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Rules tightened on bids for govt contracts to prevent leaks

The Yomiuri Shimbun The government has tightened the criteria on bidding for security-related research and study projects and other contracts that handle confidential information in order to screen out companies that could possibly channel such intelligence to foreign countries, The Yomiuri Shimbun has learned.

With China among other countries in mind, the government aims to prevent leaks of highly confidential information overseas, according to several government sources.

Aimed at preventing info leaks

The government this spring notified relevant ministries and agencies of the new guidelines before implementing them.

The new guidelines require each ministry and agency to investigate companies over their capital ties and executives’ nationalities among other background information when they take part in bids or are commissioned to conduct research projects that involve sensitive information, such as preliminary studies on the development of next-generation fighter jets, the sources said.

The guidelines stipulate the criteria for excluding candidate companies if background checks suggest there are security risks, such as the likelihood of leaking information obtained through projects, according to the sources.

Based on the guidelines, the Defense Ministry has already taken the step of not renewing a contract with one major consulting firm to conduct research studies. The consulting firm in question, which operates its business globally, had a Chinese national serving as an executive at an overseas affiliate.

There also have been cases in which government bodies such as the Health, Labor and Welfare Ministry canceled bids and changed contractors for their projects.

In China, a national intelligence law went into force in June 2017 that requires Chinese citizens and companies to cooperate with the government’s information activities.

This has raised concerns because even if companies are not directly linked to the Chinese government, they could be used by Beijing for espionage if they have Chinese executives or are linked by Chinese capital.

In April this year, the Japanese government began effectively excluding products of China’s leading telecommunications equipment companies Huawei Technologies Co. and ZTE Corp. from procurement by government bodies. By adding the new guidelines, the government aims to maintain a barrier of confidentiality.

The government’s decision to review the bidding guidelines was prompted by the United States, which shares security information with Japan and thus has been asking Tokyo to thoroughly ensure the security of information by contractors, according to the sources.

The U.S. government has already introduced a system that conducts background checks on employees of companies with government contracts and allows only those found unlikely to leak relevant information to access confidential information.

The Liberal Democratic Party has called for the introduction of a similar system in Japan.

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