Startup Procurement under Local Autonomy Act Article 167-2(1)(4) (Notice)

The government is working to expand procurement from startups by national and local governments to support the social implementation of startup technologies that help solve regional challenges.

The Japan Growth Strategy, approved by the Cabinet on July 21, Reiwa 8, set out a policy of regularly surveying the status of fourth-category sole-source contracts by each local government every fiscal year, providing advice and other support for active use, and extending outstanding procurement cases to other local governments.

The Ministry of Economy, Trade and Industry, in cooperation with the Ministry of Internal Affairs and Communications, issued a notification to each local government to support the expansion of startup procurement through fourth-category sole-source contracts.

The Ministry of Internal Affairs and Communications surveyed procurement practices, disseminated a collection of procurement cases to local governments, and published it on the ministry's website.

Competitive tendering is the general rule for contracts by local governments, but when a contract falls under one of the grounds specified in the respective items of Article 167-2, paragraph 1 of the Local Autonomy Act Enforcement Order, it may be concluded through a sole-source contract or other method.

When procuring new products or new services from startups through a fourth-category sole-source contract, a local government requires the submission of a plan concerning the development of a new business field, hears the opinions of two or more academic experts, and then certifies the procurement. For new products or new services already certified by another local government, hearing such opinions is unnecessary.

J-Startup selects startups after hearing the opinions of two or more academic experts, producing an effect equivalent to the certification procedure for fourth-category sole-source contracts. Accordingly, hearing such opinions was deemed unnecessary, as in certification cases by other local governments, and active use of fourth-category sole-source contracts was encouraged.