for certain procurements, including purchases above a specified threshold be made on the basis of the Overall Greatest Value Method (OGVM), instead of the current minimum price system. The threshold will be reduced in value over a three-year period from 800,000 Special Drawing Rights (SDRs) on April 1, 1996, to 385,000 SDRs on April 1, 1998. For the first time, equipment costs of these items will be calculated on a life-cycle basis. This means that the highly sophisticated medical technology products manufactured by U.S. and foreign firms will not be excluded automatically because of initial price. The technical excellence of those products, and the value they provide over the long term, will now be taken into account.The U.S. Government is pleased that the national government hospitals are using OGVM in selecting medical equipment valued above the established thresholds, and that they have found the methodology to be very effective in procuring the kinds of equipment they need to provide quality medical care to their patients. U.S. firms are concerned, however, that prefectural and municipal hospitals continue to use the lowest-bid procedure of evaluation in procurement of advanced technology products. Under the medical technology agreement, the Japanese Government is required to encourage prefectural and local/municipal governments to utilize measures similar to those adopted by the central government entities. The fact these entities do not use OGVM hinders the ability of U.S. companies to sell in this significant portion of the market, as U.S. equipment is usually innovative and/or high-end equipment offering special features or extraordinary performance. This equipment may have a higher initial price, but provides significant cost savings over the life of the product. The United States continues to actively encourage the Japanese Government to have local and prefectural governments adopt this methodology.The U.S. Governme...
