Kankouju or ‘Public Agency Orders’ relates to the budget of public procurement spending reserved specifically for SMEs.  This earmarked budget is regulated by the Act on Ensuring Receipt of Orders from the Government and Other Public Agencies by Small and Medium-sized Enterprises established in 1966.  

In fact, more than half of the tenders are reserved for SMEs. The Japanese government sets a target for each year, in FY 2013. 56% of the total expected demand of €61.7 billion was reserved for SMEs.

 Link: http://www.meti.go.jp/english/press/2013/0625_02.html　

 While this involves a substantial part of Japan’s government procurement, there is little English information available on Public Agency Orders.  In Japan, it is however regarded as an important way to create and sustain employment for SMEs.

 Link:  Japan’s Policy on Small and Medium Enterprises (SMEs) and Micro Enterprises (September 2013)

The Small and Medium Enterprise Agency is tasked with the support of SMEs in securing government contracts.  Among others it has developed the following activities:

• Management of a designated portal site in Japanese for public agency orders at http://www.kkj.go.jp/s/
• Support of establishment of business cooperatives of SMEs to gain access to larger government contracts.  (kankouju tekkaku kumiai)  This enables a group of SMEs to achieve a higher supplier ranking.  Foreign companies can also form or take part in such a business cooperative.
• Maintaining “Public Agency Orders’ Consultancy Centres” in all 47 prefectures. For list (in Japanese) see here.

Statistics produced by the Japanese government on the share of contracts awarded to SMEs suggest that among the national government ministries and affiliated organisations, the Ministry of Education, Culture, Science and Technology, The Ministry of Agriculture, Forestry and Fisheries, and Ministry of Labour, Health and Welfare awarded a substantial share of their procurement to SMEs.