What Are Policy-Purpose Negotiated Contracts? How Japanese Local Governments Can Contract Startups Without Bidding, with a Projection Mapping Example

When local governments in Japan procure goods or services, competitive bidding is the rule. However, the Enforcement Order of the Local Autonomy Act includes a provision that allows them to procure through negotiated contracts, without bidding, from businesses that a local government has certified as opening up new business fields with new products or services. The Tokyo Metropolitan Government calls its certification system based on this provision “policy-purpose negotiated contracts” (政策目的随意契約) and has built it into its programs for bringing startups’ products and services into government operations. Based on materials published by the Ministry of Internal Affairs and Communications (MIC) and the Tokyo Metropolitan Government, this article explains how the system works, its track record nationwide, how Tokyo uses it, and an example from projection mapping.

What are policy-purpose negotiated contracts? Article 167-2(1)(iv) of the Enforcement Order

The legal basis is Article 167-2, paragraph 1, item 4 of the Enforcement Order of the Local Autonomy Act. According to the Tokyo Metropolitan Government, it allows products and services to be procured through negotiated contracts, without competitive bidding, from those certified as seeking to open up new business fields by producing new products or providing new services, and Tokyo has established a certification system based on it. MIC materials explain that the provision was introduced through a 2004 amendment of the relevant orders, making it possible to procure new products and services from startups and others.

The key point is that a local government’s “certification” comes before the contract. Each local government certifies businesses on its own, and products or services of certified businesses can be contracted without bidding. New technologies and forms of expression do not fit easily into bidding, which compares specifications and competes on price, and businesses with little track record tend to be disadvantaged at the eligibility stage. The system gives governments a way to support such businesses as their first customer.

Track record nationwide: 191 contracts, with 2% of local governments using it

In materials dated August 2026, the Administration Division of MIC’s Local Administration Bureau compiled the results of a survey on negotiated contracts under this provision. The survey covered all prefectures and municipalities for the period from April 1, 2023 to July 18, 2025.

Of 1,788 local governments, 30 (2%) reported having such contracts. By type, they were 10 of 47 prefectures (21%), 9 of 20 designated cities (45%) and 11 of 1,721 other municipalities (1%). These governments had 191 contracts in total: 133 (70%) for purchasing or leasing goods and 58 (30%) for services. Procurement from startups accounted for 80 (42%). The materials present 31 cases that could be rolled out to other local governments, such as disaster-preparedness supplies and traffic survey services.

The figures show that while prefectures and designated cities have begun to use the system, its use by other municipalities remains limited.

How Tokyo uses it: certification after collaboration, plus a boost-up program

The Tokyo Metropolitan Government, led by its Startup Strategy Promotion Headquarters, has built the system into its programs for working with startups.

In the “Field-Dialogue Startup Collaboration Project,” Tokyo invites startups to address issues set out by government workplaces, receives proposals for solutions after dialogue with frontline staff, and has selected startups run demonstration projects in those workplaces. After a project, Tokyo reviews applications from the startups for policy-purpose negotiated contract certification; once certified, they can enter into negotiated contracts with government workplaces. For fiscal 2026, Tokyo set 20 themes and announced on October 5 that it had adopted startups for all 20 projects.

From fiscal 2026, Tokyo also launched the “Issue-Responsive Public-Private Collaboration Boost-Up Program.” It introduces startup solutions that are already commercialized, moving quickly from the call to selection and speeding up policy-purpose negotiated contract certification so that contracts and introduction can follow promptly.

In November 2024, Tokyo also began building a framework with local governments across Japan that share the program’s aims, gathering information on startup products and services certified by participating governments into a database and catalog. Tokyo says it aims to support startups’ growth by having the government become their “first customer.”

An example from projection mapping: the Edo Castle outer moat and UPGRADE with TOKYO

There are examples in culture and tourism as well. According to Tokyo, the “Edo Castle Outer Moat Projection Mapping” it held from May 30 to June 2, 2024 was decided through UPGRADE with TOKYO (Bureau of Industrial and Labor Affairs), a pitch event for startups to solve metropolitan policy issues, which called for content that lets people experience the outer moat waterside regeneration project and related history and culture; the winner was HITOHATA, INC. According to the company’s history, it won the 32nd pitch event on October 20, 2023.

On August 8, 2024, HITOHATA, INC. was then certified by the Tokyo Metropolitan Government as a company eligible for policy-purpose negotiated contracts, as a startup providing “projection mapping that uses cultural tourism resources,” which contributes to solving metropolitan policy issues. The certification runs until March 31, 2027. The outer moat projection mapping and the moat purification plan are covered in our article on “City of Water: Edo Outer Moat” and the Sotobori Purification Project.

Editor’s view

When local governments commission projection mapping, many choose contractors through proposal-based competitions. Examples of work scopes and contract caps are compared in our article on projection mapping project costs in local government calls for proposals. Policy-purpose negotiated contracts offer a separate entry point: products and services of certified businesses can be contracted without bidding or a proposal competition.

However, certification is a system run by each local government, and certification by one government cannot simply be used by another. The nationwide track record also amounts to only 191 contracts over MIC’s survey period (April 2023 to July 2025). If the information-sharing framework among local governments that Tokyo has launched spreads, other governments will have more material for considering certification. Programs that cover part of the cost of events are summarized in our article on subsidies for light events.

Frequently asked questions

What are policy-purpose negotiated contracts?

Under Article 167-2, paragraph 1, item 4 of the Enforcement Order of the Local Autonomy Act, local governments can procure through negotiated contracts, without competitive bidding, from businesses they have certified as opening up new business fields with new products or services. The Tokyo Metropolitan Government calls its certification system “policy-purpose negotiated contracts.”

How widely are they used?

In MIC’s survey (April 1, 2023 to July 18, 2025), 30 of 1,788 local governments (2%) reported having such contracts, with 191 contracts in total. Of these, 80 (42%) were procurement from startups.

Are they used for projection mapping?

In August 2024, the Tokyo Metropolitan Government certified HITOHATA, INC. as a company eligible for policy-purpose negotiated contracts, as a startup providing “projection mapping that uses cultural tourism resources” (until March 31, 2027). The company won Tokyo’s 32nd UPGRADE with TOKYO pitch event with a proposal for projection mapping on the Edo Castle outer moat.

*Information as of November 9, 2026.

*Top image: Matsumoto Castle projection mapping (2025–26) (from a press release by the Matsumoto City Tourism Brand Division)

*This article was compiled by the TOKYO ART SPHERE editorial team based on MIC survey materials (August 2026), Tokyo Metropolitan Government announcements (October 5, 2026; May 13, 2026; November 25, 2024; May 24, 2024) and information on HITOHATA, INC.’s official website.

Text: TOKYO ART SPHERE Editorial Team

A note from the publisher

*Disclosure: HITOHATA, INC., introduced as an example in this article, is an affiliate of HITOHATA ASSOCIATION, the general incorporated association that operates TOKYO ART SPHERE. The Matsumoto Castle projection mapping (2025–26) in the top image was also produced by the company (About us).

HITOHATA, INC. plans, directs, produces and operates projection mapping at National Treasures, Important Cultural Properties, World Heritage Sites and urban landmarks, as well as immersive exhibitions. Inquiries, including those at the stage before a budget is set, are accepted through HITOHATA, INC.’s contact form (which has an option for local governments and public projects). Past projects are introduced on HITOHATA, INC.’s project page, and the company profile in our profile of HITOHATA, INC.