January 2016

U.S. Department of Defense Seeks Industry Input on the Negotiation of a Reciprocal Defense Procurement Pact with Japan's Ministry of Defense

Consistent with the United States’ and Japan’s increasing focus on joint security cooperation, the U.S. Department of Defense (“DOD”) is seeking industry input on the negotiation of a reciprocal defense procurement pact with Japan’s Ministry of Defense. On December 31, 2015, DOD issued a Federal Register notice “asking U.S. firms that have participated or attempted to participate in procurements by or on behalf of Japan’s Ministry of Defense or Armed Forces to let us know if the procurements were conducted with transparency, integrity, fairness and due process in accordance with published procedures, and if not, the nature of the problems encountered.” Additionally, DOD is “interested in comments relating to the degree of reciprocity that exists between the United States and Japan when it comes to the openness of defense procurements to offers of products from the other country.”

The United States has entered into a reciprocal defense procurement memorandum of understanding with 23 other nations. According to DOD’s notice, such agreements strive “to promote rationalization, standardization, and interoperability of conventional defense equipment with allies and other friendly governments” and “provide a framework for ongoing communication regarding market access and procurement matters that enhance effective defense cooperation.” Typically, these agreements require both countries to conduct defense procurements in accordance with specific implementing procedures and to afford each other certain benefits consistent with national laws and regulations (e.g., waivers of customs, taxes, duties, and “Buy America” requirements for end products and components of defense procurements).

DOD’s notice is a step toward achieving the “seamless, robust, flexible, and effective bilateral responses” envisioned in the April 27, 2015 Guidelines for U.S.-Japan Defense Cooperation (the “Guidelines”). Although the U.S. military and Japan’s Self-Defense Forces originally created the Guidelines in 1979 in case of a military attack on Japan, the April 2015 revisions reflect the “global nature of the U.S.-Japan Alliance” and promote security throughout the “Asia-Pacific region and beyond.” The Guidelines’ emphasis on expanded U.S.-Japan collaboration in such areas as intelligence, surveillance, reconnaissance, and air and missile defense potentially presents new, streamlined sales opportunities in Japan for U.S. defense contractors.

Companies involved in defense trade with Japan may wish to submit comments in response to DOD’s notice, such that they can help to shape the rules and procedures governing U.S.-Japan public defense procurements. Comments should be submitted to Defense Procurement and Acquisition Policy, Attn: Ms. Patricia Foley, 3060 Defense Pentagon, Room 5E621, Washington, D.C. 20301-3060; or by email to patricia.g.foley.civ@mail.mil. The comment submission deadline is February 1, 2016.

Over the coming months, Holland & Hart will continue to report on the progress of the U.S.-Japan reciprocal defense procurement pact, as well as other noteworthy developments in the increasingly important U.S.-Japan defense alliance.

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