U.S. demands fair chance to bid for Kansai airport work

by Eric Johnston

Staff writer

OSAKA — As plans move forward on the second phase of construction at Kansai International Airport, U.S. government officials in Osaka, Tokyo and Washington are stepping up efforts to ensure that American firms are included in the bidding process.

On Wednesday, U.S. and Japanese officials are scheduled to meet in Tokyo for a two-day discussion on the Japanese construction industry. One of the topics on the agenda is U.S. participation in the bidding process for construction of a second runway at Kansai International Airport.

Both Japanese and Americans want to avoid a repeat of what happened during the first phase of construction. It was in early 1985 that Keith Bovetti, then a U.S. commercial officer at the Osaka-Kobe consulate, formally asked Kansai airport officials to include U.S. firms in the bidding process for the airport project. Bovetti’s efforts led to more than 40 U.S. firms registering with Kansai International Airport Corp.

Although the Transport Ministry said in mid-1985 that U.S. firms would not be at a disadvantage in bidding for construction, Kansai airport officials announced in December of that year that work on the levee of the artificial island supporting the airport would be done by Japanese firms only.

Finally, in May 1988, the U.S. and Japan signed the Major Projects Agreement, which allowed U.S. firms to participate in a number of Japanese public works projects, including the recently opened Akashi Straits bridge. In addition, the agreement made it theoretically easier for U.S. construction firms to submit bids.

With second-phase construction due to begin in the spring of 1999, U.S. officials are making the issue a high priority. Several weeks ago, Majory Searing, acting director general of the U.S. Department of Commerce, visited Osaka and reaffirmed that the U.S. government would stand behind those U.S. companies seeking to bid on the project.

Following Searing’s visit, U.S. Ambassador Thomas Foley led a delegation of 12 U.S. firms to Nagoya, where plans to build Chubu International Airport are under way, and to Osaka. “When the U.S. originally inquired about participating in first-phase construction at Kansai International Airport, we were always told by Kansai (airport) and Transport Ministry officials that it was either too early or too late,” Foley said in Osaka.

Do U.S. construction firms have a realistic chance of being included in the bid process? Sunohara said yes. “With the financial problems of both the Osaka Prefectural Government and the national government, we have to think about costs. If U.S. firms are cost-competitive, they stand a good chance of winning a contract,” he said.

Other Kansai airport officials disagree, noting that the current economic slowdown means that Japanese construction companies are counting on work at the airport to avoid financial disaster. “This is a political issue for Osaka Prefecture politicians, who receive money and campaign support from local construction firms,” said a prefectural official who refused to be named. “Many of these firms are facing bankruptcy and will strongly press their politicians to make sure that money for public works goes to them, not American firms.”

Last week, the Fair Trade Commission sent a warning to 31 construction companies to stop bid-rigging. The warning came after the FTC received extensive documentation of bid-rigging from Sakae Hirashima, a former construction official dubbed by the local media as the “bid-rigging king of Kansai.”

Hirashima spilled the beans in early 1996 after his company was excluded from an Osaka-based “dango” group that was rigging bids for earthquake reconstruction work in Kobe. He provided the FTC with documents that showed that in 1996, 156 general contractors rigged bids on more than 800 public works projects, mostly in the Kansai area.