Accenture, JAPAN-VISIT, and the mystery of the 100,000 yen bid
The story first came to light nearly one year ago, on April 21, 2006, during questioning at the House of Representatives Committee on Judicial Affairs in the Japanese National Diet. Hosaka Nobuto of the Japan Social Democratic Party, a former journalist active in educational issues and one of the leaders in the fight against wiretapping laws in Japan, launched a barrage of questions at government officials over revelations that a contract for a new biometric immigration system had been awarded to Accenture Japan Ltd., a corporation previously hired in the role of "advisor" for the same project. For many years a thorn in the side of the ruling party coalition, Hosaka in 2000 was ranked by the Japanese newspaper Asahi shimbun as the most active member of the House of Representatives, with a record 215 questions, a number that rose to over 400 by 2006 . The questions Hosaka put to the government on April 21st were undoubtedly some of the most important of his career, and yet, now nearly a year later, the story that he fought hard to publicize has barely made a ripple in the Japanese media, and remains virtually unknown to the outside world.
The background to the story reads as follows: Accenture Japan Ltd., the Japanese branch of the consulting firm Accenture, active in the Japanese market as far back as 1962 but only incorporated in Japan in 1995, received in May 2004 a contract to draft a report investigating possibilities for reforming the legacy information system currently in use at the Japanese Immigration Bureau. The investigation was requested in the context of government plans, only later made public, to re-implement and modernize a certification system to fingerprint and photograph every foreigner over the age of 18 entering the country, replacing an earlier fingerprinting system abandoned in the year 2000 over privacy concerns after prolonged resistance from immigrant communities.
Earlier the same year, against the backdrop of a post-9/11 society anxious about the threat of vaguely-defined dark-skinned "terrorists", the U.S. had begun taking fingerprints of foreigners with visas entering the U.S. at international airports and other major ports. A program entitled US-VISIT (Visitor and Immigrant Status Information Technology) was initiated in July of 2003 with the intention to secure nearly 7000 miles of borders along Mexico and Canada, including more than 300 land, air and sea ports . Described as "the centerpiece of the United States government's efforts to transform our nation’s border management and immigration systems", planners envisioned "a continuum of biometrically-enhanced security measures that begins outside U.S. borders and continues through a visitor's arrival in and departure from the United States" .
The five year multi-billion dollar contract for the American US-VISIT program was awarded to Accenture in May of 2004, the same month that the corporation was hired by the Japanese government as a consultant on immigration system reform. Whereas the corporation faced widespread distrust within the United States and elsewhere due, among other things, to its association with Andersen Consulting, the consulting division of the (now-defunct) accounting firm Arthur Andersen, its name was generally well-respected within Japan. When news came out in April of 2006 that Accenture had won a deal to implement the Japanese version of US-VISIT, referred to as JAPAN-VISIT, public reaction was subdued. While the corporation's back-room deals in the bidding process leading up to the US-VISIT deal foreshadowed similar events to come in Japan, the parallel was missed by all but a handful of activists and politicians closely following the issue, prominent among them Diet member Hosaka.
At the Committee on Judicial Affairs on April 21st of 2006, Hosaka distributed to each sitting committee member a document, freely viewable (in Japanese) at the Ministry of Justice home-page, entitled "Summary of the Investigation of the Low-price Bid" (Teinyuusatsu kakaku chousa no gaiyou) . In his personal blog, Hosaka described his reaction upon first reading this document:
When I read it on the net, I had to rub my eyes for a moment. In this document, it was noted that Accenture, a company headquartered in Bermuda, had been awarded a service contract for software development and testing of a system to handle biometric information from fingerprinting and mug shot data, the same data collection that I had brought into question in earlier deliberations on immigration regulations. The successful bid for this contract was awarded at a price of only 100,000 yen (maintenance services: 90,000 yen, product development expenses: 10,000 yen) .
For those unfamiliar with Japanese currency, 100,000 yen translates to less than one thousand American dollars: 900 dollars (90,000 yen) for maintenance services, and less than one hundred dollars (10,000 yen) for the product itself. Ten thousand yen buys you a moderately-priced sushi dinner in Tokyo.
The size of these figures did not fail to raise certain eyebrows, although far less than one might have expected. In his blog, Hosaka explains that the document he distributed at the Committee on Judicial Affairs is the record of a hearing held by the Secretariat of the Minister of Justice, Accounts Division, on the topic of the 100,000 yen bid and its exceptionally low price-tag. At the committee meeting, in response to a question from Hosaka, Vice Minister Kouno explained the context that triggered the hearing:
At the Justice Ministry, based on the provisions of an act regarding accounting, in the case of competitive bidding on contracts for construction, manufacturing, etc., with an estimated price exceeding 10 million yen, at the time of competitive bidding, if the bidding price is lower than a given percentage of the estimated price ? i.e. in cases in which the tendered bid is too low to meet this required percentage ? since there is a possibility that the contract will not be adequately implemented, an investigation is conducted to establish its feasibility. The matter you have indicated was a case of this .
In the above statement, Vice Minister Kouno implicitly acknowledges that the estimated cost of the services to be carried out in the contract exceeds 10 million yen, meaning that the bid which Accenture tendered would ? according to the government's own calculations ? cover at most 1% of the actual expenses expected to be incurred in the project.
Despite this rather curious discrepancy, the investigation concluded that, based on "know-how and accumulated overseas institutional experience", Accenture Japan Ltd. was "capable of carrying out the operations for the price proposed" . In response to questions at the committee meeting about what kind of "overseas experience" Accenture actually had "accumulated", Immigration Bureau Chief Miura Masaharu responded that "in the U.S., Accenture is setting up a system to collect fingerprints and so on for the US-VISIT program" . In his blog, Hosaka spelled out the obvious corollary: "In other words, Japan is the second country in which the program will be introduced, and therefore the statement is only applicable to the case of the United States."
A corporation with a very particular kind of "overseas institutional experience" ? namely, the US-VISIT program in the U.S. ? had tendered a bid at a price that would hardly pay for a modern desktop computer in Japan. Hosaka wrote that: "Regardless of how much experience you may say they have, in one year extracting fingerprints and photographs of 7.5 million foreigners and experimenting with an automatic gate system, an immigration-version of the ETC [Electronic Toll Collection] System, 100,000 yen is not enough, however you think about it" .
The government position on this point, expressed by Vice Minister Kouno in the committee meeting of April 21, is that "by successfully bidding on the prototype operations and playing a part in the demonstration experiments of the Japanese government, this corporation will earn the trust of the governments of every south-east Asian country hoping in the future to do this kind of thing", and thus "taking on this project in Japan and experimenting with a prototype Japanese system may become, as a business strategy, extremely advantageous for the company" . Tendering a bid at a price of 100,000 yen ? regardless of its actual face value ? may as thus be seen as an "investment" in future business opportunities, so the argument goes.
While there is an element of plausibility to this line of thinking, there is also a great deal being concealed. In his blog, Hosaka explained that the real hint to unravelling the mystery of the 100,000 yen bid is contained in another Justice Ministry document:
On closer examination, the same company was awarded an order in 2004 for a "System Reform Investigation" (58.8 million yen [or about 500,000 USD]) of the system presently in use at the Immigration Office, originally developed by Hitachi, Ltd. using a closed legacy system, and in January 2005 submitted the "Immigration Control System Reform Investigation Report". Moreover, Accenture Japan Ltd. has been awarded the contract for the "Optimization Project" (94.92 million yen [or about 800,000 USD], June 2005) based on the same investigation. In this "Optimization Project Specification", it is written that: "The contractor who will execute operation of the authentication system trials and automatic gate system (tentative title) to be used in the Immigration Bureau Access Control Information Systems Division as well in IC passports, etc., will be advised accordingly." The same company Accenture Japan Ltd., with direct ties to this 94.92 million yen contract, three months later launched a bid of only 100,000 yen to carry out the operations itself. This is not advising: Accenture essentially nominated itself .
The translation from Japanese involves a degree of subtlety in the use of the term "advised accordingly" (in Japanese "tekigi jogen o okonau", literally translated to "carry out suitable advising", with no explicit subject). The point, as Hosaka later clarified in an interview, is that: "If you read this line, you naturally assume that the contractor is another company, not Accenture" .
A Japanese person reading the project specification would never expect that the same company, originally hired in an advisory role, would end up becoming both contractor as well as consultant. And yet this is exactly what Accenture did.
At the Committee on Judicial Affairs on April 21st, Hosaka pressured government officials to explain the obvious conflict of interest. Exposing confusion on the government side, Immigration Bureau Chief Miura (likely by mistake) admitted that: "The one who is actually going to do the optimization work, and who will take on the job of implementing the system, I assume this would be a different company" .
The Japanese weekly Shuukan Kinyoubi, shortly after the meeting, noted the contradiction between Miura's statement and a statement issued by the corporation itself:
[R]esponding to questions put to them by this magazine, Accenture's public relations department replied: "We are currently aiming our efforts at becoming not only the supporter, but also the 'implementation' contractor, for development of the new system."
This corporate strategy is not hard to understand. The article in Shuukan Kinyoubi noted that, while "contrary to government guidelines regulating a separation between 'support' contractor and 'implementation' contractor", the chance to assume the role of both consultant and contractor for the second largest economy on the planet entails certain benefits: "Compared to the scale of 'implementation' operations for Japan's new immigration control system, Accenture's 'support' contract is nothing, this at least is certain" . One only has to consider the price tag of the American system, estimated to cost as much as 15 billion US dollars , to understand the potential for windfall profits.
And yet, given the nature of the biometric technology that the project seeks to implement, the consequences of the Accenture deal run deeper than its dollar value alone. Weeks later, on May 18, 2006, in the House of Councillors Special Committee on Administrative Reform, Social Democratic Party leader Fukushima Mizuho drilled the government on the gross discrepancy between the price of the contract and the scale of operations, drawing a parallel with the American case and voicing opposition on grounds of basic privacy rights:
100,000 yen is an extremely odd amount of money. The analysis charts for key challenges of the immigration authorities and resources of the Justice Ministry are talking about securing interoperability with related institutions from across the world.
The exact same company who is doing the US-VISIT program in the U.S. is going to manage fingerprinting in Japan. At the U.S. Congress House Appropriations Committee on June 9th, 2004, Democratic congresswoman Rosa DeLauro voiced criticisms about this Bermuda-based company. This multinational corporation ? maybe better to call it a "stateless corporation" ? is enrolled in the tax haven island of Bermuda. It was established after Enron and Andersen. The U.S. government is spending over a trillion yen on US-VISIT. Isn't this a bit strange? That is the argument she was putting forward. In 2004 ? sorry, this is what I was saying a moment ago ? in 2004, in the U.S., congresswoman Rosa DeLauro was making this argument, and on June 9th, 2004, in the House Appropriations Committee, an amendment to prohibit contracts between the Homeland Security Department and foreign corporations was passed with a vote of 35 to 17. However, despite this, the contract for America's US-VISIT program was awarded to Accenture anyway.
In the U.S. as well, there is a debate about whether this is a good thing, America's information going to a stateless corporation. In fact, it has been said that America is backing this project up, so we might ask: why has Accenture been awarded this contract in Japan? Information from the Justice Department describes the security of interoperability between institutions at home and abroad, information exchangeability, compatibility and sharing; it is talking about securing interoperability between institutions at home and abroad, this is how it is written here. If the same company takes on this project, then our information will be leaked everywhere, this is what I am extremely concerned about .
Following evasive replies by Minister of State Sugiura Seiken and government representative Andou Tomohiro, Fukushima laid out in detail the extent of Accenture's involvement in software development for Japanese government agencies. The subsequent exchange is included in its entirety:
According to the records of government and public offices for the fiscal year 2005, [Accenture] has been commissioned for the Imperial Household Agency, the Fair Trade Commission, the Ministry of Justice, the Ministry of Finance, and the National Tax Agency. Among these there is a contract with the Ministry of Justice. The Ministry of Justice deals with information for prosecution cases, lots of extremely delicate information. This is extremely sensitive fingerprint information for immigration control and it will be handled, as a result of the recent Immigration Law, by Accenture. The Justice Ministry is also involved in this.
Why is a multinational, foreign company handling this information for the Imperial Household Agency? Why is it handling information for the Fair Trade Commission? And the National Tax Agency, this is all extremely sensitive information. I am really extremely worried that all this very important, sensitive information of Japanese citizens, by being interchanged, or shared, with foreign countries, might be leaked.
The various agencies, including the National Tax Agency, that you listed up, and also ones that you didn't include, or the ones that I just listed up, that's all of them, right?
Representative for the government (Andou Tomohiro)
I will answer the question.
About the points you just brought up in your question, under the government policy, digitalization in ministries and agencies has been in progress for some time. However, about the Ministries who have placed those orders, the ones that we know of are the Imperial Household Agency, the Fair Trade Commission, the Ministry of Justice, and the National Tax Agency.
They are all dealing with extremely important information.
And what do you think of this, Prime Minister? This company, who is in control of system compatibility, in the United States or across multiple countries, will have access to prosecution information and Justice Ministry information. According to this document, it doesn't have to restrict its operations to within the Justice Ministry. What do you think about this?
Prime Minister (Koizumi Junichiro)
Well, I ? what is the name of this company, Accent? Accenture? I really don't know. I don't know what kind of company this is, but I understand that it complied with requirements of competitive bidding carried out in a fair manner. The question of whether a negotiated contract is a good thing has been discussed in the National Diet. There are positive aspects of negotiated contracts. I think that in some cases competitive bidding is the best choice. However, since, as a rule, this is not always the case, we have debated the issue in this committee and other places, and many different arguments have been put forward.
In terms of the problem we are discussing today, we also need to take into account the criticisms that may come up regarding barring foreign corporations from Japanese government agencies. In the end, fairness, transparency, security of the nation, I think that these are questions requiring that comprehensive judgements be made.
That's not the point. The role of Accenture in the Justice Ministry was to be an advisor. Itself acting as an advisor, it was then awarded the contract for 100,000 yen. This is a really strange story. This is after all extremely sensitive information of Japanese citizens that is being commoditized. To take an extreme example, someone from some administrative institution in the United States would become able to access this information about Japan, this is what I am afraid of. For this reason, cases in which dealings from public to private are carried out by a foreign company, to put it into extreme terms, these dealings from public to private are to be handled by America, by U.S.A. It is this issue that I think is extremely critical .
The failure of the former Japanese Prime Minister to even manage to properly pronounce the name of one of his government's most important foreign contractors may come as a shock to some. The truth, however, is that the upper echelons of the mainstream Japanese leadership, propped up for many decades by support from their long-time American allies, have little concern for the privacy rights of average Japanese citizens. Nor, if such rights are sold off, do they personally have much to lose. It is thus unsurprising that high-ranking leaders defer critical decisions of personal information collection and administration to standards of "competitive bidding carried out in a fair manner", with requisite lip-service paid to "fairness", "transparency" and "security of the nation".
The fact, on the other hand, that the average Japanese citizen knows little or nothing about the story of Accenture's 100,000 yen bid, and that the scandal itself has died such a quiet death since it was first uncovered nearly one year ago, highlights a deepening chasm between the political awareness of the Japanese people and the actions being carried out in their name by their own leaders. A survey of the major media within Japan and elsewhere at least partly explains this chasm. Aside from a handful of Diet session discussions such as the ones mentioned above (translated to English here), as well as brief mentions in newspapers and magazines such as Asahi shimbun, Sekai, the citizen journalism web-site JAN JAN (which simply quotes Hosaka's blog entry), and Shuukan Kinyoubi, the story of the 100,000 yen bid has received virtually no serious coverage within Japan. Outside of Japan, in contrast, judging from English-language search results returned by web search engines and news aggregators such as Lexis-Nexis, the topic seems to be essentially entirely unknown.
Months after the original revelation of the low-price bid, in an interview in August, 2006, Hosaka explained the frightening reality that Accenture's advances within Japan are moreover only part of a larger picture. The reality, he emphasized, is that there are strong links in the so-called "war on terror" between the defence industry and the information industry, Accenture being but one example. While most people know little about these links, they are not hard to find if one is actively looking for them:
What is interesting is that this kind of information is not actually very secret; it's scattered all over the Internet. You can pick it all up if you just put in the effort. But actually, the only people who are collecting this information and using it are people who are working in the IT industry. If you are not knowledgeable about this kind of information then you are not critically aware of what is going on. That's what is scary .
The story of the 100,000 yen bid is, it would seem, a similar case: not in any sense a secret, and yet unknown to the majority of Japanese. To the outside world, the situation is yet more extreme: given the unavailability of English-language resources on the topic, the story is essentially out of reach to all but those with direct connections to the events in question, most of whom, one might reasonably surmise, are employed by the corporate or governmental organizations in question.
The lack of English-language information on this story is particularly notable in the case of two groups. The first is the American population, who, via US-VISIT, are directly linked to the program in Japan and share with the Japanese a common interest in exposing Accenture's back-room business deals; individuals and organizations actively involved in the defence of privacy rights in the U.S. would surely benefit from knowledge of the JAPAN-VISIT program and related plans for increased "information sharing". The second group, as of November of this year to become the first actual subjects of the new fingerprinting laws, is the growing population of foreigners residing in Japan. While generally aware of the impending implementation of fingerprinting legislation, this group is largely oblivious to the scandal of the 100,000 yen bid.
Certain members of this media project, aware of the situation described above and of the need for English-language resources on the topic, made the decision to seek out and translate a handful of key Japanese-language documentation on the JAPAN-VISIT program and the 100,000 yen bid. The most important of these documents is the blog entry of Diet member Hosaka, posted on April 22, 2006 at his online blog, which outlines the main themes described in this article. The second are the proceedings of the April 21st meeting of the Committee on Judicial Affairs, posted by Hosaka on May 4, 2006 at his blog site. The third is a short article that appeared in the weekly magazine Shuukan Kinyoubi summarizing the main points that Hosaka brought up in the earlier Diet session. Finally, the fourth document is a transcript of discussions in the House of Councillors Special Committee on Administrative Reform which took place on May 18, 2006, posted at the official website of Social Democratic Party leader Fukushima Mizuho. An interview conducted with Hosaka in August of 2006, also quoted in this article, was not translated in its entirety but is linked below. For completeness, additional Japanese-language documentation on the topic is also referenced.
Readers are encouraged to consult and, where applicable, make use of the translated materials. Although no absolute guarantees can be offered regarding the accuracy of the translations themselves, we have put every effort into producing professional work of a quality sufficient for purposes of research and advocacy. Our hope in doing so is that others with more in-depth knowledge of the US-VISIT program and associated governmental and corporate information-sharing activities will be able to make use of information about the 100,000 yen deal in their various ongoing efforts.
For more information on this article or the resources linked below, readers may contact gyaku directly through the Contact section of this website.
Translations by gyaku:
· Biometric information system for Immigration linking US-VISIT and JAPAN-VISIT, blog of Hosaka Nobuto, April 22, 2006.
· Questioning about the "100,000 yen bid" for JAPAN-VISIT demonstration experiments, blog of Hosaka Nobuto, May 4, 2006.
· Suspicions regarding introduction of immigration system: Government orders contrary to bidding policy?, Shuukan Kinyoubi, May 12, 2006.
Other resources in Japanese:
· Interview with Hosaka Nobuto, SENKI, August 5, 2006.
· Proceedings of the House of Councillors Judicial Committee (questions about Revision of the Immigration Law), Webpage of Matsuoka Tooru (Democratic Party of Japan), May 16, 2006.
1. Personal website of Hosaka Nobuto (in Japanese). link
2. Robert O'Harrow Jr. and Scott Higham, "U.S. Border Security at a Crossroads: Technology Problems Limit Effectiveness of US-VISIT Program to Screen Foreigners", Washington Post, May 23, 2005. link
3. Fact Sheet: US-VISIT, Department of Homeland Security, June 5, 2006. link
4. Summary of the Investigation of the Low-price Bid (Teinyuusatsu kakaku chousa no gaiyou/??????????), Accounts Division, Minister's Secretariat, Minister of Justice (in Japanese, partial translation included in Hosaka's April 22 blog entry). link
5. Biometric information system for Immigration linking US-VISIT and JAPAN-VISIT (translation by gyaku), blog of Hosaka Nobuto, April 22, 2006. link
6. Questioning about the "100,000 yen bid" for JAPAN-VISIT demonstration experiments (translation by gyaku), blog of Hosaka Nobuto, May 4, 2006. link
7. Interview with Hosaka Nobuto, SENKI, August 5, 2006 (in Japanese). link
8. Suspicions regarding introduction of immigration system: Government orders contrary to bidding policy? (translation by gyaku), Shuukan Kinyoubi (?????), May 12, 2006. link
9. Eric Lichtblau and John Markoff, "Accenture Is Awarded U.S. Contract for Borders", New York Times, June 2, 2004. link
10. Proceedings of the House of Councillors Special Committee on Administrative Reform (translation by gyaku), Official Website of Fukushima Mizuho, May 18, 2006. link
Photos taken from USA green card center (fingerprint machine photo), US Department of Homeland Security (US-VISIT logo), sample reality (fingerprint/photograph procedure photo), ????????????????? (Hosaka Nobuto photo), JCA-NET (Fukushima Mizuho photo), and IT-PRO (JAPAN-VISIT machine photo).