In this fortnightly online column, ADM journalist Corey Lee Bell covers defence news across Japan and the Republic of Korea.
Japan’s Acquisitions, Technology & Logistics Agency (ATLA), the primary organ responsible for that nation’s defence procurements, publicly released information on its new “Fast Pass Procurement” program for defence industry startups on 27 February.
The initiative, as described in ATLA’s four-page brochure, aims to provide industry support, remove administrative hurdles, and facilitate interaction between defence personnel and designated startup defence equipment providers – measures ATLA believes will hasten Japan’s Self-Defense Forces’ (JSDF) induction of emerging technologies from the civilian sector.
The companies primarily targeted in the initiative are tech startups that specialise in AI, drones, quantum computing, biomedicine, space, and advanced training packages.
Institutionalisation of a Ministry of Defense SBIR System
A key part of the new scheme is the institutionalisation of a Japanese Ministry of Defense (MoD) Small Business Innovation Research (SBIR) System.
Japan’s Cabinet Office runs an SBIR scheme which provides funding to support the commercialisation of emerging technologies, but the MoD has hitherto not utilised it – something which is set to change under the implementation of the new system.
The Japanese MoD SBIR will also adopt a three phased process for technology induction similar to that of the US Department of War’s SBIR scheme, encompassing 1. proof of concept testing, 2. prototype development/demonstration and 3. procurement/large scale production.
According to ATLA’s brochure, this financial year (ending 31 March 2027) a corresponding 7 billion yen (approx. A $63 million) has already been allocated to seeding emerging technologies, 7.1 billion yen (approx. A $63 million) has been set aside for research and development, and 8.3 trillion yen (approx. A $74 billion) will be used to cover large scale production and procurement costs.
A unique quality of the MoD’s SBIR is that it aims to institutionalise a constant feedback loop between the startup equipment provider and the force it supplies during the testing/R&D processes.
ATLA hopes this will ensure equipment development closely caters to force needs prior to the commencement of final contract negotiations.
It believes that the combination of support and constant feedback in the earlier phases will hasten the pathway to procurement and large scale production. It is also expected to reduce the risk of companies having to write off self-funded R&D work due to late-stage rejections – something seen as a contributing factor to many companies having withdrawn from Japan’s defence industry in recent years.
Fast Pass set to reduce regulatory burdens
The Fast Pass scheme also cuts a number of administrative hurdles necessary for signing optional contracts.
Under the pre-existing scheme, government organs closely scrutinised and ranked applicants, with final contract decisions based on inflexible eligibility criteria requirements.
The new process, by comparison, will be oriented around proposal merit, while product specification documents and optional contracts will be negotiated with greater flexibility through people-to-people engagement between defence officials and company representatives.
ATLA believes that these changes will reduce late rejections and cut the length of processes leading up to the signing of optional contracts from 1 year to around just 3 months.
ATLA forms consulting service for startups
To further support the scheme ATLA announced the formation of a new sub-agency for “accompanied support for utilising startups.” It has also instituted a one-stop consulting service for both defence organs and startup equipment providers.
The new office is expected to assist in matching startups with MoD/JSDF organs, and provide specialist advice on issues including evolving defence technology needs, R&D processes, as well as contract and procurement regulations.
Expediting the induction of technologies from private sector sources has been a high priority for ATLA for several years, in response to the rise in what ATLA calls “new ways of warfare underpinned by advanced technologies” and perceptions of rising regional threats and a shrinking window of strategic warning time.
In 2023, ATLA formed the Rapid Acquisition Program to refit dual-use technology for military use, with innovations including utilising a single contract to cover multiple procurement stages, and instituting right to request rights for contracted companies during the R&D phase.
Civilian sector startups have also been encouraged to enter the defence industry via participation in ATLA’s biannual Defense Industry Promotion Exhibition (DIPEX) – which provides a platform for matching defence organs/defence primes with new entrants into the defence industry.
This year’s first event, held in February, exclusively platformed small and medium enterprises (SMEs).