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Follow-up to the Fiscal 2023 Investigative Commission for Procurement Reform of Digital Agency Information

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Outline

  • Date and time: March 12, 2024 (Tue) 16:00 to 17:00
  • Place: Digital Agency Common medium meeting room
  • Agenda:
    • 1. Opening
    • 2. Proceedings
      • 1. Follow-up on the 2023 Digital Agency Information Systems Procurement Reform
      • 2. Free Discussion
    • 3) Closing

Data

Relevant policy

Summary of the proceedings

Date and time

  • Tuesday, March 12, 2024 from 16:00 to 17:00

Place

  • Digital Agency Common Medium Meeting Room

Attending committee member

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

Summary of the proceedings

Dr. Digital Agency, Senior Researcher for Kadoma, gave an opening address. Based on Appendix 1, the Secretariat gave an overview of the results of the proposed measures implemented this fiscal year, major challenges in difficult measures, and how to proceed with measures in the next fiscal year and beyond. Then, free discussions were held among the Committee members.
Then, Dr. Kajikawa, Chair, reviewed and summarized the discussions. Finally, Dr. Tomiyasu Director-General, Digital Agency, commented on Digital Agency's future policies based on the discussions of the Study Group.

Opening Remarks by Dr. Digital Agency, Senior Researcher, Kadoma

Last year, a final report was compiled at the seventh meeting of the Digital Agency Information Systems Procurement Reform Study Group. In the current fiscal year, various initiatives have been implemented in line with the directions of the five measures indicated in the report. Today, as a follow-up to this report, we would like to report on the implementation status of the initiatives over the past year, the points that we recognize as important issues, and so on. We would like to have your suggestions on future directions and other matters from various perspectives. In addition, we also conducted a hearing survey of major related industry organizations and received various comments and requests. We would like to publish the contents of today's report and discussions, which will be useful for further promoting information systems procurement reform in the public sector, and will be a report on the efforts of Digital Agency.

After the Secretariat's briefing, the main opinions expressed by each member were as follows.

Free discussion

  • It can be evaluated that efforts are progressing smoothly as a whole in accordance with the direction of the five measures indicated in last year's final report.
  • Steady progress is being made on the development of procurement specification templates, the establishment of consultation desks, the introduction of checklists to prevent vendor lock-in, and the exchange of opinions and sharing of information with industry organizations.
  • On the other hand, we have the impression that relatively difficult issues, such as the demonstration of Digital Marketplace (DMP), agile development efforts, and consideration of setting an upper limit for damages, are still in the middle of the road. This is partly inevitable because we are required to respond to many issues with limited time and personnel arrangements, but we hope that in the future, we will also give priority to tackling highly difficult issues that are recognized as necessary.
  • Regarding agile development, it is necessary to examine the ideal way of efficient and effective implementation by promoting the analysis of the differences between agile development and general development methods such as the purpose, definition, and system design of agile development, advantages and disadvantages, and precedents including foreign countries.
  • With regard to technical dialogue, it is necessary to analyze precedents, including those of foreign countries, and to consider efficient and effective implementation.
  • It may be a good idea to proceed with legal consideration while clarifying the necessity and reasons for its introduction in public contracts, by grasping what purposes and aims are used in private contracts regarding the setting of limits on damages and quasi-mandate contracts in agile development, and analyzing whether they apply to public contracts and what kinds of differences there are, etc.
  • The overall direction of the efforts is not strange.
  • With regard to the development of an environment for agile development, what is elementary but important are efforts to identify risks at the initial stage of a project and to enhance communication by showing your face at online meetings. In public procurement, some large-scale projects are started only by confirming the proposal without presentation. Therefore, it is necessary to ensure sufficient communication at the start of a project. In order for the ordering party to recognize this point, it is necessary to add to the existing guidelines based on the past performance of agile development. In addition, in order for the business operator to recognize the necessity of communication costs at the beginning of a project, it should be clearly indicated in the procurement specifications.
  • It is important to secure a larger number of personnel involved in requirements definition from the beginning, and to take initiatives to verbalize requirements definition, goal setting, etc. Even if it is not clearly stated like in waterfall development, it may be necessary to spend more time on requirements definition in agile development.
  • It has been pointed out that the selection of a quasi-delegation contract in agile development makes it impossible to ask for responsibility for the completion of deliverables. This is certainly an issue, but on the other hand, there is also a risk of a situation where priority is given only to completion without pursuing ideal development results, and a low-quality system is delivered, and subsequent development must proceed on that premise. In any case, it is better to examine the ideal form of a quasi-delegation contract in individual contracts. It is necessary to examine how risks should be shared between the ordering party and the ordered party.
  • Regarding the development of consultation desks, it is important to improve the capabilities of the people in charge in each ministry and agency. It is good to make operational arrangements, such as handling primary consultations in each ministry and agency instead of the digital ministry and agency accepting all consultations from other ministries and agencies, accepting only the consultations that cannot be solved in a Digital Agency, and holding workshops for the people in charge of consultations, including the ministries and agencies.
  • Organizing the procurement specifications database can be evaluated as a very important effort. If information on suppliers is also added, it may lead to the dissemination of future projects and the promotion of corporate participation, etc.
  • It is also commendable that multiple measures are progressing simultaneously and in parallel, and that initiatives are being communicated to the private sector. They are taking on challenges that we have always wanted them to tackle, such as the procurement specification database and the vendor lock-in prevention checklist.
  • The private sector also has difficulty with quasi-mandate contracts in agile development. Although there are contract templates prepared by the Information-Technology Promotion Agency (IPA), they give the impression that the content is suitable for large-scale projects. Therefore, if a model that can handle small-scale projects is prepared in Digital Agency, it may lead to promotion of the use of quasi-mandate contracts.
  • Waterfall development is preferable for some projects. It may be a good idea to establish standards in each Digital Agency to determine the suitability of the development method according to the characteristics of the project. It would be good if agile development could be introduced to appropriate projects without forcibly selecting it. In addition, the standards may eliminate the variation in judgment by each person in charge of ordering.
  • Risk management remains an issue regarding the setting of an upper limit for damages. In recent years, however, it has been included in contracts for private companies, and we believe it is time to consider it in light of the times.
  • It may be a good idea to consider setting a limit on the amount of compensation for damage, starting with what can be done. It may be a good idea to try to set a limit on projects with a low amount of money and low risk, without focusing too much on details at first, as it is difficult to decide when considering both large and small projects at the same time.
  • I have heard that there are cases where start-up companies, which are not used to government projects, have problems in communicating with the Order Section. It is necessary to understand the corporate culture of start-ups and select appropriate start-up companies with appropriate procurement. In addition, there are cases where conventional large companies are more appropriate for procurement. The participation of start-up companies is very good, but we should keep in mind that start-up companies do not surpass us in everything, and we should judge their aptitude.
  • The introduction of a checklist for preventing vender lock-in is also commendable. On the other hand, I have heard that there are projects that are not properly utilized. In addition, since the vender lock-in is not necessarily poor, it is good to consider measures while discussing the future of vender lock-in, such as how to deal with cases where unilateral bidding continues for several years, and how to negotiate prices in the case of discretionary contracts.
  • The graphs show the results of the expansion of opportunities for participation by SMEs, start-up companies, etc., and of unilateral bidding. It is important to verbalize the causes of changes in the figures and to have other ministries and agencies make similar efforts as effective initiatives.
  • Regarding agile development, there are successful examples of agile adoption in the financial industry. It may be a good idea to consider what is lacking by interviewing companies with a track record of success and comparing them with their current initiatives.
  • We believe that it is necessary to examine the next steps to be taken after evaluating the degree to which Digital Agency's current efforts have been achieved, by comparing DMPs with overseas examples, such as the Senior Responsible Owner of the UK's Government Digital Service (GDS) and the Australian Digital Transformation Agency (DTA).

Additional opinion

  • In the case of Agile development, a lump-sum subcontract contract imposes a risk on the contractor, making it difficult for companies with high technological capabilities to enter the market. As a result, the original purpose of the ordering party is not achieved. It may be better to discuss from the perspective of how to promote risk sharing between the ordering party and the contractor, rather than the idea that either party bears the risk.
  • With regard to prevention of vender lock-in, for large-scale and vender lock-in projects in which it is difficult for non-major companies to enter, there is a way to make procurement more effective by selecting and negotiating a discretionary contract. Even if general competitive bidding is implemented, it may be advisable to, for example, evaluate the assignment of young engineers with additional points, promote the transfer of know-how and information sharing to new engineers at least within the same company, and devise measures at the time of placing an order so that know-how does not accumulate only in specific companies and engineers.

Review and Summary by Chairman

  • First, regarding the evaluation of the initiatives in FY 2023 and the way forward for future measures, it is recognized that steady progress has been made toward the realization of the ideal form of information systems procurement, in accordance with the directions of the five measures indicated in the final report compiled in March last year, and it can be evaluated that the direction to be taken has progressed in a generally appropriate manner. As for the points to be evaluated as initiatives, it is expected that the government has actively promoted initiatives that contribute to the development of information systems procurement, such as the use of new procurement methods, including the start of a trial of a proposal-type planning competition and the promotion of the spread of a technical dialogue method, as well as the demonstration of a DMP. It is expected that the government has actively promoted initiatives that contribute to the development of information systems procurement, such as the use of new procurement methods, including the start of a trial of a proposal-type planning competition and the promotion of the spread of a technical dialogue method, as well as the demonstration of a DMP. It is expected that the government has actively promoted initiatives that contribute to the development of information systems procurement, such as the use of new procurement methods, as well as the demonstration of a DMP. It is expected that the government has actively promoted initiatives that contribute to the development of information systems procurement, such as the use of new procurement methods, as well as the demonstration of a DMP. It is expected that the government has actively promoted initiatives that contribute to the development of information systems procurement. In the future, while utilizing internal controls, it is important to verify the effectiveness of whether these tools are being used appropriately and effectively. In order to realize an appropriate and fair procurement procedures. In order to verify whether these tools are used appropriately and effectively. In order to verify the effectiveness of these tools. It is important. In the future. In the future, it is important. In the future. In the future. In the future. In the fiscal. In the fiscal year. In the future. In the utilization of new procurement methods, and the promotion. In the procurement. In the procurement. In the procurement In the DMP. In the future. In the future. In the future. In the future. In the future. In the future. In the future. In the future. In the future. In the future. In the procurement. In the procurement in the future. In the future. In the future. In the future. In the future. In the future. In the future. In the future. In the future In the future. In the future. In the procurement. In the future. In the future procurement. In the future. In the future. In the future In the future. In the future. In the future. In the future. In the future. In the future, in the future. In the future, in the future, in the future. In the future. In the future. In the development of information system. In the future. In the future. In order to secure the implementation of the future. In order. In the future. In the future. In the future. In the future. In the future, in the future, in the future. In the future, in the future, in the future, in the future, in the future, Digital Agency function Digital Agency
  • Next, regarding the response to measures and issues that are difficult to implement, it is necessary to consider improvement measures for the implementation methods and approaches of measures that are difficult or have issues, such as those related to agile development and the issue of setting an upper limit for damages, which were discussed as today's issues, while monitoring the progress of the measures. However, there are some issues for which the direction to be aimed cannot be necessarily determined due to differences in positions and ways of thinking. Regarding these issues, I believe that Digital Agency should be actively involved so that best practices can be derived by referring to the situations of other countries, listening widely to the opinions of the ministries and agencies, relevant industry associations, experts, etc., and deepening the discussion.
  • Finally, regarding the focus on the penetration and expansion of procurement reform initiatives. At present, many of the procurement reform initiatives reviewed today are being implemented on a trial basis only in Digital Agency. It is important for Digital Agency to continue to verify and assess the effects of new measures, and to sequentially implement those that are found to be effective to the Cabinet Office and each Ministry. It is also necessary to develop these measures in the same way for local governments, but since the laws and regulations that serves as the basis for the procurement procedures differs, it is necessary to first activate communication with local governments, etc., and to consider effective cooperation measures, and then to disseminate them. These initiatives for information systems procurement reform were not seen in the past, even as a window for dialogue with private companies through an industry association. Digital Agency should also take on the responsibility of strengthening these initiatives for the appropriate improvement of public procurement. In particular, it is expected that efforts will be made to penetrate new measures, such as those represented by the DMP, through further active PR and support, etc., targeting the Cabinet Office and each Ministry, local governments, and business operators through industry associations.
  • Such efforts in Digital Agency are of great interest to the public, and are important in demonstrating how public services should be provided. We believe that measures will progress more smoothly if the government promotes measures, including public relations activities, to determine how they are useful to members of society, and if the steady progress of the measures is understood not only by the ministries and agencies and local governments but also by the general public who receive the services.

Greeting by Director-General Tomiyasu from Digital Agency

  • This time, in line with the measures proposed last year, we have summarized the activities implemented this year. We are working hard with the aim of providing good services. As a result, some positive changes have been seen, so we will continue to firmly advance our efforts and make efforts so that they can spread to ministries and local governments.
  • DMPs have progressed to the stage where the government can search for SaaS by having business operators list it as a demonstration. In the future, there will be work to compromise systems related to accounting and procurement. On top of that, I would like to see full-scale operation from the fall of 2024 or later, contributing to the procurement of local governments.
  • In the Digital Administrative and Fiscal Reform Council, we are also discussing that the utilization of digital technology is essential for maintaining local public services, since the number of local governments' employees is expected to decrease in the future due to a decrease in the number of workers. Digital Agency also wants to work on providing a common function, and I think it is significant for local governments to utilize DMP for procurement. On the other hand, there are procurement mechanisms for each local government, so we will consider these and make further discussions.
  • We ask for your continued guidance.

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