Building open contracting pathways to Japan

Japan is the world’s third biggest spender on public contracts at US$788 billion. This underscores Japan’s pivotal position on the global stage.  

Over the last two years, 21 Japanese cities have been working on opening up their public contracting for better efficiency, oversight and outcomes as part of the G20 Smart Cities Model Policy on Open Contracting (also available in Japanese). This model policy is a joint initiative of OCP and the Global Smart Cities Alliance (GSCA) – a forum uniting thousands of stakeholders from cities worldwide committed to adopting responsible technologies to drive progress towards sustainable development.

Why is open contracting policy needed in Japan?

Japan is generally perceived as a country with little political corruption. Feedback from municipal hearings suggests that information on procurement and public sector staff recruitment is already open, leading to questions about the need for further transparency. However, while public procurement does follow established procedures and some information is available on the central government platform, it is not necessarily transparent. Data on the various phases of the procurement cycle isn’t readily available online or is scattered across various platforms, making the information-gathering process cumbersome.

Another issue is the lack of insight into the process leading up to public procurement. While technical specifications are generally available, there’s limited transparency about how these documents are crafted, particularly the information exchanged between government buyers and private companies. This lack of clarity can result in inefficiencies and potential conflicts when new vendors without prior transaction histories secure a contract.

Initiatives towards deployment in Japan

So while there’s a strong rationale for introducing an open contracting policy in Japan, many municipalities currently don’t show significant interest. One primary reason is that – often very detailed – procurement regulations are set by each municipality, making changes challenging and labor-intensive. Many leaders may only consider reforming the procurement system if some corruption scandal emerges. Presently, as a system is in place (though it isn’t necessarily open), it doesn’t rank high on policy priorities.

Nevertheless, we see opportunities to use open contracting approaches in particular to improve trust among businesses about fair competition in the procurement market, and to help cities achieve their goals for the green transition and inclusivity. 

In our efforts, we’ve engaged with two organizations promoting open data: Code For Japan, which supports many municipalities with open data and digital government initiatives, and the Institute of Systems, Information Technologies and Nanotechnologies (ISIT), which operates open data sites for over 250 municipalities. In collaboration with them, we conducted study sessions for municipal officials and hearings for executives. While we received positive feedback on the potential benefits and feasibility of such initiatives, many believe that proposing such vast policy changes from a digital section is daunting.

To progress with the model policy, we believe it’s essential to proactively provide information on the benefits and feasibility of reforms not only to administrative officials but also to politicians, such as mayors and council members.

Future expectations

The implementation of the Open Contracting Model Policy in Japan is full of both potential and challenges. Many discussions with municipal officials have highlighted its possibilities. 

Moving forward, we consider it practical to continue raising awareness through sessions or events related to Smart City initiatives. Additionally, selecting regions with proactive leaders who can act as champions for a smart cities approach and providing support alongside might be an effective strategy. At GSCA, we aim to continue such endeavors, collaborating with external experts and initiatives that share our goals, such as the new model policy on innovation-friendly procurement recently launched by GSCA or Japan’s Society 5.0 concept which seeks to future-proof Japanese cities in areas such as environmental impact, public transit and disaster-resilience.

Yuta Hirayama is an advisor to Tsukuba City, Project Professor at Osaka Metropolitan University, and former Advisor of Global Smart Cities Alliance (2022-2023)

Emi Maeda is the Regional Lead, G20 Smart Cities Alliance, World Economic Forum.