Skip to main content

This page has been translated using TexTra by NICT. Please note that the translation may not be completely accurate.
If you find any mistranslations, we appreciate your feedback on the "Request form for improving the automatic translation ".

Digital Agency Information Systems procurement Reform Study Meeting (4th)

Overview

  • Date and time: Monday, October 3, 2022, from 13:00 to 15:00
  • Location: Online
  • Agenda:
    1. Opening
    2. Proceedings
      1. Procedures for the 4th Review Meeting
      2. Summary of each discussion point
      3. Examples of Efforts in Local local government
      4. Free discussion
    3. Adjournment

Materials

Relevant policies

Ensuring fairness and transparency in procurement / procurement reform to utilize new technologies

Summary of proceedings

Date

Monday, October 3, 2022, from 1:00 p.m. to 3:00 p.m.

Location

Online (Teams)

Members in attendance

Member Kajikawa, Member Arikawa, Member Kawazawa, Member Kimura, Member Sakashita, Member Sumiya

Summary of proceedings

The secretariat explained "B-1 Expansion of Entry Opportunities for SMEs and Startup Companies, etc.", and after explaining the points of discussion, we made a transition for free discussion. After that, representatives of the Tokyo Metropolitan Government and the Kobe City Government made presentations and exchanged questions as representatives of the local local government. Finally, the secretariat again explained "Flexibilization of the A-1 Budget System" and "Development of procurement Functions related to Transparency of the C-2 System validation", and after explaining the points of discussion, we made a transition for free discussion. Active opinions were expressed in both discussions. The main opinions from each committee member are as follows.

B-1 "Expanding Entry Opportunities for SMEs and Startup Companies"

  • The use of recommissioning is an effective means, but it is necessary to consider it only in the discussion of system procurement. In the implementation, the standard of the rate of recommissioning should be determined after careful discussion on the points such as raising the security requirements and paying attention so that the number of omission does not increase.

  • If the government introduces a maximum amount of compensation for damage, it must be reasonable to a certain extent. The point is how many cases in the past, for example, the number of cases in which the amount of compensation for damage exceeds the contract amount in the last 5-10 years. If there are few cases, the risk for the government is low. Even if there are more than several cases, for example, if there is a tendency that the amount of compensation for damage exceeds the contract amount only in the case of operations that handle important confidential information, there is a form in which the maximum amount of compensation for damage is not set only in that case. In principle, it may be good to find exceptions while setting a maximum amount.

  • Regarding the request from small and medium-sized enterprises and start-up companies providing SaaS services to agree to the terms of use on the procurement side, I think that there are cases where they process it as a kind of sales contract in the form of license purchase on the site. It may be good to clearly classify it as a type of procurement in the case of information systems.

  • The current system of procurement is based on the principle of equality, but if SMEs and startups are to be utilized, I would like to see a fair system. I would like to see a system in which participation can be made in the same way in consideration of each situation.

  • In the case of a procurement where the period from the plan to the public notice is long, or the development period is shortened due to the delay of the procurement, in this way, the plan is broken, the startup cannot touch it, so please stop it.

  • The reason why startups and SMEs are interested in public procurement is because they want to gain credibility. It is what the government wants to increase the number of companies that compete by creating opportunities for them to enter. Unless competition increases, the Japanese economy will not be revitalized.

  • In the discussion of the digital marketplace, some participants in the local local government expressed concern about how to consider the risk of startup bankruptcies. Please also check how foreign countries are responding to bring startups into the public procurement.

  • Regarding the establishment of the upper limit of compensation for damage, there is an example in which a contract model with no upper limit has been used for a long time, following the precedent. We would like you to set the upper limit based on reasonable judgment.

  • For example, GEPS does not guarantee the operation of Mac OS, which limits the devices that can be used. Therefore, we would like you to consider accessibility.

  • In terms of recommissioning, there is also the problem of a multiple subcontracting structure, and when considering the introduction of a mechanism like a digital marketplace, I think recommissioning does not fit. Originally, I think it is important for public authorities to have procurement capabilities such as cutting contract categories at an appropriate point of responsibility decomposition assuming loose coupling, rather than having public authorities solely take responsibility for prime vendors. However, it is effective in the sense that it is one of the methods in the transition period to promote the participation of startups, so I would like it to be communicated that it will be used when necessary, rather than recommissioning.

  • Overall, bankruptcy risks and entry barriers are discussed in a way that confuses SMEs and start-ups. Please consider whether it is possible to analyze the causes of bankruptcy risks and entry barriers for SMEs and start-ups, respectively.

  • I would like a more thorough explanation of the analysis that subcontracting is better than a consortium or a joint venture.

  • The 2006 Ministry of Finance Notice also states that, in addition to the fact that bulk recommissioning is prohibited as a general rule, or that clear control and management are necessary for partial recommissioning, ensuring the performance system for recommissioning and following up on the actual performance status after ensuring the performance system are the most important. Therefore, it is important to ensure the operation of the system. What is important is to ensure the performance system and follow up on the performance status. I think that recommissioning is the reason why such things have not been done properly. In terms of information systems, unlike other procurement, it would be appreciated if you could make a more detailed analysis of the fact that recommissioning is necessary or effective.

  • Regarding recommissioning, I think it is necessary for the ordering party to be able to confirm the substantial performance status. If there have been problems in the past, there may be problems in cases where the performance status has not been confirmed or explained. If expanding recommissioning is also considered as a measure, it is necessary to expect that the management cost as the ordering party will increase.

  • Instead of recommissioning, it is necessary to make efforts such as digitalization and paperless at the same time. For example, I think that the government is currently working on the promotion of GEPS, etc. for the procurement portal and procurement system, but it is my understanding that it is still slow. At present, we attach an estimate in a file and make it digitalization and paperless, but there is a possibility that the format is different depending on the bureau and the person in charge. Instead of having documents that fit the existing format attached in digitalization and paperless, it may be necessary to unify the format among ministries first or increase the number of optional forms on the company side. I feel that it is very important to make efforts to reduce the cost of the procedure for startups and SMEs by considerably relaxing the format.

  • Relaxation of bidding participation qualifications. Until now, it seems that the qualification for bidding participation has been set for each project, and the risk with the ordering party has been reduced by narrowing down the business operators with financial conditions commensurate with the size of the order. If the ordering party can properly evaluate the content of the proposal, as stated in the principle of comprehensive evaluation and planning competition in the information system field, it may be possible to relax the qualification for bidding participation.

  • If we are to increase the number of subcontractors, I think it is necessary for each ministry and agency or Digital Agency to implement a cycle as a management process. For example, we need to properly evaluate the performance of subcontractors in comprehensive evaluation and planning evaluation. For the next or similar project, we need to ask not only the main contractor but also the subcontractor. We also need to make the request for quotations known to startups.

Efforts by Tokyo Metropolitan Government

  • There was a talk about the Tokyo Metropolitan Government as the first customer, and they showed the number of certified cases and the number of actual procurement cases, but are you following the cases that led to the procurement of other companies? For example, in the earlier discussion, there were opinions from organizations that the bidding participation qualifications differ between the central and local governments, and standardization is necessary. I think it is important for startups to deploy those certified and procurement by the Tokyo Metropolitan Government to companies and other local government, but is there anything that is being addressed or that needs to be improved?

  • (Statement from the Tokyo Metropolitan Government) After certification, interviews are conducted with startups, but there is no compiled material on the employment record in other local government. This is a necessary viewpoint for promoting public procurement of startups in the future, and I would like to refer to it.

  • The story of "Dejima," where employees voluntarily leave, is interesting. I think it will be very stimulating for employees to have contact with start-ups. At this point, it may be necessary to utilize recommissioning, but I think it is also important to have a place where employees and start-ups can properly contact each other. What is the understanding of employees?

  • (Statement from the Tokyo Metropolitan Government) Until now, the department that works with startups has been limited. As a way of thinking in the future, it is not the time when the Tokyo Metropolitan Government alone can think about something and solve Issue. While incorporating products and new things that start-up companies think about, the administration must also upgrade. As one of them, I created Dejima. If you are in CICTokyo, start-ups visit you, which is a stimulus for the staff. I would like to take this opportunity to think about what kind of measures the Tokyo can do while talking with start-ups.

  • It seems that the main contract is used to achieve the policy objectives by utilizing the Policy Discretionary Contract (No. 4 Discretionary Contract) while conducting discretionary contracts flexibly. What kind of consideration is made to ensure fairness?

  • (Statement from the Tokyo Metropolitan Government) The standard contract is the basis, but the point is that the initiatives introduced are unique. As a process, a wide public offering is made, applications are received from business operators, and two or more academic experts examine whether it corresponds to No. 4 Zuikei (whether it is novel) and certify it.

  • It is said that start-ups and SMEs have a high risk of bankruptcy and sometimes fail in procurement. Was this point not discussed in various efforts? Were there any companies that actually went bankrupt?

  • (Statement from Tokyo Metropolitan Government) We recognize that it is a startup support project, so it is not a topic of discussion. We have not heard about the company that went bankrupt.

  • I heard from various ministries and agencies that it is difficult for small companies such as SMEs and startups to exchange documents, but aren't such troubles occurring in the field?

  • (Statement from Tokyo Metropolitan Government) We have not heard it from the site.

Kobe City's Efforts

  • How are administrative officials involved? In particular, in the sense of using new technologies such as AI and blockchains, I think it is an important initiative to work together in demonstration experiments. In order to make it truly effective, it is particularly important to have in-depth relationships, such as by involving officials and cooperating from the point of reviewing their own business processes. However, it may be difficult to actively involve officials who are labor-intensive and busy. I would appreciate if you could tell us how cooperation that actively involves officials is realized like in Issue and what is the current Kobe city.

  • (Statement from Mr. Kobe-shi) To be honest, there was a difficult aspect at first. People in the administration are not used to cooperating with startups. As a measure to connect the administration and startups, the point was to hire external human resources who could act as an intermediary and to have an NPO corporation in the office of Urban Innovation Kobe. By transferring employees who utilized demonstration experiments using startups to another department, it is expanding to utilize them in the department to which they are transferred.

  • In demonstration experiments, when the budget cannot be spent by one local government alone, I think that an initiative like Joint local government, which is carried out while cooperating between procurement, is effective. Is demonstration experiments of Joint procurement through something like Urban Innovation Japan also progressing?

  • (Statement from Mr. Kobe-shi) Urban Innovation Japan (NPO corporation) is promoting horizontal expansion between local government. In terms of cooperation between local government, Kobe-shi has signed a cooperation agreement with Shibuya-ku, and is promoting efforts to conduct demonstration experiments on both sides.

  • Regarding the new product approval system, it is stated in the section of Enforcement Order of the Local Autonomy Act No. 167 (2) (iv) that the city of procurement established a local government system in November 2019 that allows discretionary contracts. Please tell us whether the rules, etc. have been changed. In addition, second, there is a discussion of fairness. Regarding this examination and approval, what is written in the rules about the examination standards and the publication of the examination results?

  • (Statement from Mr. Kobe-shi) The implementation of demonstration experiments, the members of the Examination Board, and the points to be examined are specified in the form of the Implementation Guidelines. The approved ones are made public. Instead of holding a new regulation or a council of rules, the operation of the rules was specified in the Kobe-shi Outline and started anew.

  • Is the publication of the examination results, such as the examination standards or the planning competition of comprehensive evaluation, which shows the difference in what evaluation points has not been institutionalized?

  • (Statement from Mr. Kobe) We comprehensively evaluate the price, novelty, similarity, competitiveness, etc., and announce the results of the certification. We do not disclose individual elements.

  • It is a tight schedule to select a Issue in demonstration experiments and demonstrate it in four to five months. Rather than jointly building a completely new service, is it an effort to customize the service or the service already owned by the startup? In addition, if so, when selecting a Issue, if there is no prospect of who can improve it, I don't think it is possible to recruit a Issue and match it well. Is it a mechanism that can be realized because external human resources and human resources who mediate understand the status of the startup's service and the prospect of improving the Issue?

  • (Statement from Kobe-shi) As for the period, demonstration experiments is longer, so it has been held twice in the first and second half of the year, but this fiscal year it will be held once a year. However, we are aware that if it is longer, the burden on the startup side will be higher. Considering the period, we have existing products, and we often customize them.
    As a trick that demonstration experiments can do well, when Issue is raised, we and the NPO will discuss whether there is a startup that can provide it. We are preparing by putting a filter on it and asking potential startups if they want to apply.

  • I think that startups are widely recruited, but are there any ideas to increase the number of applications? In addition, if there are some ideas that did not make sense, please tell us about them as well.

  • (Statement from Mr. Kobe) We are talking to startups in advance, but as a local city, (startup participation) is sometimes more difficult than in Tokyo. If we expand the aspect of public relations, I think the number of applications will increase.

A-1 Introduction of Flexible Budget System

  • In the current information systems, it is difficult to apply the legal system of advance payment and approximate payment, and I think it is reasonable that partial payment is possible. What to do with the content of inspection and acceptance inspection is related to the content of the contract. If the content of the contract changes to a certain extent, inspection and acceptance inspection will be performed accordingly, and the payment method can be devised within the framework of the budget accounting system, but I think it depends on the examination of the content of the contract. In order to support startups, it is necessary to complement not only the procurement aspect but also loan systems and grant systems, and guarantee systems and insurance systems linked to them. I think it is necessary to discuss and foster and analyze not only procurement.

  • I agree with the direction to flexibly plan improvements by evaluating observation data and market survey results, and to outsource the analytical improvement planning work from a different operator than the maintenance and operation of the application. There was a talk that the procurement work is complicated, but I think it would be better for GEPS to properly work on the analytical improvement planning. There are probably quite a few operators who have left the system in the middle. On the other hand, I think it is also necessary for the orderer and person in charge of the information system to collect and analyze the information data themselves. First of all, I think it is necessary to consider whether the employees themselves can take charge of the analytical improvement planning. On top of that, if it is difficult for the employees themselves to take charge of the system or it is a fairly complex system, I think it is an idea to choose. At that time, what kind of outsourcer will be selected? It is important to build a relationship of trust with major vendors, but for example, for the system of a major vendor, it may be possible to consider utilizing the knowledge of startups in a more strategic and policy sense, such as obtaining advice by making a discretionary contract with multiple startups with new technologies. There was a talk about competitive dialogue and RFI when considering analytical improvement, but I think it is necessary to make design of daily analytical improvement planning work and ad-hoc technical dialogue as a whole. I think it is necessary to consider what kind of resources should be utilized in what part at the time of system procurement. procurement

  • I think that the process of paying after inspection and acceptance inspection is necessary. I think that there was a talk by efficiency about contract administration from the bidding, but I think that it is necessary to consider whether there is room for efficiency for inspection and acceptance inspection. For example, I think that it is necessary to review the process such as whether the form is excessively unified or whether the submission in writing is required.

  • Regarding whether it is necessary to allow multiple payments. In the first place, in the case of private sector, there is a risk of bankruptcy even for large companies, but in the case of the central government, payments are promised to a certain extent, so it should be a transaction that needs to be divided into multiple payments less than in private sector. On the other hand, what is a problem in procurement today is that it is not divided into projects that can be divided into multiple payments among specific individual projects, for example, compensation calculated by unit price is at the end of the fiscal year, or payment is not made even after delivery is completed even though delivery and maintenance and operation are separated. I think it is okay to consider what can be divided into multiple payments from the perspective of the national government. Rather than simply discussing where to divide them, I think it is better to analyze procurement and respond from what can be done.

  • I am in full agreement with the point that the analytical improvement planning work will be procurement to another operator. We need to know what the system is doing. Many companies and local government do not have the documentation. I would like Digital Agency to have it.

  • About estimated payment. Estimated payment leads to a discussion of equality and fairness. Large companies don't need estimated payment, but startups have cash flow problems, so I want them to do it fairly. However, I am concerned about the possibility that individual decisions will be made by each ministry and agency. I would like you to identify examples and consider what kind of rule operation is the most appropriate.

C-2 "Development of procurement Functions Related to Transparent System validation"

  • Monitoring. When there is a problem in a contract or procurement, it is necessary to analyze the cause, take improvement measures, and follow up on whether the improvement measures are taken properly. However, what is important is how to monitor the various improvement measures for the information systems procurement to be established in the future in the same manner as the procurement improvement plan and ex-post evaluation to be increased by the national government's Administrative Reform Secretariat while various improvement measures for the information systems procurement are being established. We would like to see the establishment of a system for monitoring with a two sided policy.

  • I think it is necessary to set rules for prior contact and actively conduct it. Unless rules are set to some extent, it is difficult for persons in charge to contact each other, so clear rules are necessary. As described in the introduction of Kobe City's efforts, I feel that the appointment of external human resources who are familiar with the market is an effective policy for collecting market information. I think it is necessary to consider a combination of the part to be implemented by ourselves and the part to be dependent on external resources.

  • In terms of internal auditing, I think it would be better to increase the advisory function a little more. In the case of the country, there are many organizations in private sector, including the Board of Audit and Ministry of Finance, that perform an auditing function. On the other hand, there are few organizations that provide consultation, and each employee is in trouble, so it would be better to improve the advisory function. However, even if each ministry and agency sets up an advisory organization in the course of discussions, it tends to disappear before you know it every time, and in fact, it is not used so much, and I have an impression that it will gradually become a dual office. There is a consultation system in Personal Information Protection Commission, but if Digital Agency is to create an advisory organization in the same way, I think it would be better to actively go outside and establish a system that is easy to consult.

  • I think there is a reason not to exchange inappropriate prior contact, but in particular, I think that seconded employees from private sector are often a problem. In the case of seconded employees from private sector, the starting point is that they do not know what the national rules are, and I think that they are not aware of the details. I think that it is necessary to create a rules manual that can be understood by seconded employees from private sector.

  • Patents and copyrights appear in the "Points to be validation to Ensure Transparency." There are cases in which companies that saw the Public Offering Guidelines insisted on their own patents, which caused controversy. I would like patents and copyrights to be thoroughly discussed and the rules to be compiled.

  • Regarding the monitoring of internal audits, it is more important to have a function of advising how to use the new guidelines and operate a procurement that meets the purpose while running side by side with the procurement manager, rather than a function of critically checking whether the rules are followed. Rather than having a function of just monitoring, I would like to see it become a function and organization that makes people want to seek help from the procurement manager.

End