Structure of Procurement Quality Control at the Ministry of Defense and Future Approach

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1 Control at the Ministry of Defense and Future Approach Deputy Director General (General Coordination) Equipment Procurement and Construction Office, Ministry of Defense October 12, 2012

2 Contents 1. Overview of defense equipment procurement 2. Structure of procurement quality control at the Ministry of Defense 3. Future approach 2

3 Overview of defense equipment procurement 1 Procurement work for defense equipment, etc. (Central and regional procurement) Central procurement Minister of Defense Regional procurement EPCO Fighters, warships, tanks, missiles, etc. Modification and repair etc. of aircraft, etc. Ground SDF Maritime SDF Air SDF Other organizations, etc. Procurement of parts, etc. Repair, etc. of equipment (except aircraft) EPCO:Equipment Procurement and Construction Office SDF:Self Defense Force Source: EPCO pamphlet 3

4 Overview of defense equipment procurement 2 Contract amounts for central and regional procurement (2011) 62% Source: EPCO pamphlet 4

5 3 Change in procurement record and number of orders (100 millions yen) 18,000 16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Overview of defense equipment procurement (Year) Central procurement orders Central procurement amount Regional procurement amount Source: Prepared from EPCO yellow paper data 5

6 Overview of defense equipment procurement 4 Flow of procurement work for equipment, etc. Ground/Maritime/Air SDF, etc. (procurement requestor) EPCO 2 Contract method selection 3 Calculation of expected price 1 Procurement request Ground/Maritime/Air SDF, etc. Receipt unit, depot, etc. (Unit using, etc.) Instruct 4 Bidding/negotiation 5 Contract conclusion 8 Fee payment Regional defense bureau/branch Report 6Oversight/inspection/cost audit 7 Equipment delivery Execute Company (contracted party) 6

7 1 Structure of quality control at the Ministry of Defense Ground/Maritime/Air SDF, etc. Procurement request Request quality control method, etc. according to Defense Specifications, etc. EPCO Procurement work Conduct oversight and inspect finished product as necessary at manufacturing plant, etc., and secure requested quality Regional defense bureau, etc. Unit using at Ground/Maritime/Air SDF, etc. Receiving inspection Maintenance/ supply Confirm the quantity, etc. of equipment, etc. delivered from manufacturing plant, etc. Oversight/inspection work Maintain/Manage quality of equipment, etc. to meets specified standards 7

8 2 DSP:Defense Specifications DSP are... Documents that note requisitions of acquisitions. (shape, structure, quality, characteristics, test methods, inspection methods, packing methods, labeling methods, conditions of shipment, etc.) and that define the requisitions of acquisitions, etc. that requires commonality to be secured in particular among equipment, etc. expected to have high frequency of use and continuous procurement. Quality management etc., common specifications (DSP Z ) Number Name Main use Year established Expected cancellation Quality control application specifications Selection of 9001, 9002, 9003, etc. Quality assurance common specifications Development of major equipment Quality management common specifications Manufacture/re pair of major equipment Inspection system common specifications Manufacture/ repair of equipment QMS- Requirements common specifications Supplemental requirements of JIS Q 9001 Quality management etc., common specifications Combination of JIS Q 9001 and 9100 requirements March 2013 March 2013 March 2013 March 2013 March 2013 Continued 8

9 Year Structure of Procurement Quality 3 History of defense specification establishment Adoption of US Air Force quality control methods with domestic production of T-34 Introduction of MIL specs in US-Japan government agreement with domestic production of F-86F and T-33A Air SDF established specifications based on MIL-Q-5923C Ground, Maritime, and Air SDF established their own specifications DSP Z 9001 to 9003 (based on MIL-Q-9858, MIL-I-45208, etc.) DSP Z 9005,6 (mini DSP) (cancelled in 2004) DSP Z 9007 (new mini DSP) DSP Z 9008 DSP Z 9000 JIS Z 9901 to 9903 JIS Q 9001:2000 JIS Q 9100:2000 JIS Q 9100:2004 JIS Q 9100:2009 ISO 9001 IAQS 9100 IAQG 9100 Requests specifications for quality control, etc. unified in DSP Z 9008 (from April 2013) 9

10 4 History of DSP Z 9008 establishment (May 2010) Problems with DSP Z 9001 to 9003 Old: Established in 1982 (MIL -Q-9858 already cancelled) Complex: Companies have 3 choices in 3 quality request levels Trend for adopting international standards Increase in certified companies (JIS Q 9001: approx. 40,000 companies, 9100: approx. 230 companies) Defense field added from JIS Q 9100: 2009 Cease concurrent use with other DSP, respecting JIS standards and eliminating choices Simplify complex form Establishment of DSP Z 9008 (benefits) Increase international standard adoption Secure fairness and achieve requests in line with general competitive bidding system Reduce related standards and simplify requirements Reduce burden on both customers and suppliers 10

11 5 Relationship between DSP Z 9008 JIS (image) DSP Z 9001 DSP Z 9002 DSP Z

12 5 Relationship between DSP Z 9008 JIS (image) DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO

13 5 Relationship between DSP Z 9008 JIS (image) DSP Z 9005 DSP Z 9006 DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO

14 5 Relationship between DSP Z 9008 JIS (image) DSP Z 9005 DSP Z 9006 DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO JIS 9001 Q 9001 (2000) 11-4

15 5 Relationship between DSP Z 9008 JIS (image) DSP DSP Z 9005 Z DSP 9007 Z 9006 DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO JIS 9001 Q 9001 (2000) 11-5

16 5 Relationship between DSP Z 9008 JIS (image) DSP DSP Z 9005 Z DSP 9007 Z 9006 DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO JIS 9001 Q 9001 (2000) JIS Q 9100 (2000) 11-6

17 5 Relationship between DSP Z 9008 JIS (image) DSP DSP Z 9005 Z DSP 9007 Z 9006 DSP Z 9001 DSP Z 9002 DSP Z 9003 DSP Z 9000 ISO JIS 9001 Q 9001 (2000) JIS Q 9100 (2000) 11-7

18 5 Relationship between DSP Z 9008 JIS (image) DSP DSP Z 9005 Z DSP 9007 Z 9006 JIS Q 9100(2009) DSP Z 9000 DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO JIS 9001 Q 9001 (2000) JIS Q 9100 (2000) 11-8

19 5 Relationship between DSP Z 9008 JIS (image) DSP Z Additional requirements DSP DSP Z 9005 Z DSP 9007 Z 9006 JIS Q 9100(2009) DSP Z 9000 DSP Z 9001 DSP Z 9002 DSP Z 9003 ISO JIS 9001 Q 9001 (2000) JIS Q 9100 (2000) 11-9

20 6 Selection of requirements by DSP Z 9000 Items related to quality assurance JIS Q DSP Z 9001 or DSP Z 9007 JIS Q 9100 or + Items related to material review DSP Z 9000 Quality control application specifications Items related to quality control JIS Q DSP Z 9002 or DSP Z 9007 or JIS Q Items related to material review Items related to inspection system Request necessary items (defined in individual specification) JIS Q DSP Z 9003 or DSP Z 9007 or JIS Q classifications 12

21 7 Features of DSP Z 9008 (classified by equipment) DSP Z 9008 Quality management etc., common specifications Request necessary items (defined in individual specification) 3 classifications Classification a (aircraft, missiles, etc.) JIS Q additional requirements Classification b (tanks, ships, firearms, etc.) JIS Q additional requirements Classification c (vehicles, ship engines, etc.) JIS Q 9001 inapplicable items Required functions/performance and safety 13

22 8 Status of JIS Q 9100 and other certification accreditation status for Defense related companies (March 31, 2012) Source: Prepared from EPCO yellow paper data Note : EPCO ---Equipment Procurement and Construction Office 14

23 9 Categories of companies certified (March 31, 2012) Chemicals, chemical products, and fiber products 1% Investigated the companies required for Quality evidence review and Inspection Rubber and plastic products 3% Base metal / Machined metal products 3% Industries not covered by other categories 2% Information technologies 3% Others 8% Electrical and optical equipments 32% Other transport equipments 4% Aerospace industries Machineries, equipments Note : EPCO ---Equipment Procurement and Construction Office Source: Prepared from EPCO yellow paper data 15

24 Future approach 1 Maintaining and fostering efforts for aircraft manufacturing / engineering foundation (1) Manufacturing / technical foundation for fighters Completion F-2 fighter delivery / Fighter manufacturing suspension Future issues in manufacturing /engineering foundation for fighters (2) Concepts for future fighters R&D visions for future fighters Periodic exchange of opinions between public and private sector (3) Diversion of aircraft for private sector use Cooperation review with related government ministries and agencies Specific system design such as for disclosure of Ministry of Defense technical materials C-2 Cargo Plane / US-2 SAR Amphibious Plane which had disclosure request by private sector Source: 2012 Defense white paper 16

25 Future approach 2 Efforts in acquisition of equipment, etc. (1) Enhanced lifecycle cost control Contribute to effective and efficient equipment acquisition. (2) Expansion of incentive contract system Prompt improved productivity of companies and enhancement/advancement of low-cost structures. (3) Efforts in cost control Control costs by concentrated procurement of parts and joint procurement with other ministries and agencies. (4) Efforts to improve fairness and transparency Enhance budgeting check function to prevent reoccurrence of incidents. (5) Review of central and regional procurement Require minister approval for expensive limited tendering contracts of regional procurement (150 million yen or more). (6) Study for more efficiency in acquiring equipment Acquiring equipment through IPT method Cost control structure Introduction of PBL Source: 2012 Defense white paper 17-1

26 Future approach 2 Efforts in acquisition of equipment, etc. (1) Enhanced lifecycle cost control Contribute to effective and efficient equipment acquisition. (2) Expansion of incentive contract system Prompt improved productivity of companies and enhancement/advancement The Ministry of of low-cost Defense structures. is (3) Efforts in cost control Control costs by concentrated aiming procurement to of parts and joint procurement with other ministries and agencies. (4) Efforts to improve fairness and transparency Enhance achieve budgeting quality check function of to procured prevent reoccurrence of incidents. (5) Review of items central and regional reduce procurement costs Require minister approval for expensive limited tendering contracts of regional procurement (150 million yen or more). (6) Study for more efficiency in acquiring equipment Acquiring equipment through IPT method Cost control structure Introduction of PBL Source: 2012 Defense white paper 17-2

27 Future approach 3 Compliance is the staring point for achieving quality Fraudulent aircraft seat inspection JIS Q 9100 JIS Q 9001 ISO 9001 Organization regulations, etc. Laws, etc. Fraudulent aircraft part inspection Compliance Social rules (common sense, ethics) 18

28 4 Ideal relationship with companies and the Ministry of Defense (image) Efforts to deal with issues Introduction of ethics code and compliance Future approach Defense Agency Defense Agency Contract Contract Company Company Win-Win Relationship Ministry of Defense Contract Company 19

29 JIS Q 9100 Expansion Achieving quality of defense equipment Win-Win Relationship Aerospace industry growth Don't "Making the Buddha statue body without the soul." (Don't "Ploughing the field and forgetting the seeds.") 20

30 Thank you for your time 21

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