Digital Agency Information Systems procurement Reform Study Meeting (6th)

Overview

Date and time: December 20, 2022 (Tue) from 13:00 to 14:30
Location: Online
Agenda:
1. Opening
2. Proceedings
  1. Procedures for the 6th Review Meeting
  2. Recommendations on Digital Marketplaces and Directions for Digital Agency Consideration
  3. Formulation of policies for remaining Issue
  4. Free discussion
3. Adjournment

Materials

Relevant policies

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

Summary of proceedings

Date

December 20, 2022 (Tue) from 1:00 pm to 2:30 pm

Location

Online

Members in attendance

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

Summary of proceedings

Member Sumiya presented the recommendations on the Digital Marketplace (DMP) discussed at the "DMP Open Task Force" hosted by the World Economic Forum Fourth Industrial Revolution Japan Center on Issue B-2 "Development of a System procurement Platform." After that, Digital Agency explained the direction of the DMP study and made a transition for free discussion by each member.
In the second half, the Secretariat explained "Measures for one party Bidding in Digital Agency" and "Open Source", and after the explanation of the points, the transition was held for free discussion. The main opinions from each committee member are as follows.

Recommendations on Digital Marketplaces and Directions for Digital Agency's Research Efforts

I basically agree with the introduction and realization of DMP because it creates a market and increases options, and it creates competition. I also agree with the promotion of consideration while introducing it in Digital Agency, but I think it will be expanded to local government in the future. When implementing it in local government, I think the most overhead is the explanation to the accounting authorities. I would like you to think about how to make it smooth.
Since application software will be introduced, BPR will be involved. If we do not show in the guidelines that BPR will be properly implemented and applications will be introduced, I think that social implementation will be difficult.
Since it is a SaaS, it is necessary to include whether or not data governance such as the part of the security and the location of the data is properly effective in the options. In particular, we would like the data location to be described in the rules.
I agree with the introduction and enforcement. Regarding the outcome, although it is possible to grasp the decrease in procurement prices by example, how do you grasp it as a whole? I think it is possible to compare the agreed price of the Framework Agreement (FA) with the conventional unit price, but even if the effect of the first year appears, how do you find the continuous effect? After all, the effect at the time of introduction in the first year is the price, but after the second year, it is better to focus on the effect a little, such as increasing the number of participating organizations and decreasing the unit price accordingly.
I think it is realistic to target SaaS and procurement of cloud support this time, but on the other hand, since the effect in the United Kingdom is the effect of the whole, I think it is better to show how much effect is expected by targeting two this time. It is a waste if there is an effect but there is no effect, so it is better to think about how much effect should be targeted in advance.
There was a discussion about excluding LGWAN connections from DMP posting. We agreed that Internet environments should be the default as a general rule, but we had the impression that excluding them from DMP posting would not be too strict. I think there is a risk of complaints due to exclusion, so I think it is a desirable process that SaaS premised on such connections will not be used and will be eliminated from the market.
I think that how to set up the registration process in the part of the information registration of the business operator is a balance of the administrative burden on the checking organization side, but in anticipation that a wide range of public authorities will use it, I think that users will feel that there is a merit in participating if the background check and the check of the terms and conditions of use are performed by the Digital Agency side to some extent. I think that it is important to increase the number of participating organizations, so it is possible to consider reducing the administrative burden on the using organization side.
Regarding price registration and change, I think that it may be raised or lowered for a certain period of time as a campaign. It may be possible to respond flexibly by raising or lowering the price up to the upper limit at the time of conclusion of FA.
It says that all prices are disclosed to public authorities and are not disclosed to other operators, but is it correct to say that they are disclosed as contract information? If contract information is not disclosed, there will be a problem of transparency of public procurement information, so I think it is necessary to disclose it.
It is stated that competitiveness is secured by comparing searches, but I think that how to ensure that the comparison of searches is conducted in a manner that is worthy of substantial competition is one Issue.
Regarding the Digital Agency, Committee Member Sumiya explained that the procurement procedures should be organized in the system section, but it would be better to promptly respond to the points that should be shared across the board, such as the unification of FA and documents. If the DMP mechanism is a discretionary contract based on quotation, I think it can be operated at the demonstration stage without deep organization. I think it is good to think about what can be operated without such organization.
I agree with DMP as a system. I think it is good to start with SaaS as a target of DMP, but when I look at examples of foreign countries, there are some that target a slightly wider range (such as construction services). In fact, I think it has affinity with Agile and Government Cloud, so I would like to advance so that they can be targeted in the long run.
Regarding page 11 of the document, it is necessary to consider how much the range of public authorities where DMP will be started this time can be expanded in relation to the Local Autonomy Act, etc., while comparing it with law.
It is said that the due diligence (qualifications check) is only to be sworn in by the business operator, but regarding the anti-company check, there are some that are checked internally at the stage of the registration examination of the ranking, so I think that it is better to implement that.
If Digital Agency does not check the terms of use at all, I think it will be difficult to use it if local government is also involved. At least, it is better to extract important points and have the business operator present them. For example, it is better to have a manual that uniformly shows the scope of responsibility, the scope of exemption, and the handling of personal data, and to have it presented at the time of registration.
There are some concerns about the prototype. When looking at the prototype itself, it is emphasized that it is easier to use on the side of the registered operator. However, DMP is only for the convenience of the procurement side, and as pointed out at the beginning, it is transparent and quick procurement. We would like to ask you to emphasize transparent security. In particular, if tagging is provided as a function, the place where it is described seriously will lose money, and manuals and consults for countermeasures will be circulated, and competition will work in unnecessary places. Therefore, I think it is better to make it a system design that is more fair and that new entrants can feel a sense of fairness. I think there are various discussions, but for example, at the final search stage, I think it is an idea to search without seeing the operator.
When making a procurement after creating a catalog, etc., there is a problem that specifications are often made for a specific service, and I thought that such a problem is likely to occur even with DMP. However, such a problem is also a story of actual procurement until now, and only public authorities, which is easy to access to organization, is prioritized, and specifications are made for it, and it may procurement without knowing it. At first glance, it seems to be a problem of DMP, but I think there is actually a problem of procurement as a whole, so I would like you to carefully analyze and proceed so that the introduction of this system will not be stopped by criticism around that.
I basically agree with the introduction and enforcement of DMP. I think that it is necessary to carefully examine the outcome at the stage of enforcement after introduction, because it is essential to carefully examine the outcome in order to obtain the approval of each government agency, etc., at the time of introduction.
One point I would like to emphasize is that the purpose of the introduction of DMP is to increase the number of business operators, mainly start-up companies, as much as possible, and to reduce the burden on ordering government agencies and business operators. I believe that this system is being considered for this purpose. However, if it is possible to do so by devising various ways to find new business operators for the catalog site, it may not be so easy because it will depend on what the current bidding system itself has done. As pointed out by each committee member, in order to ensure transparency and fairness in the selection of business operators, it is necessary to make the design of the system so that transparency and fairness can be properly secured without insisting on cost reduction. I believe that the most important point to be paid attention to when conducting the design of the system from now on is how to ensure transparency and fairness in the selection process of business operators registered on the catalog site. I hope that you will work on it thoroughly.
It is important to consider how to position DMP in the overall procurement system based on the consistency and relationship with other procurement systems and systems related to security, and how to cooperate with various systems, rather than considering what kind of system should be used only in the digital marketplace. Although it was out of the scope of consideration of the "DMP Open Task Force" this time, I would like you to continue to consider this point toward the introduction.

About "one party Bidding in Digital Agency" and "Open Source"

The problem of one party bidding appeared in the course of a major review of discretionary contracts in 2006, and the term one party bidding came into focus. The fact that one party bidding must be eliminated is a Issue linked to the fundamental problem of how to ensure fairness, economic efficiency, and transparency, which are at the root of public contracts. Partly because of this, ministries and agencies have been working together with the Administrative Reform Secretariat since 2008 to improve the one party bidding problem. In the past five or six years, in order to create more efficient improvement measures, we have conducted a detailed analysis of the causes of one party bidding for each contract type, proposed improvement measures based on the cause analysis, and set up liaison meetings and study meetings to share information among ministries and agencies. Unfortunately, only the information systems procurement among the contract types has been fraught with problems such as vendor lock-in, and the reform has been delayed the most. Under such circumstances, in February 2022 this year, the JFTC conducted a cause analysis based on a fact-finding survey and a cause analysis focusing on vendor lock-in to some extent, and made specific recommendations based on the results. Regarding vendor lock-in in one party bidding for information systems, which has been delayed the most, I think that the most required approach to the one party bidding problem is to examine the actual situation, take the suggestions that the JFTC has made, and start analyzing and making specific recommendations so as to create guidelines that will be a reference not only for Digital Agency but also for government agency.
In the analysis of one party bidding, we often hear from business operators, but when we hear from the procurement Representative, the circumstances are often different. Therefore, we think that it is better to confirm with the procurement Representative and consider measures.
I agree with the idea of advancing open source step by step. Since there are problems with the scope and security of confidential information, I think there is a sense of level at which each can be disclosed. However, in order to expand the image of open source as much as possible, I think it is better to expand the scope of disclosure to at least local government. In addition to local government, if possible, I think it is an idea to create a community in which only those who agree to certain rules, for example, confidentiality, and those who can prove the identity of the person who receives the information participate, and disclose it there.
For systems that are not secret agreements, I think it would be good to create a system that can be shared with each other. For example, when a particular ministry and agency create an open source system, they may only target the system that they want to open source. Instead, if each ministry and agency can create a development system in which they present a list of systems that they have shared, point out the content of this system to each other, and if possible, they want this system to be open, I think open source will spread within the ministry and agency and will be widely used.
In order to prevent one party bidding, I think that the main subject of consideration this time is to analyze and review the written specifications. As a measure to prevent one party bidding, I think that there are measures other than the review of the written specifications, such as additional approaches or RFI if there are few acquirers of the bidding manual. I think that it is needless to say, but with the current content of the written specifications, it can be read if it is implemented only by organizing the matters to be checked in the written specifications, so I think that it is better to consider implementing it after organizing the matters to be checked and the process.
It says that they plan to ask contractors to utilize open source, but from the perspective of the contractor, if they are asked to do so while they do not know how it will be utilized, they are concerned about whether they will be able to provide it properly, so I think careful dialogue is necessary. I think it would be a waste if it reduced the motivation to participate.
One party bidding is not a bad thing at all. The problem is whether or not the situation is such that only one party can bid when the specifications are submitted. I would like you to conduct not only the analysis of the specifications but also the analysis of the process. There are examples of one party bidding due to the fact that it was rewritten at the request of the procurement Division.
With regard to open source, President Biden has signed an executive order on the management of open source, and the U.S. has adopted the SBOM (software bill of materials) method. Japan should thoroughly implement this study and try to capture the quality of open source.
Regarding one party bidding, I think it is important not only to analyze the specifications but also to analyze whether the structure is such that only one party can participate from the viewpoint of architecture. For example, according to the JFTC report, when looking at the network layer, if there are only a few operators who have proposed this network, I think that there is a structural situation in the IT system procurement where the specifications must be tailored to the operators. I think that it is extremely important to develop human resources who can analyze such points and share viewpoints.
I agree with the idea of advancing open source step by step. However, when it comes to how to share source code at that time, I think there are points to be worked out about how to share source code and collaborate between administrations, such as what kind of platform and mechanism to use, and making it possible to make pull requests like GitHub so that they can improve each other. In addition, from the viewpoint of UI/UX, I think it is difficult for the government to create a shared platform on its own, so it may be good to actively use the services of private sector.
I think that OSS is not just about sharing open source with each other, but is also very closely related to the community, knowledge exchange, and innovation that will grow in it. Not only the United States but also the People's Republic of China is very focused on creating open source communities and rules. I think that the public procurement of OSS is very closely intertwined with how to position open source in the Japanese market in terms of future competitiveness and industrial policy. The fact that there are a certain number of people in the government who know the culture of the open source community and how to collaborate will lead to an update of the Japanese central government and local administrations, so it may be possible to consider incorporating a working environment and incentives in the ministries and administrations so that they can participate more actively in the open source community, as private sector companies already do.

Other comments and additional opinions on the whole

Open source is sometimes discussed on the premise that disclosure between ministries and agencies may be problematic in terms of rights, but in the first place, the procurement of a country is carried out on a national basis, and the contractor is the country regardless of each ministry or agency conducting the procurement. Strictly speaking, the points at issue are different. In theory, the disclosure of source between ministries and agencies is an internal problem and should not be related in terms of rights. The understanding of the business operator and the actual situation are different, so it is important to appeal this point toward the elimination of the problem.

End