bidrigging

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All DFAA public projects suspected of bid-rigging works

Major general construction contractors have been awarded Defense Facilities Administration Agency (DFAA) contracts for construction projects in U.S. military bases in Japan including Okinawa in bids at an average 97.5 percent of the upper limit of contract price offered by the orderer.

Akahata found out that bids have been rigged at the U.S. Misawa Air Facility in Aomori Prefecture, the U.S. Yokota Air Base in Tokyo, the U.S. Army Camp Zama, the U.S. Yokosuka Navy Base, and the U.S. Atsugi Naval Air Facility in Kanagawa Prefecture, the U.S. Marine Corps Iwakuni Air Station in Yamaguchi Prefecture, and the U.S. Navy Sasebo Base in Nagasaki Prefecture, as well as several facilities in Okinawa Prefecture.

According to Akahata, the number of public construction projects awarded by DFAA was 1,346 in FY 2001-2004, and the total contract price was about 279.8 billion yen, which on average was 97.5 percent of the maximum contract price (about 287 billion yen).

Already, the Tokyo District Public Prosecutor's Office arrested three assistant vice-ministers from DFAA engineering affairs on January 30 on suspicion of bid-rigging over air-conditioning projects at the U.S. Iwakuni base, and raided the Defense Agency on the following day.

The arrests led to a big scandal involving leading general construction contractors, including Kajima Corporation, Taisei Corporation, Ohbayashi Corporation, and Tekken Corporation. The prosecutors also conducted a criminal investigation into these companies.

Public works projects are funded with tax money. Most of the budget for DFAA contracts for projects at U.S. military facilities was allocated from the so-called "sympathy budget" (which Japan has no obligation to pay under the Japan-U.S. Status of Forces Agreement). Such collusive bidding distorts fair competition and enables contractors to win the bid at an inflated figure. It is indeed a wasteful use of tax money to allow illegal bidding practices.

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After Defense Agency (DA) Secretary General Nukaga Fukushiro suggested that the DFAA be dissolved following the arrests of senior DFAA officials, Japanese Communist Party Chair Shii Kazuo at a news conference in the Diet on February 2 said, "The first thing the DA should do is to thoroughly uncover the extent of the scandal in which the government agency itself was involved."

Shii also pointed out that the root cause of cozy ties between bureaucrats and business is the system of re-employment of retired government officials to high positions in the private sector, the so-called phenomenon of "Amakudari." He stressed that unless "Amakudari" is prohibited, similar scandals will continue indefinitely.
- Akahata, February 6, 2006