RESTRICTED
WORLD TRADE S/WPGR/W/11/Add.5
27September 1996
ORGANIZATION
(96-3863)
Working Party onGATS Rules Original: English
COMMUNICATION FROM JAPAN
Response totheQuestionnaire onGovernment Procurement ofServices
Thefollowing communication isbeing circulated attherequest ofthedelegation ofJapan to
Members oftheWorking Party onGATS Rules.
_____________
I. EXISTING PROCUREMENT REGIMES
Definition
1. What isthedefinition ofgovernment procurement employed incompleting this
questionnaire?
Forthepurpose ofcompleting thisquestionnaire, government procurement isreferred toas
theprocurement ofservices covered bytheAgreement onGovernment Procurement concluded
inMarrakesh on15April 1994 (hereinafter, "theAgreement"). Itmust benoted thatthis
definition isusedonlyinthecontext ofthisquestionnaire andshould notprejudice Japan's
position onunderstanding ofthescope ofgovernment procurement.
Administrative structure
2. Howaregovernment procurement activities administered? Towhatextent areprocurement
activities centralized? Please specify theidentity ofanycentral procurement agencies and
theirrespective responsibilities.
InJapan, government procurement isconducted onthebasisofprocurement contracts entered
intobyeachprocuring entity, thusinadecentralized manner. Theprocurement procedures
areprovided forintheAccounts Lawandrelevant regulations withregard tocentral government
entities, intheLocal Autonomy Lawandrelevant regulations withregard tosub-central
government entities, andinaccordance withtherelevant procurement procedures operating
under thesupervision ofthecentral government entity concerned withregard toother entities.
Procurement plans ofthecentral government arenormally formulated onthebasis of
procurement planned bytheprocuring entity. Adraftbudget isprepared aftergoing through
theexamination bythefiscal authorities, andthatdraftcomes intoforce atthebeginning of
thefollowing fiscal yearaftertheapproval oftheDiet.S/WPGR/W/11/Add.5
Page2
Laws andregulations inforce
3.(a) Please specify thelaws, regulations, rules, guidelines, decrees, decisions andother measures
governing government procurement. What isthescope oftheirapplication? Inparticular,
please describe anyexemptions thatexist. Please provide abrief summary ofthecontent
ofeachofthese measures.
Thefollowing isalistanoutline ofthemajor lawsandregulations related togovernment
procurement inJapan andthescope oftheirapplication.
(1) List
(i) Accounts Law
(ii) Cabinet Order Concerning theBudget, Auditing andAccounting
(iii) Special Provision oftheCabinet Order Concerning theBudget, Auditing and
Accounting
(iv) Regulations ontheManagement ofContract Administration
(v) Cabinet Order Stipulating Special Procedures forGovernment Procurement
ofGoods orServices
(vi) Ministerial Ordinance Stipulating Special Procedures forGovernment
Procurement ofGoods orServices
(vii) Local Autonomy Law
(viii) Ordinance forEnforcement ofLocal Autonomy Law
(ix) Cabinet Order Stipulating Special Procedures forGovernment Procurement
ofGoods orServices inLocal Government Entities
(x) a) Ontheestablishment oftheOffice ofGovernment Procurement Review
(Cabinet Decision of1December 1995)
b) Review Procedures forComplaints Concerning Government
Procurement (Decision oftheOffice ofGovernment Procurement
Review on14December 1995)
c) Designation ofApplicable Measures Concerning Government
Procurement (Decision oftheHead oftheOffice ofGovernment
Procurement Review on14December 1995)
(2) Outline
(i) Accounts Law
Thislawstipulates thebasicitems ofthenation 'saccounting duties pertaining
tocontractualduties,contractualmethods,tenderingmethods,contractualforms
andother matters.
(ii) Cabinet Order Concerning theBudget, Auditing andAccounting, theSpecial
Provisions forCabinet Order Concerning theBudget, Auditing andAccounting
andtheRegulations ontheManagement ofContract Administration.
These accounting regulations stipulate thedetail oftherules andprocedures
provided forintheAccounts Law, including theconditions fortheuseof
selective tendering andsingle tendering
(iii) Cabinet Order Stipulating Special Procedures forGovernment Procurement
ofGoods orServices.S/WPGR/W/11/Add.5
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ThisCabinet Order provides special rulesandprocedures which arenecessary
forimplementing theAgreement inaddition tothelaws andregulations
mentioned above in(1)(i) through (iv)
(iv) Ministerial Ordinance Stipulating Special Procedures forGovernment
Procurement ofGoods orServices
ThisMinisterial Ordinance isapplied totheprocurement contracts subject to
theprovisions oftheCabinet Order referred toabove in(1)(v). Theordinance
stipulates thedetails oftherules andprocedures suchasinformation tobe
publishedintheofficialgazette"Kanpo"onthequalificationprocedures,matters
tobedescribed intender documents andinformation onthecontract awarded.
(v) Local Autonomy Law
ThisLawprovidesageneralprincipleconcerningtheorganizationandoperation
oflocalgovernment bodies (including therulesonprocurement contracts) and
thebasic relations between thecentral government andlocalgovernments.
(vi) Ordinance fortheEnforcement ofLocal Autonomy Law
ThisOrdinance provides detailed rules andprocedures forimplementing the
provisions oftheLocal Autonomy Law, including matters onprocurement
contracts.
(vii) Cabinet Order Stipulating Special Procedures forGovernment Procurement
ofGoods orServices inLocal Government Entities
ThisCabinet Order establishes thespecial rules andprocedures needed to
implement theAgreement inaddition tothelawsandregulations mentioned
above in(1)(vii) and(viii)
(viii) OntheestablishmentoftheOfficeofGovernmentProcurementReview(Cabinet
Decision of1December 1995) (hereinafter the"OGPR")
TheOGPR wasestablished bythePrime Minister 'sOffice toimplement the
Provisions oftheAgreement regarding challenge procedures. TheGovernment
Procurement Review Board (the"GPRB"), heldunder theOGPR, processes
complaints inafairandneutral manner withregard toprocurements bythe
central government entities andother entities. TheGPRB reviews complaints
inaccordance withthespecific procedures setoutbytheOGPR byapplying
theprovisions oftheAgreement andthemeasures otherwise designated by
theheadoftheOGPR.
(ix) Following themodel oftheprocedures setoutbytheOGPR, theprefectural
governments andthedesignated cities covered bytheLocal Autonomy Law
have established their respective procedures toprocess complaints on
procurement subject totheAgreement.S/WPGR/W/11/Add.5
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(3) Scope oftheApplication
Thelawsandregulations mentioned above in(1)(ii)(iii) and(iv)apply toallthecentral
government entities, while those mentioned above in(1)(v) and(vi)apply toall
sub-central government entities andthecabinet order mentioned above in(1)(vii) applies
toalltheprefectural governments andthedesignated cities covered bytheAgreement.
Theabove-mentioned lawsandregulations havenoprovisions forexemptions totheir
application, except fortheprovisions accepted intheAgreement.
(b) Does theprocurement regime distinguish between theprocurement ofgoods andservices?
Ifso,thenhowistheapplication ofrulesdetermined incases ofjointprocurement involving
bothgoods andservices?
There isnosuchdistinction inourprocurement regime.
Procurement procedures applied
4.(a) What procedures arefollowed intheprocurement process?
Themethods followed forprocurement contracts byentities covered bytheAccounts Lawand
theLocalAutonomyLawareopentendering,selectivetendering,andsingleorlimitedtendering.
i) Open Tendering
Under thismethod, eachentity publishes public notices ofintended procurements in
theofficial gazette "Kanpo" oritsequivalents atthelocallevel, andnormally invites
qualified suppliers toparticipate intendering procedures. Theprocurement contract
isawarded tothesupplier whosubmitted thelowest-priced tender. Thisserves asthe
principal method forgovernment procurement contracts inJapan.
ii) Selective Tendering
Under thismethod, eachentity publishes public notices ofintended procurements in
theofficial gazette "Kanpo" oritsequivalents atthelocal level totheeffect that
applications toqualify forparticipation incompetitive tendering willbeaccepted.
Among those suppliers whohavebeenidentified byeachentity asqualified through
itsqualification procedure, theentity designates thesuppliers deemed tohave the
capacity tofulfilthecontract. Thecontract isawarded tothesupplier whosubmitted
thelowest-priced tender among those designated. However, theconditions inthis
method aredefined bylawsandregulations, which provide forsuchcases asdonot
necessitate theuseofopentendering, forexample duetothelimited number ofsuppliers
competing because ofthenature orthepurpose ofthecontract.
iii) Single orlimited Tendering
Thismethod allows entities toconclude contracts withdesignated suppliers without
following competitive tendering procedures. Thesingle tendering method isusedonly
exceptionally. With regard toprocurement contracts subject totheAgreement, in
particular, single tendering canbeusedonlyinaccordance withtheconditions stipulated
intheAgreement ---suchascases inwhich nosuppliers would respond even ifS/WPGR/W/11/Add.5
Page5
competitive tendering procedures wereapplied andcases connected withtheprotection
ofexclusive rights including patents andcopyrights.
(b) Under whatcircumstances aredifferent procedures used? Forinstance, ifthemethod used
depends onthevalue oftheprocurement, thethresholds should begiven.
Asforthecircumstances under which different procedures areused, see4(a)above. Thechoice
ofaprocedure doesnotdepend onthevalue oftheprocurement contract concerned.
(c) What arethetimelimits forsubmission ofbids?
Suppliers mustsubmit theirbidsbefore thedeadline mentioned inthenotice fortenders inthe
gazette (thenotice ispublished inprinciple 40daysinadvance ofthedeadline.)
Publicity forinviting tenders
5.(a) How areintended procurements publicised? Areinvitations totender published? Ifso,
where, andinwhat languages?
Aprocuring entity publishes anotice intheofficial gazette, "Kanpo" oritsequivalents atthe
locallevel, fortheinvitation totender inprinciple 40daysinadvance oftheclosing dateof
receipt fortenders. Therefore, itisveryimportant toreadnotices ontenders inthegazette
carefully. Information ontenders isalsoavailable through contact points ongovernment
procurement. Asforthelanguages usedfortheinvitations, seebelow 5(c)
(b) Dotheextent andform ofpublicity differ according totendering procedures applied and/or
onthevalue ofprocurement?
With regard toprocurement inJapan, theextent andform ofpublicity doesnotdepend on
tendering procedures oronthevalue ofprocurement.
(c) What details oftheintended procurement arenormally published? Isthere aminimum set
ofinformation thatisrequired tobepublished? Ifso,please specify.
Anotice ofinvitations totender includes suchinformation asisindicated below. Intheofficial
gazette, thenature andquantity ofservices tobeprocured, thetime-limits setforthesubmission
oftenders, andthename anddepartment oftheofficial incharge ofthecontract aredescribed
inEnglish, i.e.oneoftheofficial languages oftheWTO. Public notices onselective tendering
procedures contain, inaddition tosuchinformation, requirements forbeing designated to
participate intenders.
- Subject matter ofcontract;
- Incases ofrecurring contracts, thenature andquantity oftheservices tobeprocured
under alltheremaining contracts afteroneoftheseries ofrecurring contracts, the
estimated dated ofthesubsequent tender notices andthedateofthenotices andthe
dateofthenotices inviting thefirsttender;
- Qualifications required forparticipating inthetendering procedures;
- Place andtime-limits setforthesubmission oftenders;
- Place forindicating contract provisions;
- Place andprocedures forthedelivery oftender documents;
- Name anddepartment oftheofficial incharge ofthecontract;S/WPGR/W/11/Add.5
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- Place, dateandtimeofopening tenders;
- Language andcurrency tobeusedforthecontract;
- Information ontender guarantee feesandcontract guarantee fees;
- Obligations oftenderers;
- Confirmation thattenders made bynon-qualified suppliers andtenders violating the
conditions ofthetender areinvalid;
- Whether awritten contract isrequired ornot,and
- Method fordetermining thesuccessful tenderer;
(d) Arethere anycharges forobtaining thefullsetoftender documents? Ifso,please specify
anddescribe howthese charges areset?
Thosewhointendtoparticipateincompetitivetenderingprocedurescanobtaintenderdocuments
containing detailed information onthetender fromtheprocuring entity concerned. Sometimes
when itisnecessary, expenses ofthetender documents havetobepaidfor.
(e) Areelectronic means usedtoadvertise procurement opportunities? What isthenature of
systems thatareinplace? Aredifferent tendering provisions applied tocontracts advertised
inthismanner? Ifso,please describe.
Withaviewtofacilitating access toinformation about government procurement, anelectronic
data-base containing theinformation published intheofficial gazette, "Kanpo", isavailable,
either atsuchplaces aslocalbranch offices andBusiness Support Centers oftheJapan External
Trade Organization (JETRO) andthrough on-line information anddatabaseretrieval services
ontheInternet.
Requirements laiddown forpossible suppliers
6.(a) Arethere registration, residence orother requirements forpotential suppliers?
Usually, those whowishtoparticipate inopentendering andselective tendering procedures
must receive qualifications from procuring entities andbeincluded inthepermanent listof
qualified suppliers which isprepared andupdated byprocuring entities.
Inorder toensure thetransparency, openness, andefficient useofallocations intheprocedures
forcompetitive tendering, competition through pricealone serves astheprinciple. Therefore,
incases where suppliers areasked toparticipate incompetitions andtheydonotconsider their
ability toimplement contracts inadvance, there isariskthatthedesignated supplier willnot
beabletoimplement thecontract properly. Thus, while paying attention tonotreducing the
leveloffairness incompetition, qualifications forparticipating incompetitions aredetermined
andsuppliers applying toparticipate incompetitions arejudged based ontheir scale of
operations, record ofachievements andother factors, and,afterdetermining theirability to
implementthecontract,thosesuppliersdeemedtohavethecapacitytocarryouttherequirements
aredesignated asthesuppliers qualified tocompete. Inthatwaythetransparency ofcontract
procedures issecured while guaranteeing thatsuppliers withacertain level ofability to
implement contracts areselected. Norequirements except those mentioned above areimposed
onsuppliers forparticipating inqualification procedures.S/WPGR/W/11/Add.5
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(b) What isthenature ofanyconditions forparticipation required from suppliers -such as
financial guarantees, commercial standing andtechnical qualifications? Dotheconditions
ofparticipation varyaccording tothenature ofthetender process and/or thevalue ofthe
intended procurement?
Forthefirstquestion, see6(a)above. Forthesecond question, theconditions ofparticipation
varyaccording tothetypesofprocedures explained intheanswer 4(a).Theconditions, however
donotdepend onthevalue oftheprocurement.
(c) Dothere existlistsofapproved suppliers? Ifso,what aretheprocedures forchecking the
capability offirms applying forinclusion ontenderers 'mailing lists? Arelistsofapproved
suppliers, ifany,regularly reviewed/updated?
See6.(a), thepermanent list(hereinafter, "thelist")ofqualified suppliers prepared byprocuring
entities isupdated every oneortwoyears ingeneral. Inaddition, suppliers mayapply toreceive
qualifications atanytime. When theyareidentified asqualified, theywillbeenrolled onthe
list
Criteria forassessing bidsandawarding contracts
7.(a) What criteria aretaken intoaccount intheaward oftenders? Arecriteria foraward of
contracts made available inadvance topotential suppliers?
Inorder toensure transparency andopenness orefficient useofallocations intheprocedures
forcompetitivetendering,tenderssubmittedareevaluatedonthebasisoftheleast-priced-method,
forwhich aprocuring entity calculates apricewhich serves asthestandard forawarding based
onobjective andreasonable specifications toberequired. Insome major sectors suchas
computer andrelated services, however, when tenders submitted areabove thethreshold, an
overall-greatest-value-method isusedforanobjective evaluation ofthequality ofrelevant
services.Thesecriteriaaredescribedinnoticesontendersandsuppliersareinformedinadvance.
(b) Isprocurement subject toanyoffset provisions, suchaslocal content, technology transfer
orcountertrade requirements?
There arenooffset provisions, suchaslocal content, technology transfer orcountertrade
requirements inJapanese government procurement procedures.
(c) Ispreference given toanyparticular enterprises orgroup ofenterprises? Ifso,please specify.
Government Procurement inJapan places norestrictions ontheplace oforigin ornationality
ofthesupplier andiscarried outontheprinciple ofnational treatment andnon-discrimination.
Nopreferential treatment isextended tospecific suppliers.
(d) Dotheprocurement criteria differ according tosector orregion oftheeconomy?
InGovernment Procurement inJapan, competition through price alone serves astheprinciple
andprocurement criteria donotdiffer according tothesector orregion oftheeconomy.S/WPGR/W/11/Add.5
Page8
(e) What isthemargin ofchoice ordiscretion allowed tothepurchasing authority? What does
theextent, ifany,ofdiscretion allowed depend upon?
Withregard toGovernment Procurement inJapan, theriskofarbitrary decisions bytheofficials
incharge indetermining theaward ofcontracts areeliminated byqualifying suppliers inadvance
onanon-discriminatory basis, requiring suppliers tofollow conditions onquality, specifications
andother elements inamanner which donotpreclude competition andmaking price-based
competition serve astheprinciple.
Disclosure ofbidsreceived andcontracts awarded
8.(a) How aretenders received, registered andopened?
Sealed tenders mustbesubmitted atthetimeandplace andspecified inthenotice intheofficial
gazette "Kanpo" oritsequivalents atthelocallevel. Specifications oftheservices tobeprocured
mayberequired tobesubmitted withthetenders insome cases.
Tenders areopened atthetimeandplace specified inthenotice intheofficial gazette, "Kanpo"
oritsequivalents atthelocallevel, inthepresence oftenderers ortheirproxies. Should no
tenderers ortheirproxies bepresent, thestaffoftheprocuring entity whoarenotinvolved
inthetendering procedures arerequired tobewitnesses.
(b) Areentities required topublish details ofthecontracts awarded and/or notify unsuccessful
tenderers?
Eachprocuring entity notifies tenderers ofthedecision oftheaward ofthecontract inwriting.
Furthermore, eachentity publishes anotice intheofficial gazette, "Kanpo" oritsequivalents
atthelocallevel, containing thesubject matter ofthecontract, dateofaward, name andaddress
ofwinning tenderer, andvalue ofwinning award withaviewtoincreasing opportunities for
potential suppliers toparticipate intendering procedures. Information onawarding ofcontracts
isalsoavailable atcontact points oneachgovernment procurement.
(c) Areentities required topublish, orprovide tounsuccessful bidders, pertinent reasons why
theirbidwasrejected?
Thenotification which eachentity gives tothetenderers concerned regarding itsdecision on
theaward ofthecontract doesnotinclude information about thereason fornotbeing awarded.
Ifrequested, however, information isprovided promptly.
Treatment granted todomestic andforeign services and/or suppliers
9. What laws, regulations, procedures orpractices accord domestic services and/or suppliers
treatment more favourable thanthataccorded toforeign services and/or suppliers, oraccord
services and/or suppliers ofaMember more favourable treatment thanthose ofanother
Member? Please specify how, ifatall,more favourable treatment isaccorded. Please also
specify theworking definition of"domestic" inrelation todomestic services andsuppliers.
Government procurement inJapan hasnodiscrimination ontheplace oforigin ornationality
ofsupplier andtheprinciple ofnational treatment andnon-discrimination issecured. InJapan
"domestic services" procured bygovernment organizations isinterpreted asservices providedS/WPGR/W/11/Add.5
Page9
through commercial presence established inJapan andowned orcontrolled bypersons of
Japanese nationality ortheservices provided byJapanese whoareresidents inJapan.
Procedures forhearing andreviewing complaints/appeals
10. What, ifany,aretheprocedures available forparties, domestic andforeign, tolodge
complaints against theaward ofacontract? Please provide details.
TheJapanese Government, pursuant torelevant provisions oftheAgreement, hasintroduced
abidchallenge system1which enables thesuppliers interested tofilecomplaints onthe
procurements covered bytheAgreement and/or based onthevoluntary measures which Japan
hastaken. With aview toprocessing complaints onprocurement byentities other than
sub-central government entities, Japan hasestablished theOffice ofGovernment Procurement
Review (OGPR) under thePrime Minister 'sOffice based onaCabinet Order ofDecember
1995, andtheGovernment Procurement Review Board heldunder OGPR hassetoutthespecific
procedures forreviewing complaints. Thefollowing isanoutline ofhowtousethose
procedures. (Complaints onprocurement bysub-central government entities canbeprocessed
inaccordance withprocedures which eachentity concerned hasestablished mutatis mutandis
tothose ofthecentral government.)
Qualification ofComplainants
Complaints maybefiledbysuppliers whoeither participated orarequalified toparticipate
inspecific andindividual casesofprocurement, subject totheprocedures forcomplaint review.
Where toFileComplaints
Complaints should befiledwiththeSecretariat oftheBoard intheOffice forGovernment
Procurement Challenge System (CHANS), Coordination Bureau, Economic Planning Agency.
Filing ofComplaints
Complaints canbereceived inaccordance withtheform specified inAppendix 1,through a
phone call,visit, mailorother means ofcommunication.
Participation inReview Process
Allsuppliers thathaveinterests intheprocurement subject tothecomplaint mayparticipate
inthereview process byattending orexpressing theirviews atmeetings oftheBoard. Those
whowishtodososhould notify theSecretariat, inaccordance withtheforminAppendix 2,
within fivedaysafterthepublic notice isgiven, through theofficial gazette "Kanpo" orthe
Internet.
1Asupplier mayfileacomplaint withtheBoard, ifthesupplier believes thattheprocurement hasbeen
carried outinamanner inconsistent withanyprovision oftheAgreement orother applicable measures which
Japan hastaken voluntarily inorder toincrease access opportunities forforeign suppliers totheJapanese market.S/WPGR/W/11/Add.5
Page10
II. MEMBERSHIP OFPLURILATERAL, REGIONAL AND/OR BILATERAL AGREEMENTS
11. IstheMember party toanyplurilateral, regional and/or bilateral agreements withprovisions
ongovernment procurement? Ifso,please describe therelevant provisions.
Japan isaparty totheAgreement onGovernment Procurement which wasreached on15April
1994 inMarrakesh, while remaining aparty totheAgreement onGovernment Procurement
which wasreached on12April 1979 inGeneva andamended on2December 1986.
III. ECONOMIC IMPORTANCE OFSERVICES PROCUREMENT
12.(a) Please provide statistics (ifavailable) onthenumber andvalue ofservices procurements
- onbothanaggregate andsectoral basis;
- byorigin ofservices andsuppliers.
(b) Please provide statistics (ifavailable) onthe
- share ofservices procurement intotalprocurement;
- share ofprocurement ofeachservice intotaldomestic output oftheservice;
- share ofprocurement ofeachservice intotaldomestic consumption oftheservice.
Nosuchstatistical information onprocurement ofservices hasyetbeenmade available. (With
regard toprocurement oftheservices covered bytheAgreement, theGovernment ofJapan
willbegin tocompile fromnextyeartherelevant information ontheprocurement ofthisyear.)S/WPGR/W/11/Add.5
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APPENDIX 1
Form forFiling Complaints
Information Required forFiling aComplaint
Complainant
(Noanonymous requests
canbeaccepted)Company name (thecompany must havesomething todowith
theprocurement inquestion)
Address, postal code
Telephone, faxno.
Name (inthecaseofacompany, include thename ofthe
representing official)
Name ofthestaffincharge
Procurement which is
subject tothecomplaintOfficially announced astender bidding #_______ (inthe
Official Gazette dated D/M/Y), tobeprocured (procured) by
______ (name ofentity)
Description ofcomplaint (Toensure prompt handing, please describe asspecifically as
possible. Please enclose asmany descriptive materials as
possible aswell.)
Have youconsulted with
theprocuring entity upto
now?1) Yes(when, where?)
2) NoS/WPGR/W/11/Add.5
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APPENDIX 2
Form forIndicating Desire toParticipate inComplaint Review Process
Information Required toIndicate Desire toParticipate inBoard Meeting
Person (body) wishing to
attend (Noanonymous
requests canbeaccepted)Company name (thecompany must havesome interests inthe
procurement inquestion)
Address, postal code
Telephone, faxno.
Name (inthecaseofacompany, include thename ofthe
representing official)
Name ofthestaffincharge
Complaint Review Process
inwhich theperson wishes
toparticipatePublic notice #______ oftheGovernment Procurement Review
Board
Description ofinterest
involved(Please describe specifically yourinterest inquestion)