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Second Meeting of the Digital Agency Information Systems Procurement Reform Study Panel

Last Updated:

Outline

  • Date and time: August 1, 2022 (Monday) 13:00 to 14:30
  • Location: online
  • Agenda:
    • 1. Opening
    • 2. Proceedings
      • 1. Procedures for the 2nd Review Meeting and thereafter
      • 2. Overview of Each Topic
      • 3. Free Discussion
    • 3) Closing

Data

Relevant policy

Summary of the proceedings

Date and time

Monday, August 1, 2022 from 13:00 to 14:30

Place

On-line

Attending committee member

Member Kajikawa, Member Arikawa, Member Kawasawa, Member Kimura, Member Sakashita, Member Sumiya

Summary of the proceedings

Committee Member Sumiya reported on Issue B-2 "Development of a System Procurement Platform," focusing on the Digital Marketplace. After that, the Secretariat explained A-3 "Agile Development and System Procurement and Contracts Including Quasi-Entrustment Contracts," and C-1 "Adoption of a Architecture to Prevent vender lock-in." After explaining each issue, the discussion moved into a free discussion, and opinions were actively expressed. The main opinions from each committee member are as follows.

B-2 Development of a System Procurement Platform

  • Committee Member Sumiya explained "Document 2: Overview of the Digital Marketplace and Policy for Consideration".
  • It should be noted that the digital marketplace, which has a history of about 30 years in the UK, will be introduced in Japan at a single step. First, it is necessary to consider the case where the management method called P3RM adopted in the UK is applied in Japan. In the case of the UK, it is operated by charging 0.6% of the procurement amount as a usage fee, but in Japan, it is also necessary to consider how to do it.
  • When it comes to reducing process costs, internal organizational costs are higher than external costs. Since the point is how much can be reduced, I think it is necessary to actually try and verify it.
  • I support the introduction of the digital marketplace, but I am concerned about two points: legal issues and whether it can be used immediately after introduction. Even if legal issues can be solved in Digital Agency, it will take time for it to spread in the field. I believe that it will be used on a small scale at first, and gradually increase and expand the examples.
  • I support the introduction of the digital marketplace, but depending on how it is implemented, it may not be used. How to realize it in a way that each ministry and agency actually participates is a challenge. Although the separation and division of orders for information systems has been pointed out for a long time, it has not been realized, but I recognize that the possibility of realization has increased due to changes in the situation. It is necessary to design to expand the use while building up a track record with ministries, local governments, and other public institutions. In addition, since the digital marketplace cannot cover everything, it is also necessary to explain what kind of procurement is covered.
  • At present, the Administrative Reform Secretariat, in order to ensure competitiveness, is investigating and trying to grasp the number of business operators that can receive orders in each contract ordering field. I understand that the marketplace study is an effort in the same trend. The issue is to ensure fairness and transparency at the first stage of registering on the marketplace and the second stage of selecting from registered business operators and placing orders. If these can be secured, I think we can introduce it without conflict with the current legal system.

A-3 Approaches to Procurement and Contracts Including Agile Development and Quasi-Entrustment Contracts

  • Regarding the handling of limited tender contracts in other countries, the implementation conditions in the United Kingdom and the United States, and the cases of VFM (value for money) in Australia are cited. It may mean that careful checks are required at both the entrance and exit of a contract because limited tender contracts are irregular and have many problems. Therefore, it can be said that "excellent cases of limited tender contracts" is a troubling expression. Limited tender contracts are also a form of contract recognized under the Accounting Act, and there is no problem in highlighting them as appropriate cases when they meet the requirements. However, the expression "excellent cases" may be misleading.
  • There is a need for guidelines on contract changes, but basically, if it is clearly stipulated in the Civil Law, even in the case of public-private contracts, it is interpreted and operated based on that. Therefore, it may be difficult to include content that is written in the Civil Law but not written in the Accounting Law only for contract changes. I would like you to create guidelines while keeping in mind that major principles of the Civil Law, including default, are not written in the Accounting Law.
  • The Board of Audit of Japan pointed out that long-term contracts are not available for cloud services, but I don't think that's the case. In the case pointed out by the Board of Audit of Japan, the problem is that long-term contracts are made for software and hardware together with telecommunications costs, and I don't think it means that cloud services cannot be procured.
  • In limited tender contracts in anticipation of agile development, it may be a requirement that performance by a person other than the contractor is "disadvantageous." For this reason, I think that there may be criteria for distinguishing between limited tender contracts and contract changes that require the sameness of the contract even in the current system.
  • In relation to A-3 (a), there is an argument that it may be better to make Agile development a service contract even in private contracts. If we are going to proceed with a quasi-mandate contract as a policy, I think it is better to decide. Even if it is called a quasi-mandate contract, there are cases that are similar to fulfillment percentage type in which a reward is paid for the work performed, or a contract in which a reward is paid for the achievement of a certain deliverable. Therefore, it is necessary to create a model for the administrative agency by specifying what form should be adopted in Agile. In addition, in the context of cloud services, there was talk about using a reseller as an intermediate business, but there is also a discussion that the use of a reseller is a re-consignment, so there is a concern that it is necessary to adjust with the prohibition of re-consignment.
  • As for long-term contracts, water and gas, the Internet, and telecommunications can be contracted at present. However, since there are many cloud services that have spread as infrastructure in the real world, it is better to make it clear on the laws and regulations that these can also be used.
  • Since there is often a lack of understanding of laws and regulations in cases of contract amendments and single tendering, the establishment of guidelines is considered to be effective.
  • As for the contract system, the UK has created a contract database and published examples in it. The UK has Certificates of Understanding between vendors and governments for discounts, which is useful. In 2003, the Budget Bureau in Ministry of Finance created a document called the Budgetary Assessment Policy. Since that year, the system has been changed so that it can be concluded in multiple periods, so I think it would be good to refer to the discussion when considering it.
  • We are also working on quasi-mandate contracts, and our policy is to produce results while moving. In particular, the specifications are not included in the contract but are attached as an attachment so as not to be hard law. In addition, it is necessary to pay attention not to become a disguised contract, so it is clearly stated in the contract that it is not a command and order. It is clearly stated that the ordering party takes back all intellectual property after delivery. Regarding the deadline, we have a policy of terminating the contract if the target is not achieved within three to six months.
  • With regard to A-3 (a), I basically agree with the measures written by the Secretariat. Document 1 "How to proceed with the 2nd Review Meeting and the outline of each discussion point" states on page 19 that the acceptance inspection is "performed in each sprint", but in order to avoid making Agile development itself heavy, I think that the acceptance inspection in each sprint should be limited to confirmation of only important parts, and consideration should be given to weighting, such as by leaving the final ones at the end. In addition, although there are many policies for creating guidelines, I felt that it is necessary for both the public and private sectors to be able to access them, and for the guidelines themselves to be updated by receiving feedback from users so that they do not become old. In addition, regarding training, training of the Product Owner is important, but understanding of the surroundings and organizational building are also important. For example, in agile development, if the surroundings interfere or the boss requests detailed reports, the Product Owner will not be able to exercise leadership and agile development will not be possible. I think it is important to have people over a certain year acquire knowledge through training, while having other members deepen their understanding.
  • We would like to confirm our basic understanding of the comments regarding long-term renewal contracts. The basis of the view on multi-year contracts in the first place is that, while there is a major principle in the Constitution that the people and the Diet, which is a representative of the people, should control the budget on a single-year basis, the Finance Act clearly states four types of contracts as exceptions: acts resulting in the assumption of national treasury obligations, continuation expenses, carryover without prior notice, and carryover due to accidents. However, for electricity and water charges, for which the same amount of debt is borne every year with a similar amount of money, the Finance Act lists four types of contracts as exceptions to the exceptions under the Finance Act based on the enumeration principle. The reason why the National Assembly and the Board of Audit raised an issue around 2002 was that long-term contracts were used in such a way as to avoid acts resulting in the assumption of national treasury obligations. If long-term contracts or the like are to be used for the burden of system-related debts in the future, I believe that there will be a problem unless the matter is discussed in the Diet and clearly stated in a law so that it becomes an exception to the constitutional exception.
  • Long-Term contracts are listed in Article 102 (2) of the current Provisional Order, but there are cases in local governments where they are described more widely, so we believe that those examples will be helpful.
  • Regarding long-term contracts, we talked about rules based on the Constitution, but since it is an exceptional treatment, we must include a specific list. We should examine whether it is really necessary and consider whether to upload it to the list, and the form of the law must be based on the law. We would like you to carefully examine the contents of the contract and consider including it in the list of government ordinances in accordance with the original rule system to the extent that it does not violate the law. Also, exploring the third way is a little dangerous, so I would like you to avoid it if possible.
  • The framework agreement method has the advantage of separating the agreement from the order and finding a supplier who can accept the order in advance. It is also considered to be beneficial for the competitiveness of procurement. I would like to consider and realize it with as much speed as possible.

C-1 Adoption of Architecture to Prevent vender lock-in

  • I think it is very important to make use of existing open-source software. It is also important to make the software developed by the governments as open source so that other governments can also use it in the sense of eliminating vender lock-in. I think the direction of basically making it open except for highly confidential matters should be thoroughly pursued. In addition, when promoting loose coupling of systems, it is very important to ensure interoperability. For example, the Digital Ad Hoc Administrative Investigation Commission has formulated five digital principles. However, I think it is important to establish and spread a mechanism in Japan so that administrative officers do not confuse the point of view that SaaS differs in the form of paying for the license in relation to the digital marketplace this time. In addition, regarding the intellectual property of C-1 (b), the Intellectual Property Rights Guide of the United Kingdom is useful. However, I think it is important to establish and spread a mechanism in Japan so that administrative officers do not confuse the point of view that SaaS differs in the form of paying for the license in relation to the digital marketplace this time. Also, regarding the previous point, I forgot to mention one word, but I would like to emphasize that the introduction of the framework agreement method should be promoted with a sense of speed. Digital Agency
  • Regarding vender lock-in, there are no IT knowledgeable staff who can write RFPs. The biggest problem is that public call is made with ambiguous requirements and specifications that are advantageous to specific business operators. It is important to develop human resources. In the United Kingdom, there is a project management method called prince2. Seven themes appear in it, and they generally match the Architecture diagram of society5.0. I would like you to consider how to develop human resources by referring to such things.
  • The Bayh-Dole method is good if it can be open-sourced, but there is a concern that it may reduce the number of successful people. The Bayh-Dole method is difficult to use in the field. Although the rights are completely left to the business operator, it is necessary to report the usage status of the rights. When exporting overseas, the consent of the government is required. The government's right to sublicense is recognized as a reason for companies to hesitate. I think the Bayh-Dole method itself has played an important role, but it is somewhat outdated. It may be necessary to adjust the part of intellectual property after changing the system to one that is a little easier to adopt the private contract form.
  • In the review of administrative projects, some expressed concerns about security in the cloud, and I think it is difficult to open source. Digital Agency should carefully explain to each ministry, and guide them to open source for those without security issues. Otherwise, it may not be possible to spread it as a government-wide effort. In addition, data portability is extremely important. I feel that bidding is being conducted in a situation where it is extremely difficult to do so at present, including the inspection of materials when a business operator considers a bid. At this point, from the viewpoint of data portability, it may be appropriate to proceed with individual examinations of various projects.
  • In the vender lock-in discussion, we felt that the secretariat might also be concerned about the knowledge of the ordering party. I felt that the major premise of the discussion would be an enlightenment activity on how to enhance the knowledge of the ordering party in the future, and how to incorporate the knowledge and awareness of the entire organization, not just the department in charge of digital, into the administrative actions themselves. We would like to discuss with the secretariat about the consultation service, inter-ministry cooperation, etc.

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