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

Click here for the Trade Guide

Japan Major Projects Arrangement (1991)

WASHINGTON, D. C.

July 31, 1991

Dear Secretary Mosbacher:

I am writing to you with regard to the review of the Major Projects Arrangements, described in Ambassador Nobuo Matsunaga's letter of May 25, 1988 to Secretary of Commerce William Verity (hereinafter referred to as the "MPA"). This review, which the Governments of Japan and of the United States of America began in May 1990, as provided for in the Matsunaga-Verity exchange of letters, was completed on June 1, 1991. The results of this review are described in Appendix I, entitled "Japan-U.S. Joint Report on the Review of Major Projects Arrangements," which is attached to this letter.

In the absence of an international agreement governing procurement systems of public works and recognizing that procurement systems are different among nations, the Governments of Japan and of the United States of America agreed to respect each other's procurement system. In this context, the Government of Japan, after discussions with the Government of the United States of America, decided in May 1988 to introduce the MPA based on the fact that foreign companies had not been familiarized with the Japanese system.

Although the MPA has contributed to the achievements of their intended goals, the Government of Japan has decided, in an attempt to promote further familiarization of foreign firms with, and thus to facilitate greater access to, the Japanese construction market, to take additional adjustment measures, which I expect to be implemented quickly. This letter transmits "Policies and Special Measures of the Government of Japan Relating to Construction Procurement" attached as Appendix II, which is comprised of "General Statement of Policies" (Part I) and "Special Measures for Major Designated Public Works and Private Projects" hereinafter referred to as "Special Measures" (Part II).

The Special Measures will replace the following documents:

1. All of the appendices to Ambassador Matsunaga's letter to Secretary Verity of November 4, 1987; and

2. All of the appendices and attachments to Ambassador Matsunaga's letter to Secretary Verity of May 25, 1988.

The policies set forth in Ambassador Matsunaga's letters to Secretary Verity of May 25, 1988, as well as the purposes of the MPA remain unchanged.

I would like to confirm that the contents of Appendix II are acceptable to our two Governments. The Government of Japan will implement the measures described in the contents of Appendix II in a mutually beneficial manner.

Sincerely,

Ryohei Murata

Ambassador of Japan

The Honorable

Robert A. Mosbacher

Secretary of Commerce

Washington, D.C. 20230

Appendices:

I. Japan-U.S. Joint Report on the Review of the Major Projects Arrangements

II. Policies and Special Measures of the Government of Japan Relating to Construction

THE SECRETARY OF COMMERCE

Washington, D.C. 20230

July 31, 1991

His Excellency Ryohei Murata

Ambassador of Japan

2520 Massachusetts Avenue, N.W.

Washington, D.C. 20008

Dear Mr. Ambassador:

I am pleased to acknowledge receipt of your letter of today's date and the attached documents with regard to the review of the Major Projects Arrangements ("MPA"), described in Ambassador Nobuo Matsunaga's letter of May 25, 1988 to Secretary of Commerce William Verity. The Government of the United States of America confirms the results of the review described in Appendix I. The joint assessment of the MPA set forth in the "Japan-U.S. Joint Report on the Review of Major Projects Arrangements," which is transmitted with your letter is acceptable to my Government.

The Government of the United States of America welcomes the decision of the Government of Japan to expand the scope of coverage of the MPA and to take the additional adjustment measures set forth in Appendix II, entitled "Policies and Procedures of the Government of Japan Relating to Construction Procurement," which was also transmitted with your letter. It is my expectation that the contents of Appendix II will be implemented quickly.

It is my understanding that the Special Measures will replace the following documents:

1. All of the appendices to Ambassador Matsunaga's letter to Secretary Verity of November 4, 1987; and

2. All of the appendices and attachments to Ambassador Matsunaga's letter to Secretary Verity of May 25, 1988.

It is my further understanding that the policies set forth in Ambassador Matsunaga's letters to Secretary Verity of May 25, 1988, as well as the purposes of the MPA remain unchanged.

As a result of the opportunities made available under the MPA, U.S. firms have made significant efforts to participate in major projects in Japan. The adjustments (for example, Track IV procedures) will enable our Governments to resolve procedural questions that arose under the original MPA.

The goal of our efforts is to achieve significant participation by foreign firms in major projects in Japan. This will require a continued strong commitment by U.S. firms to take advantage of these new opportunities, and by both our Governments to resolve promptly any problems which may arise.

I would like to confirm that the contents of Appendix II are acceptable to our two Governments. The Government of Japan will implement the measures described in the contents of Appendix II in a mutually beneficial manner.

Sincerely,

Robert A. Mosbacher

Appendix I: Japan-U.S. Joint Report on the Review of the Major Projects Arrangements

APPENDIX I

Japan-U.S. Joint Report

on

the Review of the Major Projects Arrangements

[The content of the Appendix has not been included.]

APPENDIX II

POLICIES AND SPECIAL MEASURES OF THE GOVERNMENT OF JAPAN

RELATING TO CONSTRUCTION PROCUREMENT

Part I--General Statement of Policies

I. It has been and will continue to be the policy of the Government of Japan to maintain open, transparent, competitive and non-discriminatory procedures in the procurement of public works, and to treat foreign firms no less favorably than domestic firms, including providing information in a non-discriminatory manner. The Government of Japan believes that international competition should be facilitated in major projects procurement by all entities, public and private. The Government of Japan welcomes the entry of foreign firms into the Japanese market and will, as a general principle, undertake positive steps to promote and facilitate the entry of foreign firms into the Japanese construction market.

II. The Government of Japan decided in May 1988 to introduce the Major Projects Arrangements (MPA) because the lack of sufficient experience by foreign firms in the Japanese private sector had made it difficult for them to enter into Japanese public works procurement. The goals of the MPA were to promote further familiarization of foreign firms with, and thus to facilitate greater access to, the Japanese construction market. Through participation in the designated public works, some foreign firms have gained, and others are expected to gain, the experience necessary to participate in other projects in Japan.

III. With reference to the policy set forth above and in parallel with the implementation of the MPA, the Government of Japan will continue to pursue reforms, to be applied generally, of Japan's procurement system of public works in response to the need to further enhance and facilitate international competition in Japan's construction market and make Japan's construction market more open to the world. An example of the reforms is demonstrated by the March 25, 1991 report jointly concluded by the Ministry of Construction and representatives of the private construction industry, which includes various suggestions for reform of Japan's current procurement system. With the issuance of this report, the Ministry of Construction also announced measures that it will take on its own initiative.

IV. Multilateral discussions are now underway in GATT, which are aimed at formulating international rules concerning the procurement system for public works, that would serve as the basis for reforms of national procurement systems of GATT contracting parties. It is the policy of the Government of Japan to participate actively in such multilateral discussions.

V. Elimination of Bidrigging

It is the policy of the Government of Japan and all commissioning entities within its direct or indirect control to procure goods and services on the basis of bids submitted in a manner that is consistent with the provisions of the Antimonopoly Act. The efforts and measures that the Government of Japan has taken and will continue to take in order to eliminate bidrigging are described in Annex A.

VI. Categories of Interest to Foreign Firms

The Government of Japan recognizes that the following specific project categories, including the expansion of existing projects and facilities within such categories, are of particular interest to foreign contractors and suppliers: (a) airports;

(b) ports and harbors;

(c) highways;

(d) bridges;

(e) tunnels;

(f) railroads;

(g) mass transit systems;

(h) residential and nonresidential construction, including but not limited to, mixed use developments, housing;

(i) office buildings;

(j) schools;

(k) hospitals;

(l) prisons;

(m) cultural centers and sports facilities;

(n) urban parklands;

(o) environmental projects;

(p) Minkatsu Law projects; and

(q) Resort Law projects.

Part II--Special Measures

for

Major Designated Public Works and Private Projects

I. GENERAL APPLICATION OF THE MEASURES

1. Designated Public Works and Private Projects

(a) The Special Measures will be applied to the licensing, ranking, designation and procurement procedures for the major designated public works projects commissioned by the government or government-related entities (hereinafter referred to as "designated public projects") and for the Kansai International Airport and other major projects undertaken by similar private commissioning entities (hereinafter referred to as "designated private projects"), listed on Annex B-1 and Annex B-2, respectively. In the case of projects commissioned by private and third-sector entities which are related to the designated public and private projects referred to above (hereinafter "third-sector projects"), listed on Annex B-3, the Government of Japan intends to encourage the relevant commissioning entities to follow non-discriminatory procurement policies as provided in Annex C. The projects listed on Annexes B-1, B-2 and B-3 (hereinafter collectively referred to as "listed projects") include additional projects which were listed, as a result of the present review, from those projects commissioned by the entities referred to above, considering the categories listed in Section VI of Part I above.

(b) For procurement of goods, the Special Measures will be applied, in the case of the designated public projects to those valued at 130,000 SDR's or more and, in the case of designated private projects, to those valued at 30 million yen or more. For procurment of construction services, the Special Measures will be applied to those valued at 700 million yen or more. For procurement of design and consulting services, the Special Measures will be applied to those valued at 25 million yen or more, which require high-grade technical judgment. For procurement of a combination of design and consulting services, which require high-grade technical judgment, with the supply, manufacturing and/or installation of goods, the Special Measures will be applied to those valued at a total of 700 million yen or more.

(c) The listing of listed projects does not limit or prejudice participation by foreign companies in projects not listed in the relevant annexes.

2. Periodic Review

Government-to-Government reviews will be held to examine whether the Special Measures provided for in Part II of this Appendix II are serving the intended purpose of facilitating sufficient access to the Japanese construction market. Depending upon the results of this review, the Special Measures may be adjusted, if necessary. In the reviews, the Government of Japan will consider and decide on the addition, if necessary, of specific projects, taking into account the presentation by the Government of the United States of additional specific projects of interest to U.S. firms. The first review will be held in one year's time, and thereafter at such intervals as the two sides may agree, taking into account the progress made in achieving the intended purpose.

II. MONITORING COMMITTEE

A Monitoring Committee consisting of officials of the Ministry of Foreign Affairs, the Ministry of Transport and the Ministry of Construction will meet in Japan with officials of the U.S. Embassy in Japan at the request of either side to monitor the implementation of the Special Measures and to resolve problems where possible. Relevant information will be made available upon request. In addition to the sessions of the Monitoring Committee, officials of the two Governments will meet at the request of either party to resolve any issues with regard to the Special Measures.

III. INFORMATION ACCESS

1. In the provision of information on all procurements, commissioning entities will treat foreign firms in a non-discriminatory manner.

2. The Government of Japan instructs and provides guidance to commissioning entities to treat foreign firms in a non-discriminatory manner.

3. An office for Construction Market Access and a contact point for each commissioning entity have been, or will be, established to provide information regarding listed projects of that entity.

IV. EFFECTIVE PERIOD OF THE SPECIAL MEASURES

The Special Measures will be effective for the entire duration of the implementation of the designated public and private projects.

V. REGISTRATION (This Section does not apply to designated private projects.)

1. Potential suppliers of design and consulting services, construction services, and goods must register with the commissioning entity of each project. Construction services firms may be requested to present the results of an official examination of management, based upon the Construction Business Law, and evidence that they have been duly licensed. A construction business license will not be required for suppliers of design and consulting services or goods.

2. Registration will be received approximately three times a year while the Special Measures are in effect. Registration will be received at any other time if necessary for the effective implementation of these Special Measures. For goods suppliers, on all public works projects, registration will be received at any time.

3. A general example of the ranking factors that commissioning entities will use is set forth in Annex D. All of the factors that a commissioning entity will use to rank registered firms will be made available in writing to interested firms upon request.

4. The Government of Japan will shorten the examination period for ranking and ensure that each entity and its constituent parts will follow a single ranking procedure, including the use of a single ranking application, except in cases of a duly substantiated need for different procedures. A commissioning entity will not require any firm to provide ranking information in addition to the information specified in the ranking application. Firms may be required to update the standard form no more than once each year.

5. The Government of Japan will ensure that efforts are made to minimize the differences in the ranking applications used by its entities. For the purpose of further facilitating the unification of the ranking processes for all public projects, foreign firms will be advised to make full use of a system of management examination under the Construction Business Law to evaluate management ability levels of firms based upon the common measurement methods shared by various commissioning entities with the aim of the simplification and standardization of the current ranking system.

6. In ranking foreign firms, commissioning entities will treat such firms no less favorably than domestic firms.

7. The ranking of a foreign firm will be subject to the Complaints Mechanism set forth in Part VII of these Special Measures.

VI. PROCUREMENT PROCEDURES

1. Track I--For Procurement of Goods (The following procedures will be implemented while ensuring consistency with the requirements of the GATT Agreement on Government Procurement, as amended (Code), in the case of projects covered by the Code.)

(a) Information on Proposed Procurement

A notice, advising that a designation (or selection) process has been initiated and containing the information specified in Paragraph 5(b) below, will be published for each order in appropriate daily industrial papers listed in Annex E.

(b) Time Period

(1) In the case of designated public projects, the period between the publication of the notice referred to in Paragraph 1(a) above and designation will be 30 days. Potential suppliers of goods may express their interest in being designated to the commissioning entity within the deadline set by the entity. The deadline will be included in the notice referred to in Paragraph 1(a) above and will be at least 18 days from the date of the notice.

(2) In the case of designated private projects, the period between publication of the notice referred to in Paragraph 1(a) above and the deadline for applications will be 30 days, followed by deliberation on the selection of participants to the competition.

(c) Publication and Distribution of Procurement Information

Concurrently with the publication of the notice referred to in Paragraph 1(a) above, information including terms and conditions of contracts and specifications will be made available at the commissioning entity's office or such other place specified in the notice. Potential suppliers may obtain (or purchase in the case of designated private projects) such procurement information upon request.

(d) Designation/Selection of Participants in the Competition

(1) All of the criteria that a commissioning entity will use to designate (or select) firms will be published in the notice referred to in Paragraph 1(a) above, or otherwise made available in writing to interested firms. The commissioning entity will not apply the designation (or selection) criteria in a manner that would disadvantage foreign firms.

(2) The commissioning entity will notify designated (or selected) firms that they have been designated (or selected to participate in the competition) and also publish a list of such firms in appropriate daily industrial papers listed in Annex E.

(e) Bidding and Award of Contract

(1) The period between designation (or selection of participants) and bidding (or the submission of cost estimates) will be 40 days from the date of the publication of the list of firms, pursuant to Paragraph 1(d)(2) above.

(2) Bids (or cost estimates) will be opened and recorded in the presence of participants in the competition or their agents at a specified time and place. A contract will be awarded to the bidder (or participant) who submits the lowest bid (or cost estimate) below the ceiling price set by the commissioning entity (unless the cost estimate is unreasonably low).

(3) If no bid (or cost estimate) falls below the ceiling price, participants will be requested to re-bid (or to resubmit their final revised cost estimates) immediately. Upon request by one or more participants, the re-bidding (or resubmission) will be held after three (3) working days.

2. Track II--For Procurement of Construction Services. (In the case of the Kansai International Airport Project, this Track will be applied to the construction of airport facilities such as runways, aprons and terminal buildings.)

(a) Information on Proposed Procurement

A notice, containing information specified in Paragraph 5(b) below, will be published in appropriate daily industrial papers listed in Annex E, to advise that a designation (or selection) process has been initiated for each contract. In case one notice applies to split orders, the information specified in Paragraph 5(b) below will be published for each split order.

(b) Time Period

(1) In the case of designated public projects, the period for designation will be 30 days from the date of the publication of the notice referred to in Paragraph 2(a) above. In case one notice applies to split orders, the period for designation will be 30 days from the day specified in the notice for the start of designation for that order. Potential suppliers of construction services may express their interest in being designated to the commissioning entity within the deadline set by the commissioning entity. The deadline will be included in the notice referred to in Paragraph 2(a) above and will be at least 18 days from the date of the notice.

(2) In the case of designated private projects, the period between publication of the notice referred to in paragraph 2(a) above and the deadline for applications will be 30 days, followed by the deliberation on the selection of participants to the competition. In case one notice applies to split orders, the period for application will begin 30 days from the day specified in the notice for each split order.

(c) Explanation Meeting

The commissioning entity will set a time and place for the meeting at which the commissioning entity will explain the preliminary specifications for construction, including equipment contained in such specifications, and give firms opportunities to express constructive opinions, and have them seriously considered. The commissioning entity will decide whether they should be accepted. Contractors as well as all potential subcontractors and suppliers can attend. The commissioning entity will provide, at the time of the explanation meeting, interested firms with available information on equipment which is to be incorporated into or affixed as a major element of the project but not contained in the specifications.

(d) Designation/Selection of Participants in the Competition

(1) In the case of designated public projects, registered firms which have been ranked for the expected amount of the contract of the project concerned, will be eligible for designation.

(2) All of the criteria that a commissioning entity will use to designate (or select) firms will be published in the notice referred to in Paragraph 2(a) above, or otherwise made available in writing to interested firms. The commissioning entity will not apply the designation (or selection) criteria in a manner that would disadvantage foreign firms.

(3) The commissioning entity will notify selected firms that they have been designated (or selected to participate) and also publish a list of such firms in appropriate daily industrial papers listed in Annex E.

(4) Concurrently with the publication of the notice of designation (or selection), information such as terms and conditions of a contract and the specifications will be made available at the commissioning entity's office or such other place specified in the notice. Potential suppliers may obtain (or purchase in the case of designated private projects) such procurement information upon request.

(e) Bidding and Award of Contract

(1) The period between designation (or selection of participants) and bidding (or the submission of cost estimates) will be 40 days (60 days in the case of designated private projects) from the date of the publication of the list of such firms, pursuant to Paragraph 2(d)(3) above.

(2) Bids (or cost estimates) will be opened and recorded in the presence of participants in the competition or their agents at a specified time and place. A contract will be awarded to the bidder (or participant) who submits the lowest bid below the ceiling price set by the commissioning entity. If the bid is exceedingly low, it may be examined to ensure that it is responsive.

(3) If no bid (or cost estimate) falls below the ceiling price, participants will be requested to re-bid (or to resubmit their final revised cost estimates) immediately. Upon request by one or more participants, the re-bidding (or resubmission) will be held after three (3) working days.

3. Track III--For Procurement of Design and Consulting Services.

(a) Information on Proposed Procurement

A notice containing information specified in Paragraph 5(b) below will be published in appropriate daily industrial papers listed in Annex E to advise that a designation (or selection) process has been initiated for each order.

(b) Time Period

(1) In the case of designated public projects, the period for designation will be 30 days from the date of publication of the notice referred to in Paragraph 3(a) above. Potential suppliers of design and consulting services may express their interest in being designated to the commissioning entity within the deadline set by the commissioning entity. The deadline will be included in the notice referred to in Paragraph 3(a) above and will be at least 18 days from the date of the notice.

(2) In the case of designated private projects, the period between publication of the notice referred to in Paragraph 3(a) above and the deadline for applications will be 30 days, followed by the deliberation on the selection of participants to the competition.

(c) Publication and Distribution of Procurement Information

Concurrently with the publication of the notice referred to in Paragraph 3(a) above, information including specifications will be made available at the commissioning entity's office or other place specified in the notice. Potential suppliers may obtain (or purchase in the case of designated private projects) such procurement information upon request.

(d) Designation/Selection of Participants in the Competition

(1) All of the criteria that a commissioning entity will use to designate (or select) firms will be published in the notice referred to in Paragraph 3(a) above, or otherwise made available in writing to interested firms. The commissioning entity will not apply the designation (or selection) criteria in a manner that would disadvantage foreign firms.

(2) The commissioning entity will notify firms that they are designated (or selected to participate) and also publish a list of such firms in appropriate daily industrial papers listed in Annex E.

(e) Submission of Proposals

Designated (or selected) firms will submit detailed unpriced technical proposals within 30 days (40 days for priced technical proposals in the case of designated private projects) of publication of the list of designated (or selected) firms, pursuant to Paragraph 3(d)(2) above.

(f) Selection of Proposal

(1) In the case of designated public projects, a Screening Committee will be formed for each specific order and this committee will evaluate the technical proposals submitted, ensure that each technical proposal meets the technical specifications established by the commissioning entity, and select the firm which submits the best unpriced technical proposal. The commissioning entity will negotiate a contract with the firm which submits the best technical proposal, at a price which is below the ceiling price set by the commissioning entity. When the commissioning entity is unable to negotiate a satisfactory contract with the firm submitting the best technical proposal at a price below the ceiling price, the commissioning entity will terminate negotiations with that firm and undertake negotiations with the firm submitting the next best technical proposal that meets the technical specifications. This is in accordance with the procedures stipulated by domestic laws and regulations.

(2) In the case of designated private projects, a Screening Committee will be formed for each specific order and this Committee will first evaluate the priced technical proposals submitted. Then the Contract Evaluation Committee will deliberate on the proposals comprehensively, both as to technical and price merits, awarding the contract to the firm which submits the best proposal. The commissioning entity will negotiate the terms and conditions of the contract with the firm which submitted the best proposal.

4. Track IV--For Procurement of a Combination of Design and Consulting Services with the Supply, Manufacturing and/or Installation of Goods. (The following procedures will be implemented while ensuring consistency with the requirements of the Code in the case of projects covered by the Code.)

(a) Application

The following procedures may be used to procure a combination of design and consulting services, requiring high-grade technical judgment, with the supply, manufacturing and/or installation of goods, valued at a total of 700 million yen or more and when:

(1) the contract award cannot be made solely on the basis of price, and

(2) it is inappropriate to procure such goods or services separately under Track I, II or III.

(b) Information on Proposed Procurement

A notice containing the information specified in Paragraph 5(b) below will be published in appropriate daily industrial papers listed in Annex E to advise that a designation (or selection) process has been initiated for each order. In case one notice applies to split orders, the information specified in Paragraph 5(b) will be published for each split order.

(c) Time Period

(1) In the case of designated public projects, the period between the publication of the notice described in Paragraph 4(b) above and designation will be 30 days from the date of the notice. Potential suppliers may express their interest in being designated to the commissioning entity within the deadline set by the commissioning entity. The deadline will be included in the notice referred to in Paragraph 4(b) above and will be at least 18 days from the date of the publication of the notice.

(2) In the case of designated private projects, the period between publication of the notice referred to in Paragraph 4(b) above and the deadline for applications will be 30 days, followed by the deliberation on the selection of participants to the competition.

(d) Publication and Distribution of Procurement Information

Concurrently with the publication of the notice referred to in Paragraph 4(b) above, information including the terms and conditions of the contract, an outline of the specific procurement and performance requirements will be made available at the commissioning entity's office or such other place specified in the notice. Potential suppliers may obtain (or purchase in the case of designated private projects) such procurement information on request.

(e) Explanation Meeting for the Specific Procurement Prior to the Selection of Participants

The commissioning entity will set a time and place for an explanation meeting at which it will outline the specific procurement and performance requirements, and give firms the opportunity to express constructive opinions, and have them seriously considered. The commissioning entity will decide whether they should be accepted. Contractors as well as all potential subcontractors and suppliers can attend.

(f) Designation/Selection of Participants in the Competition

(1) All of the criteria that a commissioning entity will use to designate (or select) firms will be published in the notice referred to in Paragraph 4(b) above, or otherwise made available in writing to interested firms. The commissioning entity will not apply the designation (or selection) criteria in a manner that would disadvantage foreign firms.

(2) The commissioning entity will notify firms that they have been designated (or selected to participate in the competition) and also publish the list of such firms in the appropriate daily industrial papers listed in Annex E.

(g) Explanation Meeting for Designated (or Selected) Participants on the Guidelines for Making Detailed Technical Proposals

The commissioning entity will set a time and place for the meeting at which it will explain the evaluation factors, the weight assigned to each technical evaluation factor and the relative importance of price in relation to the combined weight of the technical evaluation factors, and how to prepare detailed technical proposals.

(h) Period for Submission of Technical Proposals

The commissioning entity will allow 40 days from publication of the list of designated (or selected) firms, pursuant to paragraph 4(f)(2) above for designated (or selected) firms to submit technical and price proposals.

(i) Evaluation of Proposals and Award of Contract

(1) Firms will be required to submit technical proposals and price proposals in separate sealed envelopes. The commissioning entity will not open the price proposals prior to the public opening of the price proposals. Upon receipt of the technical proposals, the commissioning entity will evaluate the technical proposals based on the evaluation factors specified in the notice referred to in Paragraph 4(b) above.

(2) In the case of designated private projects, during the technical evaluation, the commissioning entity will inform each offeror in writing or orally, if confirmed in writing, of any deficiencies in its technical proposal and requested clarifications and provide each with a fair and equal opportunity to submit revised technical and price proposals in separate sealed envelopes by a specified common date, addressing the deficiencies identified and the clarifications requested by the commissioning entity. The commissioning entity will then complete the technical evaluation.

(3) The commissioning entity will invite all firms with technically acceptable proposals to attend the public opening of the price proposals. At the same time, it will notify the firms whose technical proposals were found to be unacceptable.

(4) The commissioning entity will then open all of the price proposals submitted by firms with acceptable technical proposals in the presence of the participants in the competition or their agents at the time and place specified for the public opening, and announce and record the results. At the same time and place that the price proposals are publicly opened, the entity will publicly announce the total technical evaluation scores and detailed scores for each technical evaluation factor for each firm that submitted an acceptable technical proposal, without identifying the names of such firms. At the same time, each firm will be provided in writing with its total technical evaluation score and detailed score for each technical evaluation factor.

(5) The final selection based on the technical and price proposals will be made with reasonable promptness, and award of the contract will be made to the firm which submitted the best overall proposal, in terms of the technical evaluation factors and price, as specified in the notice referred to in Paragraph 4(b) above. In the case of designated private projects, the commissioning entity will negotiate the terms and conditions of the contract with the firm which submitted the best overall proposal. In the case of designated public projects, a contract will be awarded to the bidder who submits the best overall proposal with a bid below the ceiling price set by the commissioning entity.

(6) Upon request an explanation meeting will be held to explain the evaluation process.

5. Requirements Applicable to Tracks I-IV

(a) Each commissioning entity will establish a contact point for those firms which are interested in participating in the designated projects.

(b) The following information will be published in a notice in appropriate daily industrial papers listed in Annex E, which advises that a designation (or selection) process has been initiated:

(1) A general description of the procurement and, in the case of Track II, a brief description of the preliminary specifications, and, in the case of Track IV, a summary of the performance requirements.

(2) Identification of the procurement procedure to be used (Track I, II, III or IV);

(3) All of the designation (or selection) criteria that will be applied in that procurement, or a contact point where interested firms may obtain a copy of such criteria;

(4) All evaluation factors, if Tracks III or IV are to be used;

(5) The period between notice of initiation of designation (or selection) process and designation (or deadline for applications);

(6) How to submit bids or technical proposals;

(7) Contact point, how to indicate interest in designation (or selection);

(8) How to obtain specifications and, in the case of Track II, the preliminary specifications;

(9) Date and place of delivery of goods or performance of services;

(10) Description of the designation (or selection) process, including how participants in the competition and contractors are determined; when they are determined; how they are notified and in which industrial papers participants in the competition will be listed;

(11) In the case of Tracks II and IV, the date and place of explanation meetings for interested firms on procurement information (which for Track II will include the preliminary specifications for construction, as well as the equipment contained in such specifications, and for Track IV will include the outline of the specific procurement and performance requirements) and information on how the firms can express their opinions; and

(12) Other items which are judged necessary.

(13) The following information will be written in English in the notice:

a. Subject matter of the procurement,

b. The time limits for indicating interest in being designated (or submitting applications) and for submitting bids or technical proposals, and

c. Addresses of contact points (or, in the case of designated private projects, how to obtain application forms).

(c) In the notice described in Paragraph 5(b) above, information regarding the specific type of work that indicates required capabilities will be included. Such information will be provided in sufficient detail to enable a potential bidder to assess whether there is a reasonable likelihood that it has the technical capabilities required for designation (or selection).

(d) Post-Designation (or Selection) and Post-Award Information and Notification of Offerors

(1) As for contracts covered by these Special Measures, the names of designated (or selected) companies and the successful offeror will be made available at the commissioning entity's office immediately after designation (or selection) or contract award.

(2) When a firm is not designated (or selected), the commissioning entity will explain immediately, upon request, to the non-designated participant the reason(s) for not being designated (or selected), including identifying the specific designation (or selection) criteria that was/were not met by that participant.

(3) Upon request, the entity shall promptly inform the unsuccessful offerors by written communication that a contract has been awarded, the value(s) of the offers and the name and address of the winning offeror.

(4) Upon the request of an unsuccessful offeror, the entity shall promptly provide the unsuccessful firm with pertinent information concerning the reason(s) its offer was not selected. The entity shall exclude such information as would prejudice the legitimate commercial interests of particular suppliers or might prejudice fair competition among suppliers. The entity shall, in no event, disclose to any third party any offeror's trade secrets, manufacturing processes and techniques or other proprietary business information.

(5) A contact point in each entity shall provide additional information to any unsuccessful offeror who is dissatisfied with the explanation for rejection of its offer or who may have further questions about the award of the contract.

6. Exceptional Cases

When a commissioning entity determines that it is not able to follow the procedures set forth above for a particular procurement because of the need for urgent action or confidentiality, the absence of a reasonable alternative, the involvement of proprietary rights, the inappropriateness of any of the Tracks or, in the case of designated private projects, the inappropriateness of awarding a contract by means of price competition, the entity shall determine the appropriate procedures to use for such procurement. The commissioning entity will publish notice of the application of this provision and the procedures to be used for the procurement in the industrial papers listed in Annex E.

VII. COMPLAINTS MECHANISM

1. Overview

It is vital to secure fair and open competition. In order to ensure compliance with these Special Measures and to ensure the equitable and expeditious resolution of disputes, the following complaint process will become effective 90 calendar days after these Special Measures go into effect.

2. Procurement Review Board

(a) The Government of Japan will ensure that a Procurement Review Board (Board) is established, as an independent reviewing organization, to review complaints by potential suppliers concerning procurements subject to these Special Measures. The Board will have no substantial interest in the outcome of a procurement subject to its review.

(b) The Board will receive complaints in writing, conduct investigations of the facts and make recommendations to a commissioning entity with respect to any aspect of a procurement by the entity.

(c) The Board will be comprised of persons who have knowledge and experience related to public sector procurements. No member of the Board will participate in the review of a complaint in which that member has a conflict of interest.

3. Participants

(a) Potential suppliers are firms whose direct economic interest would be affected by the award of, or the failure to award, a contract. In the case of designated public projects, depending on the stage of the procurement, potential suppliers mean those firms which have applied for ranking, have expressed an interest to the commissioning entity in being designated or have been designated. In the case of designated private projects, potential suppliers mean those firms that have applied for selection.

(b) The entity, the complainant and any other potential suppliers may participate in a complaint proceeding provided any such potential supplier notifies the Board of such intent within seven (7) days after receipt of the notice in Paragraph 4(f) below, and whereupon they would be subject to the procedures in Paragraph 4(i)(2) below, unless barred by Paragraph 4(e) below.

4. Procurement Review Process

(a) A potential supplier that believes a procurement has been carried out in a manner inconsistent with any provision of these Special Measures may file a complaint in writing with the entity of any alleged inconsistency with these Measures at any time during the procurement process, but no later than 10 days after the basis of the complaint is known or reasonably should have been known.

(b) The entity will respond in writing to a complainant within 10 days from the date of filing.

(c) If the complaint is not resolved by the entity, the complainant may file the complaint with the Board within 7 days after receiving the response referred to in Paragraph 4(b) above. The potential supplier will submit a copy of the complaint to the entity within one (1) working day of filing it with the Board. (Days will be considered calendar days unless otherwise specified.)

(d) The Board may consider a complaint, even though not timely filed, if it finds that good cause is shown.

(e) The Board will review a complaint within seven (7) days of its filing and may, in writing and with reasons given, dismiss any complaint found to be:

(1) not submitted in a timely manner;

(2) not subject to these Special Measures;

(3) frivolous or trivial on its face;

(4) not submitted by a potential supplier; or

(5) otherwise inappropriate for review by the Board.

(f) Where the Board determines that a complaint has been filed properly, it will notify in writing all potential suppliers of the complaint within one (1) day.

(g) Suspension of Award or Procurement Process

(1) Within 10 days of the filing of a pre-award complaint, the Board will promptly issue a written request for suspension of the procurement process pending resolution of the complaint.

(2) In the case of a post-award complaint, filed within 10 days after the award, the Board will promptly request in writing suspension of performance of the contract pending resolution of the complaint.

(3) The entity will suspend the procurement process or performance of the contract immediately after it receives the Board's request, unless the head of the entity determines that urgent and compelling circumstances do not allow the entity to follow the request, in which case he will immediately provide written notification to the Board of his determination and the factual circumstances on which it is based.

(h) Investigation

(1) The Board will conduct an investigation of the complaint, which may include the filing of briefs, pleadings and other documentation by the complainant and entity.

(2) The Board may, on the request of the complainant or entity or on the Board's own initiative, hold a hearing on the merits of a complaint.

(i) Entity Report

(1) Within 14 days after the day on which a copy of the complaint was sent to the entity, it will file with the Board a written report on the complaint, containing the following:

(a) the tendering document, including the specifications or portions thereof relevant to the complaint;

(b) all other documents relevant to the complaint;

(c) a statement that sets out all relevant facts, findings, actions and recommendations of the entity and responds fully to all allegations of the complaint; and

(d) any additional evidence or information that may be necessary in order to resolve the complaint.

(2) The Board will, forthwith after receiving the report referred to in Paragraph 4(i)(1) above, send a copy of the relevant material to the complainant and give the complainant an opportunity, within seven (7) days after it receives the relevant material, to file with the Board comments or request that the case be decided on the existing record. The Board will, forthwith after receiving the comments, send a copy to the entity.

5. Findings and Recommendations

(a) The Board will make a report of its findings and recommendations to the entity within 50 days after the day on which the complaint is filed. Its findings, in which the Board will grant or deny the complaint in whole or in part, will specify whether the procurement process or award was inconsistent with specific provisions of these Special Measures.

(b) Whenever the Board finds evidence of misconduct, actions or behavior contrary to law, it will refer the matter to the appropriate enforcement authorities for action.

(c) In making its findings and recommendations, the Board will consider all the circumstances surrounding the procurement process or award, including the seriousness of any deficiency in the procurement process, the degree of prejudice to any or all potential suppliers or to the integrity and effectiveness of these Special Measures, the good faith of the participants and the extent of performance of the contract to which the procurement relates.

(d) Where the Board finds that any provision of these Special Measures has not been realized, it may recommend an appropriate remedy, including one or more of the following:

(1) that a new solicitation package be issued;

(2) that new offers for the contract be sought;

(3) that the offers be re-evaluated;

(4) that the contract be awarded to another supplier; or

(5) that the contract be terminated.

(e) The Board will send its findings in writing with its recommendations to the complainant, the entity and any other participants, within one (1) working day after issuance.

(f) The findings of the Board on any complaint brought appropriately before it will be duly followed, as a matter of principle, by the procuring entity as its own decision.

(g) The Board will respond to external inquiries concerning its findings.

6. Express Option

(a) Where the complainant or entity requests in writing an expeditious handling of a complaint, the Board will consider the feasibility of using the procedure set out in this section, referred to herein as the "express option."

(b) The Board will determine whether to apply the express option within two (2) working days after receiving a request therefor and will notify the complainant, the entity, and any other potential suppliers referred to in Paragraph 3 above, as to whether the express option is to be applied.

(c) Where the express option is applied, the time limits and procedures will be as set forth in this Paragraph.

(1) The entity will, within six (6) days after the day on which it is notified by the Board that the express option is to be applied, file with the Board a written report on the complaint, as specified in Paragraph 4(i) above. The Board will, forthwith after receiving the report, send a copy of the relevant material to the complainant and any other participants. The Board will give the complainant and any other participants five (5) days to file with the Board comments on such material or request that the case be decided on the existing record. The Board will, forthwith after receiving the comments, send a copy to the entity.

(2) The Board will issue its findings and recommendations on the complaint in writing within 25 days after the day on which the complaint is filed.

VIII. DETERMINATION OF TECHNICAL SPECIFICATIONS

Specifications will be prepared by each commissioning entity. In preparing technical specifications for equipment, the commissioning entity will use performance specifications wherever appropriate. As for technical specifications for materials, national standards in Japan or their equivalent will be applied where appropriate. In addition, the commissioning entity will, when judging conformity with the specifications, treat generally accepted foreign test data and records of use in a foreign country as equivalent to Japanese test data and records of use in Japan, unless there is any compelling reason not to treat such data as equivalent. Where the commissioning entity does not intend to accept foreign test data as equivalent, a written explanation of the compelling reasons will be given immediately upon inquiry prior to the contract award.

IX. INFORMATION ON THE PROCUREMENT SCHEDULE

1. A master plan for the designated projects (the long-term plan showing time and work sequence for the entire construction schedule) will be available at the relevant contact point of each commissioning entity at least 12 months, where applicable, prior to the beginning of the Japanese Fiscal Year, shown as the period for the undertaking in Annex B for the designated projects. For projects already underway, master plans will be available within 60 days. The Government of Japan will be prepared to report on the status of the master plans for the designated public projects annually after the enactment of the budget.

2. An annual plan of orders which includes target month for procurement announcements and target month for availability of designated (or selected) bidders lists and contract awards for each order and appropriations for the fiscal year will be available at the relevant contact point for each project annually after the enactment of the budget.

3. A commissioning entity will make public a decision to contract for the design of designated projects in the annual plan of orders. When the commissioning entity makes a decision to contract for the design of a designated project after the annual plan is issued, it will make the decision public expeditiously by publication in the appropriate industrial papers listed in Annex E.

X. BUSINESS LICENSES FOR CONTRACT CONSTRUCTION

1. On receiving applications for authorization of foreign managerial and technical qualifications and/or experience, the Ministry of Construction will assess the foreign qualifications and/or experience on an individual basis. In giving authorization, there will be no unfavorable treatment for foreign qualifications or experience.

2. As for foreign licensing period, foreign companies will be given no less advantageous treatment than Japanese companies except for the period necessary for authorization processing.

3. The Construction Contractors Division of the Ministry of Construction is the contact point for the authorization processing and will explain upon request by the applicant the status of authorization processing. It is recognized that such items as credit ratings, completed contracts and equipment operations are not relevant to the requirements for the license, and will not be used.

4. The standard processing period for the issuance of a license by the Minister of Construction will be between three (3) and four (4) months. As for the license issued by a Prefectural Governor, the ordinary processing period will be between one (1) and two (2) months. For both types of licenses, after 90 days, upon request, the applicant will receive from the Ministry of Construction an explanation of the status of his application.

5. To obtain a construction license from the Minister of Construction or a prefectural governor, prior experience in Japan is not required.

XI. EVALUATION OF THE WORLDWIDE BUSINESS ACTIVITIES OF FOREIGN FIRMS

In evaluating a foreign firm for purposes of ranking or designation (or selection), commissioning entities will treat the results of an inquiry into the firm's experience and technical competence acquired in a foreign country as equivalent to experience and technical competence acquired in Japan.

XII. JOINT VENTURES

1. Joint ventures are utilized only in certain large scale projects; and they are not required as a matter of Japanese law.

2. While the commissioning entity may specify the appropriate number of companies that may participate in a joint venture in such projects, the commissioning entity will not determine the share of any company in the joint venture nor the segment of the project that any company will undertake.

3. In determining the qualifications of an applicant and in awarding a contract, commissioning entities will treat applicants no less favorably where a foreign firm is the prime contractor or where one or more joint venture partners are foreign firms.

XIII.SUBCONTRACTING

1. The Government of Japan will encourage appropriate business construction contractor associations to provide, upon request, interested firms with information in relation to subcontracting opportunities.

2. Where Track II is used, in the notice of the procurement, the commissioning entity will include information regarding the major goods and services to be procured by the general contractor or a subcontractor for use in that project.

3. At an explanation meeting, the commissioning entity will provide potential suppliers with information which includes the preliminary specifications, where available, of the major goods and services to be procured by a general contractor or subcontractor.

4. Where a potential supplier is not awarded the contract or subcontract to supply such goods or services, the supplier will first seek an explanation from the general contractor or subcontractor. Where the supplier is not satisfied with that explanation, the commissioning entity will, upon request, encourage the general contractor or subcontractor to provide a further explanation.

5. In determining the qualifications of an applicant and in awarding a contract, commissioning entities will treat applicants no less favorably where one or more subcontractors are foreign firms.

XIV. CORPORATE FORM OF FOREIGN FIRMS

1. Foreign firms will be allowed to participate in procurements of listed projects regardless of the form of their corporate presence in Japan if the following conditions are met. When a foreign firm establishes a subsidiary in accordance with Japanese laws, it will establish a branch to qualify as a foreign firm for purposes of the Special Measures. The Government of Japan will facilitate this process, if necessary. A branch so established will be able to use the same personnel, equipment and offices as the subsidiary for purposes of licensing, registration, designation and project implementation, consistent with relevant Japanese laws.

2. In a joint venture, the foreign partner retains its identity as a foreign company.

Annexes:

A Measures to Prevent Bidrigging

B Listed Projects: B-1 Designated Public Projects

B-2 Designated Private Projects

B-3 Third-Sector Projects

C General Policy Statement Regarding Procurements by Private and Third-Sector Entities

D Factors for Ranking

E Daily Industrial Papers

ANNEX A

MEASURES TO PREVENT BIDRIGGING

The Government of Japan has taken and will continue to take the following measures and efforts to eliminate bidrigging:

1. Commissioning agencies have rigorously dealt with all bidrigging cases, and will more vigorously apply against firms found to have engaged in such bidrigging administrative measures, including suspension from designation, that are effective in deterring bidrigging activities.

2. Commissioning agencies will increase their vigilance against bidrigging activities in all of their procurements, and will on their own judgment report relevant information regarding such activities to the Fair Trade Commission (FTC). In the National Coordinating Committee for Implementation of Public Works Contract Procedures (NCC), commissioning agencies were clearly directed to observe the above-mentioned policies; and, the Procurement Review Board will also report relevant information regarding bidrigging to the FTC.

3. The FTC will enforce the Antimonopoly Act strictly against bidrigging in all industries, and upon receiving the relevant information regarding bidrigging activities, the FTC will take appropriate steps, depending upon the content and reliability of the information. At the time any formal actions are taken by the FTC, the contents, including the names of the offenders, the nature of the offense and circumstances surrounding it, all formal actions taken, such as recommendations and surcharge payment orders will be made public. Warnings will also be made public other than in exceptional cases.

4. In order to strengthen administrative procedures and sanctions against bidrigging, the Government of Japan has taken, or will take, the steps described as follows:

a. The NCC has revised its model guideline on designation suspension, extending the period of suspension and expanding the district of application of suspension in cases of Antimonopoly Act violations. Through this revision, in certain cases, the minimum period of designation suspension has been doubled and the suspension of designation will be applied on a nationwide basis and not just in the specific area where the violations took place.

b. In accordance with the NCC revised guideline, governmental agencies and public corporations have revised their guidelines on designation suspension.

5. In order to effectively prevent bidrigging, the Government of Japan will ensure that the following measures are implemented with respect to public works procurement procedures:

a. The explanation document provided at the on-site explanation meeting includes a statement of the legal prohibitions against collusive activities and directs offerors not to conduct any activities that violate the Antimonopoly Act;

b. The guidance for tendering will state clearly that collusive activities are illegal under Japanese law and that any activities against the Antimonopoly Act are prohibited and that a bid resulting from collusive activities or other illegal activities will be declared invalid by the commissioning entity. In addition, in such cases, the offeror that submitted such a bid will be deemed ineligible to resubmit a bid in that procurement; and

c. Each commissioning entity will require each bidder to submit with its bid signed and sealed bidding document which states compliance with the guidance for tendering, which includes prohibitions against collusive bidding, and the explanation document provided at the on-site explanation meeting.

ANNEX B-1

DESIGNATED PUBLIC PROJECTS

Projects Listed in 1988

o Haneda Airport Expansion Phase III (FY 90-95)

o New Hiroshima Airport (FY 86-93)

o Tokyo Port Redevelopment (Metropolitan Expressway 12) (FY 84-)

o Akashi Kaikyo Bridge (to be completed by FY 97)

o Ise Bay Highway (to be completed by FY 96)

o Yokohama Minato Mirai 21 (Major Hall of International Conference Center, land consolidation, port construction) (FY 85- )

o Kansai Science City (land consolidation, second Keihan Expressway, Center for Graduate Studies in Advanced Science and Technology) (FY 88- )

Projects Added in 1991

o New Chitose Airport Phase III (to be completed by FY 2000)

o Kurushima Bridge (to be completed by FY 98)

o Makuhari High Rise Apartment (FY 92-) (tentative name)

o New National Theater (FY 91-96) (tentative name)

o Kansai National Government Building (tentative name)

o National Olympics Memorial Youth Center (FY 91-94)

o Postal Savings Nikko Kirifuri Resort Facilities (FY 91-96)

o Research Center for Aging and Health* (tentative name)

o Social Insurance Hospital (Kanto area) (FY 91-93)

o Tokyo University of Foreign Studies*

o National institute of Polar Research, The Institute of Statistical Mathematics and National Institute of Japanese Literature*

o Synchrotron Radiation Facility (SPring-8) (Hyogo) (to be completed by 1998) (excluding Storage Ring Building [Phase I] and related facilities)

* when and if initiated

ANNEX B-2

DESIGNATED PRIVATE PROJECTS

Projects Listed in 1987-88

o Kansai International Airport

o Trans-Tokyo Bay Highway

o Nippon Telegraph and Telephone Corporation (NTT) Shinjuku Building

ANNEX B-3

THIRD-SECTOR PROJECTS

Projects Listed in 1987-88

o Technoport Osaka

o Rokko Island**

o Haneda Airport Terminal Construction (Phase II)

o Haneda Airport Terminal Construction (Phase III)

o New Hiroshima Airport Terminal Construction

o New Kitakyushu Airport Terminal Construction*

o Tokyo Teleport

o Yokohama Minato Mirai 21 (International Conference Center)

Projects Added in 1991

o Import Integrated Terminal in Yokohama Daikoku Pier (tentative name)**

o Rinku Gate Tower Building

o Sendai Airport Terminal Building for International Passengers

o New Chitose Airport Terminal Construction (Phase III)*

o JR Kyoto Station Redevelopment

o JR Ueno Station Redevelopment*

* when and if initiated

** when and if third-sector major projects under these plans emerge

ANNEX C

GENERAL POLICY STATEMENT REGARDING PROCUREMENTS

BY PRIVATE AND THIRD-SECTOR ENTITIES

It is the policy of the Government of Japan that all major public works projects will be conducted in accordance with Japanese laws and regulations under non-discriminatory procurement procedures. Recognizing the mutual benefits derived from international competition in construction services and related equipment, some organizations have already issued policy statements, as attached hereto, to ensure foreign access to concrete commercial opportunities associated with specific project components through open, transparent, and non-discriminatory procurement policies including procedures. The Government of Japan fully supports such steps. The Government of Japan has no authority to impose legal requirements on private and third-sector entities in carrying out their major projects, but it will actively encourage those entities listed in Annex B-3 to take steps to ensure that procurement policies including procedures provide competitive opportunities to foreign and domestic suppliers without discrimination. The Japanese Government fully expects that such entities will follow practices based on purely commercial factors as part of their open procurement policies. As found in the attachments, this would include:

-- establishing contact points to facilitate entry by foreign firms;

-- making the master plan and final designs and specifications available to potential suppliers;

-- providing opportunities to explain and discuss specifications in advance;

-- allowing reasonable time to submit quotes;

-- using performance related standards and specifications where appropriate;

-- making supplier qualifications and procurement criteria available to potential suppliers in advance; and

-- using internationally recognized commercial practices.

The attached policy statements by Japan Airport Terminal Co., Ltd. and Pacific Convention Plaza YOKOHAMA serve as examples for private and third-sector entities listed in Annex B-3. The Japanese Government expects that these entities will follow this example. In the case of airport terminals shown in Annex B, the Government of Japan will be sure that the above-mentioned points are followed.

May 20, 1988

POLICY STATEMENT

On the Procurement of Goods and Services for the Construction of International Conference Center in relation to Yokohama Minato Mirai 21 Project

Fumio Takagi

President

Pacific Convention Plaza YOKOHAMA

Our company welcomes participation by foreign companies in the procurement of major goods and services for the international conference center (i.e. conference hall and hotel building), for which our company is the commissioning entity. Foreign companies will be treated no less favorably than Japanese companies in any respect. Our company will implement the following measures which should enhance competitive opportunities for foreign companies wishing to do business with us.

It may be added that in order to meet the time schedule for the opening of the center in the spring of 1991, this project needs to be carried out in an efficient and prompt manner. This being the case, companies participating in the project, whether it is foreign or Japanese, are required to comply with such time schedule of the project.

Our company will announce in a timely fashion all business opportunities regarding the said procurement and, specify how to obtain relevant drawings and a project master plan showing the work sequence on a time scale. A contact point will be established in order to facilitate entry by foreign companies. Our company will provide opportunities to explain and discuss with all interested suppliers specifications and, disclose any necessary supplier qualifications to be used by our company for supplier selection. In all cases, a reasonable time period will be allowed to accommodate foreign suppliers. Our company will use internationally recognized commercial practices and performance-based specifications and standards where appropriate. Our company will base its selection on purely commercial considerations such as price, quality, delivery and post-sale services.

May 20, 1988

POLICY STATEMENT

On the Procurement of Goods and Services for the terminal Building of the Tokyo International Airport (HANEDA) Expansion Project

Hisao Takahashi

President and Chairman

of the Board of Directors

Japan Airport Terminal Co., Ltd.

The Japan Airport Terminal Co., Ltd. is undertaking the construction of the terminal building with the primary objective of enhancing airport users' convenience and of ensuring airport safety, in parallel with the progress of the Tokyo International Airport Expansion Project, which needs to be completed as soon as possible.

Our company welcomes participation by foreign companies in the procurement of major goods and services for the terminal building in accordance with the principles of economic rationalism as a private enterprise. Foreign companies will be treated no less favorably than Japanese companies in any respect.

Our company will announce in a timely fashion all business opportunities and, specify how to obtain relevant drawings and a project master plan showing the work sequence on a time scale. "International Business Office" will be established within our company as a contact point to facilitate foreign company access to these documents. Our company will explain and discuss with all interested potential suppliers specifications and, disclose any necessary supplier qualifications to be used by our company for supplier selection. In all cases, a reasonable time period will be allowed to accommodate foreign suppliers. Our company will use internationally recognized commercial practices and performance-based specifications and standards wherever appropriate. In all cases, our company will base its selection on purely commercial considerations such as price, quality, delivery, and post-sale services.

ANNEX D

FACTORS FOR RANKING

1. Factors used by commissioning entities for ranking are, in general, as follows:

(1) Annual average value of completed construction works in the field of interest to the firm;

(2) Net worth;

(3) Number of staff members who are engaged in construction business;

(4) Business condition

o Profitability (ordinary profit ratio of value of completed construction works, ordinary profit ratio of total liabilities and net worth, ratio of break-even point),

o Liquidity (current ratio, quick ratio, month of processing working capital),

o Productivity (logarithm of value of completed construction works per capita. Logarithm of added value per capita; logarithm of total liabilities and net worth per capita), and

o Stability (fixed ratio, ratio of net worth, ratio of fixed liabilities to net worth);

(5) Number of technical staff members;

(6) Number of years in business;

(7) Construction performance;

(8) Experience in special construction;

(9) Safety performance in construction; and

(10) State of labor welfare.

2. Weights for each factor

Evaluation methods are, in general, as follows:

[ Calculation formula ]

(1) x [ (2)+(3) + (4) + (5)+(6) ] + (7)+ (8) + (9) + (10)

70 40 55

[ Range of values for each item]

(1) 178 ~ 14 (2) 120 ~ 60 (3) 60 ~ 30 (4) 184 ~ 0

(5) 200 ~ 26 (6) 50 ~ 10 (7) 675 ~ -300 (8) 200 ~ 0

(9) 0 ~ -15 (10) 5 ~-(15a + 5b)

a: Number of cases of unpaid wages by the firm

b: Number of cases of unpaid wages by a subcontractor, where the firm (primary contractor) is responsible

ANNEX E

DAILY INDUSTRIAL PAPERS

I. GOODS--Track I

--Procurement and Designation

Nikkan-Kensetsu-Kogyo-Shimbun

Nikkan-Kensetsu-Tsushin

Nikkan-Kensetsu-Sangyo-Shimbun

II. CONSTRUCTION--Track II

--Procurement and Designation

Nikkan-Kensetsu-Kogyo-Shimbun

Nikkan-Kensetsu-Tsushin

Nikkan-Kensetsu-Sangyo-Shimbun

III. CONSULTING SERVICES--Track III

--Procurement and Designation

Nikkan-Kensetsu-Kogyo-Shimbun

Nikkan-Kensetsu-Tsushin

Nikkan-Kensetsu-Sangyo-Shimbun

IV. COMBINATION PROCRUEMENTS--Track IV

--Procurement and Designation

Nikkan-Kensetsu-Kogyo-Shimbun

Nikkan-Kensetsu-Tsushin

Nikkan-Kensetsu-Sangyo-Shimbun

EMBASSY OF JAPAN

WASHINGTON, D. C.

July 31, 1991

Dear Secretary Mosbacher:

In relation to the expansion of the project coverage under the Major Projects Arrangements discussed in the Japan-U.S. Construction Review Meeting of May 1991, the Government of Japan wishes to inform the United States Government of its view with regard to the following specific projects of interest to U.S. firms.

1. Fukuoka Airport Terminal Building (West)

The official decision has not yet been made on the construction of this project, because there remain several problems to be solved based upon the consensus with the local community such as a drainage problem. When the official decision is made on construction of the project in the future, the Government of Japan will add this project to the MPA project list.

2. Chubu International Airport

The local community has initiated their ideas for this project. There are, however, a number of issues which need to be settled, including, among others, those of the necessity of such an airport itself, airspace program, appropriate manner of cost-sharing, maintenance of profitability, the acceptance by, and the consensus of, the local community. Therefore, no decision has been made as to whether such an airport be constructed or not.

If the construction of this project becomes feasible and the official decision is made on the construction of the project in the future, the Government of Japan will add the project to the MPA project list.

3. Fukushima Airport

The Government of Japan does not have any plan to redesignate Fukushima Airport from type III airport administered by the local authority to type II administered by the national government. If the official decision should be made on the expansion of the Airport as type II airport in the future, the Government of Japan will add this project to the MPA project list.

4. Saitama YOU And I

There exist various ideas for construction at this moment including a colosseum, exhibition hall, and consolidated governmental office buildings. The basic plan for Saitama YOU And I, however, has not yet been formulated, and neither the disposition of the lot in the central part of the project area nor commissioning entities for the projects have been decided. If specific projects within Saitama YOU And I should be materialized in the future, the Government of Japan will consider adding them to the MPA project list.

5. Second National Diet Library

A decision of the Diet is required to initiate this project. The preliminary study prior to the decision is currently being conducted on the necessity of this type of library and on the selection of the site. When the decision of the Diet is made in the future, the Government of Japan will add the project to the MPA project list, subject to the approval of the Diet.

6. Minami-Aoyama NTT Project

It is difficult to anticipate, at this stage, when this project will take place basically due to the objection by the local community. The Government of Japan, however, will add this project to the MPA project list, when the construction of this project becomes feasible and the plan for the project is approved.

NTT has no plans, in a foreseeable future, for construction of a new building or replacement of existing buildings with new ones, other than this project.

JR Projects

The Government of Japan does not intend to include any JR project in the project coverage under the MPA, the initiation of which takes place after the complete privatization of the JRs concerned.

It is the view of the Government of Japan that, by the time the Ueno Station project is initiated, East JR will be completely privatized. However, the Government of Japan has, as the only exceptional measure, included this project in the MPA project list despite its basic position as stated above.

Sincerely,

Ryohei Murata

Ambassador of Japan

The Honorable

Robert A. Mosbacher

Secretary of Commerce

Washington, D.C. 20230

EMBASSY OF JAPAN

WASHINGTON, D. C.

July 31, 1991

Dear Secretary Mosbacher:

It is my pleasure to present you with the attached letter from the President of Nippon Telegraph and Telephone Corporation (NTT) to the Vice Minister of Posts and Telecommunications regarding the Minami-Aoyama NTT Project.

This letter confirms that when the construction of this project becomes feasible and the plan for the project is approved, the project will be added to the MPA project list and appropriate MPA procedures will be followed, as committed in my July 31 letter to you in relation to the expansion of the project coverage.

Sincerely,

Ryohei Murata

Ambassador of Japan

The Honorable

Robert A. Mosbacher

Secretary of Commerce

Washington, D.C. 20230

Attachment

July 31, 1991

Mr. Taizo Nakamura

Vice Minister

Ministry of Posts

and Telecommunications

Dear Vice Minister Nakamura,

In relation to the expansion of the project coverage under the Major Projects Arrangements (hereinafter referred to as the "MPA") discussed in the Japan-U.S. Construction Review Meeting of May 1991, NTT wishes to state the result of the deliberation on Minami-Aoyama NTT Project with full consideration of the importance attached to the Review Meeting mentioned above, as follows:

Minami-Aoyama NTT Project is a building construction project, plan of which is made by NTT Urban Development Co., a subsidiary company of NTT. The official decision has not yet been made on this construction project, because there remain some problems to be solved based upon the consensus with the local community.

NTT, however, will follow necessary and appropriate procedures in implementing the project, when the project is added to the MPA list on the basis that the construction of the project become feasible and the plan for the project be approved by relevant authorities.

Sincerely,

/s/

Masashi Kojima

President

Nippon Telegraph

and Telephone Corporation

This is the English translation of the Japanese original dated July 31, 1991

UNITED STATES DEPARTMENT OF COMMERCE

The Under Secretary for InternationalTrade

Washington. D.C. 20230

July 31, 1991

Mr. Sadayuki Hayashi

Director-General

Economic Affairs Bureau

Ministry of Foreign Affairs

2-2-1 Kasumigaseki

Chiyoda-ku

Tokyo 100, Japan

Dear Mr. Hayashi:

The satisfactory conclusion of the Major Projects Arrangements review will make an important contribution to the efforts of U.S. firms to gain greater access to the Japanese construction market.

We recognize the Government of Japan's position that action by the U.S. Government to restrict access by Japanese construction firms to U.S. federal government construction projects will result in its suspension of the current Major Projects Arrangements (MPA).

Based upon this recognition, I will be discussing with the U.S. Department of Transportation the current status of its implementation of the Aviation Safety and Capacity Expansion Act of 1990 (Act).

The public interests served by the continued implementation of the current MPA, in my view, could serve as a basis for the Department of Transportation to determine, within the discretion provided by the law, that waivers might be granted with respect to Japanese construction firms and imports.

It is my intention to promptly inform you of the status of the Department of Transportation's response to my inquiry.

I hope to be able to inform you that the Department of Transportation's implementation of the Act will not result in any adverse impact on Japanese participation in U.S. government public works. An impact prompting the Government of Japan to suspend the operation of the MPA would not be in the interest of our countries.

Sincerely,

J. Michael Farren

cc: Mr. Takao Nagai, Director, Aerodome Department, Ministry of Transport

Mr. Noboru Ban, Director-General, Economic Affairs Bureau,Ministry of Construction


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.