Possible collusion in Shinkansen bid-rigging case must be clarified
Do the new allegations over bid-rigging on Shinkansen-related engineering work mean that competitive bidding on infrastructure improvement projects essential for the safety of bullet train services was derailed through a collusive relationship between entities in the public and private sectors? Investigating authorities must uncover the full truth.
The allegations have arisen over projects to prevent snow damage along the Hokuriku Shinkansen line. On Tuesday, the Tokyo District Public Prosecutors Office and the Fair Trade Commission searched offices linked to the case on suspicion of a violation of the Antimonopoly Law. The locations searched by the prosecution’s special investigative squad and the FTC included equipment installation companies that participated in the bidding, as well as the Japan Railway Construction, Transport and Technology Agency (JRTT), a government-affiliated independent administrative institution that placed orders for the projects.
The projects under investigation cover a route that is being constructed to connect Nagano and Kanazawa along the Hokuriku Shinkansen line. The Nagano-Kanazawa route is scheduled to open late in fiscal 2014.
The cost of the projects is to be covered by such resources as national government subsidies and contributions from local governments affected by these plans. If prices tendered for construction projects are exorbitant due to bid-rigging, the corporations involved in the scheme will reap unlawful profits, thus requiring excessive public expenditures.
Given the seriousness of the latest bid-rigging case, the special investigation team and the FTC had every reason to embark on a probe aimed at establishing the criminal responsibility of the corporations involved and JRTT.
It will be particularly disconcerting if the case is found to involve collusive bidding at the initiative of such a government-affiliated institution as JRTT.
However, this seems likely as bidding on the projects included more than one case in which the price of a successful bid on a construction project was equivalent to 99 percent or more of the price anticipated by JRTT. It is apparent that the prices must have been leaked to potential contractors as the bids on the projects were accepted at prices nearly equal to those JRTT anticipated.
Possible irregularities have been brought to light through the investigative squad’s questioning of some company employees responsible for the bidding procedures. They reportedly told investigators that JRTT officials, who held positions comparable to section chief, gave them hints as to anticipated prices ahead of the bidding sessions.
Another probable factor behind the latest case is that JRTT wanted to smooth progress in the bidding process so it could complete the construction projects in time for the opening of the Nagano-Kanazawa route. If no bidder had won a contract for a project, it would have taken about two months for a new bidding session to take place. This would have led to delays in the JRTT projects.
If JRTT put its own convenience ahead of everything else by becoming involved in bid-rigging and accommodating bidders’ interests, it would undermine the essential nature of competitive bidding. It would also impair people’s trust in public works projects.
In December 2006, the Public Sector Bid-Rigging Prevention Law was revised to impose criminal penalties on public service employees and others. The law would apply to employees at JRTT, an institution wholly financed by the government. We hope the investigative team will carry out a thorough probe into all aspects of the case, including whether top-ranking JRTT officials were involved in the affair.
JRTT’s undertakings include construction work on new Shinkansen lines in Hokkaido and Kyushu in addition to the Hokuriku Shinkansen. Prompt measures should be taken to determine whether there were any suspicions about bidding for projects on these lines. It is also essential to confirm whether JRTT is properly managing information about its anticipated prices.
The latest case has highlighted the depth of industry-wide collusion. The targets of Tuesday’s search included a large corporation that has expertise in installing snow-melting equipment.
The latest bid-rigging case is not an isolated one in the engineering industry. In 2006, action was taken in a case involving an order placed by the now-defunct Defense Facilities Administration Agency for air-conditioning equipment installation work.
All corporations in the engineering industry need to eliminate collusive relationships and comply with the law.
(From The Yomiuri Shimbun, Feb. 5, 2014)