E N F O R C E M E N T   AND   C O M P L I A N C E

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What is this Agreement and what does it do?

Who benefits from this Agreement?

How can this Agreement help my company?

Can the U.S. Government help me if I have a problem?

How can I get more information?

What is this Agreement and what does it do?

The U.S.-Japan Satellite Procurement Agreement has increased opportunities for U.S. and other foreign companies to supply satellites, other than research and development (R&D) satellites, to the Japanese Government and to Japanese entities whose procurement is subject to direct or indirect government control. The Japanese Government agreed to procurement procedures for non-R&D satellites that are open, transparent and non-discriminatory. Broadcast satellites procured by Nippon Telegraph and Telephone Corporation (NTT) and the government-owned television/radio service (NHK) are covered by this Agreement.

The Agreement is in the form of an exchange of letters dated June 15, 1990 between the U.S. Trade Representative and the Japanese Ambassador to the United States. It has no expiration date.

Who benefits from this Agreement?

Any U.S. satellite manufacturer interested in supplying non-R&D satellites to the Japanese Government or to entities whose procurement is subject to government control can benefit from this Agreement. Between 1990 and 1997, U.S. companies won all five satellite contracts that were openly bid under the Agreement's procedures. The combined value of these contracts was over one billion dollars.

How can this Agreement help my company?

Prior to the signing of this Agreement, Japanese government entities were prohibited from purchasing foreign satellites if such purchases would interfere with Japan's development of an indigenous production capability. In addition, timely information was not being provided about the government's satellite acquisition plans, technical specifications were being written in ways that favored specific companies, and procurement criteria were not being disclosed openly or equally to all interested suppliers. The Agreement removed the ban on the purchase of foreign satellites (except for R& D satellites and R&D payloads), and required Japan to adopt detailed procurement procedures that are transparent, open and non-discriminatory.

The procedures set forth in the Agreement apply to the procurement of all satellites other than R&D satellites and R&D payloads on non-R&D satellites. A matter of particular concern to the U.S. negotiators was to ensure that procuring entities did not use such a broad definition of R&D satellites and payloads that procurement opportunities would be denied to U.S. and other foreign suppliers. R&D satellites and payloads, according to the definition in the Agreement, are used "for the purpose of in-space development and/or validation of technologies new to either country, and/or noncommercial scientific research." Satellites that are designed or used for commercial purposes or for the provision of services on a regular basis are not considered under this Agreement to be R&D satellites. As added insurance that R&D satellites are not mis-classified, the Japanese Government is obliged, on a yearly basis, to publish its Space Development Program, which includes programs for the development of R&D satellites. The U.S. Government can request consultations with the Japanese Government if it believes that a satellite has been mis-classified, and these consultations must be held promptly.

Procurement Procedures

When a procuring entity plans to procure a non-R&D satellite, it is obliged under the Agreement to publish an announcement in the Kanpo, Japan's official gazette (similar to the Federal Register) and to invite suppliers to provide information on their products. Suppliers can purchase the Kanpo at certain bookstores in major cities worldwide. (Note: the Kanpo is in the Japanese language.) Procuring entities are obliged to respond promptly to inquiries and to hold an explanatory session with potential suppliers.

Technical specifications, according to the Agreement, will not be prepared, adopted or applied with a view to creating obstacles to international trade. Wherever possible they should be in terms of performance rather than design, and based on international standards, national technical regulations or recognized national standards. There should be no references in the specifications to particular trademarks, names, patents, design or type, specific origin or producers.

The Agreement states that open tendering procedures (under which all interested suppliers may submit a tender) will be used to the maximum extent possible. If single tendering procedures are used (where the procuring entity contacts individual suppliers), a notice concerning the procurement must be published in the Kanpo at least 40 days before the award of the contract.

The detailed tendering procedures set forth in the Agreement can be summarized as follows: First the procuring entity publishes in the Kanpo a notice of procurement and an invitation to participate. This is followed by a pre-solicitation notice and conference, and then a more detailed solicitation notice and a pre-tender conference. The Agreement states that "any prescribed time limit for receipt of tenders will be adequate to allow foreign as well as domestic suppliers to prepare and submit tenders". The prescribed time limit for the receipt of tenders will not, in any event, be less than 45 days from the publication of the initial procurement notice.

The Agreement states that tenders will be evaluated on the basis of "overall greatest value" to the procuring entity. Factors to be considered will include relevant experience, previous worldwide performance, price, terms and conditions. All factors used to evaluate the procurement of a particular satellite must be set forth in the solicitation notice so that the evaluation process will be open, transparent and non-discriminatory. Once a contract is awarded, unsuccessful suppliers will be notified promptly, and, upon request, will be provided with information on why their tenders were not accepted.

Complaint Mechanism

The Japanese Government has established an independent Procurement Review Board to review complaints by potential suppliers concerning the procurement of non-R&D satellites under this Agreement. A complaint may be filed with this Board at any time during the procurement process, but must be filed within 10 days of the time that a supplier knew or reasonably should have known the facts forming the basis of the complaint. Within ten days of the filing of a pre-award complaint, the Board will generally request that the procurement process be suspended. Post-award complaints must be filed within 10 days of the award. In these cases, the Board generally requests suspension of performance of the contract.

Within 90 days of the filing of the complaint, after conducting an investigation which can include a hearing, the Board issues a report of its findings and recommendations. The Board must state whether the procurement process was inconsistent with the intent or specific provisions of the procurement procedures. Where it finds that the Agreement's intent or provisions have not been realized, it may recommend an appropriate remedy such as issuing a new tender package, seeking new offers for the contract, re-evaluating existing offers, awarding the contract to another supplier, or terminating the contract. The findings of the Board, according to the Agreement, "will be duly followed, as a matter of principle, by the procuring entity as its own decision".

Can the U.S. Government help me if I have a problem?

Yes. If your company is experiencing difficulties participating in the procurement of a satellite by the Japanese Government or an entity whose procurement is subject to direct or indirect government control, and you believe that the Japanese Government is not complying with this Agreement, contact the Office of Trade Agreements Negotiations and Compliance's hotline at the U.S. Department of Commerce. The Center can help you understand your rights and Japan's obligations under the Agreement, and it can alert the appropriate U.S. Government officials to help you resolve your problem. With your concurrence, the U.S. Government can, if appropriate, raise the particular facts of your situation with Japanese officials and ask them to review the matter.

How can I get more information?

The complete text of the U.S.-Japan Satellite Procurement Agreement is available on the Office of Trade Agreements Negotiations and Compliance's web site.

If you have questions about this Agreement or how to use it, you can e-mail the Office of Trade Agreements Negotiations and Compliance (TANC), which will forward your message to the Commerce Department's Designated Monitoring Officer for the Agreement. You can also contact the Designated Monitoring Officer at the following address:

Designated Monitoring Officer

U.S.-Japan Satellite Procurement Agreement

Office of Transportation and Machinery

U.S. Department of Commerce

14th Street & Constitution Avenue, N.W.

Washington, D.C. 20230

Phone: (202) 482 - 2232

The Designated Monitoring Officer can also provide you with useful trade leads and contacts.

You can obtain additional information by visiting the following web sites in the International Trade Administration of the Department of Commerce:

The Office of Transportation and Machinery undertakes industry analysis, contributes to U.S. trade policy development, participates in trade negotiations, organizes trade capacity building programs, and evaluates the impact of domestic and international economic and regulatory policies on the aerospace, automotive, and machinery industries. OTM works with other Department of Commerce units and U.S. agencies in developing a public policy environment that advances U.S. competitiveness at home and abroad.

The U.S. Commercial Service, American Embassy, Tokyo The American Embassy in Tokyo helps U.S. companies enter the Japanese market and expand their sales there.

The International Government Procurement web site of the Department of Commerce's Trade Agreements Negotiation and Compliance contains general information on international government procurement opportunities.

You can also visit the home page of the International Trade Administration's Office of Aerospace to obtain further information on the Agreement and on other export opportunities for U.S. aerospace companies. The Office of Aerospace helps American aerospace companies export their product lines by sponsoring trade promotion events, conducting industry analyses, monitoring trade agreements and assisting in the formulation of U.S. trade policy.

TANC offers these agreements electronically as a public service for general reference. Every effort has been made to ensure that the text presented is complete and accurate. However, copies needed for legal purposes should be obtained from official archives maintained by the appropriate agency.