New Defense Acquisition Rules for Japan

New Defense Acquisition Rules for Japan

Jul 23, 2008: Buffeted by government scandals and the artificially high costs of developing defense gear, Japan’s new defense ministry has decided to adopt a more competitive style of acquisition, according to Japan-based U.S. analysts. With the current government’s defense team already savaged once by claims of gifts and other kinds of influence peddling by the trading companies, the defense ministry has adopted a plan to cut the growth in procurement costs, which includes radically revamping the way it orders its materiel to allow for competition. The initial task is for the defense ministry to develop a list of baseline costs for all of its hardware and supplies to include weaponry, aircraft, ships, computers and software, U.S. officials say. Suppliers will then be invited to bid for contracts by submitting plans for cost cutting. Any savings will be shared by the contractor and the defense ministry. To counter any tendency to manipulate prices while computing the catalogue of basic prices, the year-old defense ministry is establishing a strict set of rules and self-policing procedures to eliminate the opportunity for corruption and influence peddling. The rulebook is expected to be published this fall and in place for the F-X fighter replacement contract. The Japan Self-Defense Force’s (JASDF) legacy F-2 – sometimes described as a slightly larger F-16 at three times the cost – is an example of how the Japanese government operated in the past. To ensure political support, any purchase had to have a high ratio of indigenous industrial content. That also would help appease the politically powerful trade unions. But the scale of production was so small – since Japan cannot sell military equipment abroad – that costs for high-tech equipment were often stunning. Another contributing factor was the government’s reliance on trading companies to act as the military’s acquisition agency. These discretionary contracts essentially eliminated any real competition. No incentive Since defense purchases have been made through special orders without direct competition, there has been virtually no financial incentive to lower cost since the political benefits of contracts increased with their cost. A Japanese team this year visited Lockheed Martin’s F-35 Joint Strike Fighter facility in Ft. Worth. More recently, the Japan Air Self-Defense Force’s director of defense planning, Lt. Gen. Hidetoshi Hirata, flew British Aerospace’s Typhoon. British officials describe their offering as a blend of superior maneuvering and forward stealth, while the F-35’s advantage is represented as very low observability combined with a battery of sensors for extraordinary situational awareness. Unofficially, the JASDF has given up its quest for the F-22 Raptor, citing uncertainty about getting export approval and the likelihood of a truncated technology package. The primary competitors for F-X are all designed for export. Hirata told Aviation Week that the JASDF wants stealth and speed, but some degree of stealth could be sacrificed for low cost and an advanced sensor package.