July 1, 1999

Dear Ambassador Barshefsky:

I refer to the arrangements on procurement by Nippon Telegraph and Telephone Corporation (NTT), which were set forth in the exchange of letters between Dr. Saburo Okita and Ambassador Reubin O'D. Askew on December 19, 1980, then supplemented and extended by the subsequent exchanges of letters between the Government of Japan and the Government of the United States, the last of which being our exchange of letters on September 30, 1997 (hereinafter referred to as the "arrangements"). These arrangements no longer have effect upon the restructuring of NTT on July 1, 1999.

I also refer to recent consultations between the representatives of the Government of Japan and the Government of the United States. As a result of these consultations, the two Governments confirm that the measures set forth in this letter will remain in force until July 1, 2001.

The Government of Japan welcomes that the post-restructured NTT ("the NTT holding company"), the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and the NTT Communications Corporation (these companies hereinafter collectively referred to as "the NTT Companies") have each decided to introduce new procedures for the procurement of public telecommunications equipment for domestic services, which will be made public in brochures and on the Internet. The basic policy of such procedures is to (i) conduct their procurement in an open and transparent manner taking into account the business needs of the NTT Companies, (ii) provide non-discriminatory and competitive opportunities to both domestic and foreign suppliers, and (iii) conduct global and market-driven procurement of competitive products meeting their business needs. The Government of Japan recognizes and welcomes that the NTT Companies believe that the new procedures will increase access to the procurement opportunities of the NTT Companies.

The Government of Japan also welcomes that the NTT Companies have decided to designate contact points to receive complaints or opinions regarding their procurement procedures and other issues related to their procurement. In addition, the Government of Japan welcomes the provision of data, as set forth in the attachment to this letter, by the NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION.

With a view to facilitating the smooth implementation of these new procurement procedures and improved access to the procurement opportunities of the NTT Companies, the Government of Japan will meet annually with the Government of the United States in 2000 and 2001 to discuss (i) systemic issues concerning the procurement of public telecommunications equipment by the NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION , and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, (ii) operation of the new procurement procedures for public telecommunications equipment of the NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION , and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and (iii) other issues mutually acceptable to the two Governments.

The Government of Japan welcomes the willingness of the Government of the United States to discuss difficulties that Japan may experience in the U.S. market in the above-mentioned meeting. The Government of Japan also welcomes the commitment of the United States, and the Federal Communications Commission in particular, to the openness and transparency of the U.S. telecommunications market.

Sincerely,

Kunihiko Saito
Ambassador of Japan

The NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION will, for a period of two years from July 1, 1999, collect and provide the following information and data in an efficient manner for fiscal years 1999 and 2000. The information and the data will be treated as strictly confidential unless otherwise specified by each of these companies.

1. For the product categories identified in paragraph 4 below, each of these companies will provide each fiscal year the following information:
-- the number of procurement applications by foreign suppliers;
-- the number of procurement selections of foreign suppliers;
-- the number of all procurement selections;

provided, that in exceptional cases where disclosing certain data will result in the breach of a business confidentiality agreement, each of these companies will consult expeditiously on ways to produce the data with appropriate protection of confidentiality.

2. The total value and share of foreign procurements for each of these companies.

3. The value of procurements and the foreign suppliers' procurement value for each of these companies in the product categories identified in paragraph 4 below, provided that in exceptional cases where disclosing certain data will result in the breach of a business confidentiality agreement, each of the NTT companies will consult expeditiously on ways to produce the data with appropriate protection of confidentiality.

4. The product categories are as follows:
a) Network System (Node),
b) Network System (Link),
c) Network System (Access),
d) User System, and
e) Operation System.

Dear Ambassador Saito:

I acknowledge receipt of your letter of today's date on the subject of procurement of the Nippon Telegraph and Telephone Corporation (NTT)(the NTT holding company), the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION , and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and the NTT Communications Corporation (hereinafter collectively referred to as "the NTT Companies").

The Government of the United States confirms that the arrangements, as defined in your letter of today's date, no longer have effect upon the July 1 restructuring of NTT, and that the new measures set forth in our exchange of letters will remain in force until July 1, 2001. The Government of the United States expects that these new measures will increase access to the procurement opportunities of the NTT Companies and lead to an increase in the foreign value and share of their procurement in the medium term.

With a view to facilitating the smooth implementation of these new procurement procedures and improved access to the procurement opportunities of the NTT Companies, the Government of the United States and the Government of Japan will meet in 2000 and 2001 to discuss (i) systemic issues concerning the procurement of public telecommunications equipment by the NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and (ii) operation of the new procurement procedures for public telecommunications equipment of the NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION , and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and (iii) other issues mutually acceptable to the two Governments. The Government of the United States welcomes the provision of data by the NTT holding company, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION.

The Government of the United States is committed to the openness and transparency of the U.S. telecommunications market. To this end, the Government of the United States remains willing to discuss, with the Government of Japan, difficulties that Japan may experience in the U.S. market in the above-mentioned meetings.

Sincerely,

Charlene Barshefsky

Dear Ambassador Barshefsky:

I refer to the recent consultations between the representatives of the Government of Japan and the Government of the United States described in our exchange of letters dated July 1, 1999, regarding the Nippon Telegraph and Telephone Corporation (NTT), the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and the NTT Communications Corporation.

In this connection, I would like to transmit to you herewith the procurement procedures of the Nippon Telegraph and Telephone Corporation (NTT), the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, and the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION.

Sincerely,

Kunihiko Saito
Ambassador of Japan

I. Basic Policy

1.As its basic policy, throughout its procurement process, the Nippon Telegraph and Telephone Corporation (hereinafter referred to as the Company) will:
-- conduct its procurement in an open and transparent manner, taking into account the Company's business needs,
-- provide non-discriminatory and competitive opportunities to both domestic and foreign suppliers, and
-- conduct global and market-driven procurement of competitive products that meet its business needs.

II. Procurement Procedure

[1] Scope
2. This procedure will be used to procure public telecommunications equipment for domestic services. This includes equipment that can be used for both domestic and international services, but is actually used for domestic services. This procedure will not apply to purchases described in the exceptions set forth in Article XXIII of the WTO Agreement on Government Procurement (GPA) or in note 2 to the Government of Japan's Annex 3 to the GPA. Single tendering will be used only in exceptional cases, justified in accordance with the GPA.

[2] Processes
3. This procedure consists of Request for Proposal (RFP) Process, Supplier's Proposal Process and Follow-on Purchase Process. The RFP Process is the process through which the Company procures the product by requesting proposals from suppliers. The Supplier's Proposal Process is the process through which the Company procures the product based on proposals by suppliers. The Follow-on Purchase Process is the process through which the Company purchases the product or additional units of the product from suppliers qualified through the RFP Process or Supplier's Proposal Process.

RFP Process

[1] RFP
4. In this process, the Company will publicly announce requests for proposal (RFP).

5. The RFP will contain the following:
(1) outline of the product;
(2) the addresses and final date for submitting an application;
(3) any information necessary for obtaining Procurement Documentation and other documents and contact points from which further information may be requested.

[2] Procurement Documentation

6. Suppliers responding to the RFP will be provided with Procurement Documentation. The Procurement Documentation will contain information necessary to permit suppliers to submit applications such as the following:
(1) the addresses where applications should be sent;
(2) the contact points where inquiries are received;
(3) closing date for receipt of applications;
(4) any economic and technical requirements, financial guarantees and information required from suppliers;
(5) quantity of the product to be supplied;
(6) a description of the product required or of requirements;
(7) delivery date;
(8) the proposed number of suppliers to be selected;
(9) the criteria for the selection -- including the evaluation factors, and, if any, sub-factors described in terms of priority and their relative importance in the evaluation process -- and award of the contract(s) to the successful applicant(s);
(10) the terms of payment; and
(11) any other terms or conditions.

The Company will provide a minimum of 30 days from the date of issuance of the RFP to submit applications, recognizing that for certain standard off-the-shelf type of products, this period may be shortened.

7. The Company will respond to any reasonable request for clarification of the RFP or Procurement Documentation.

[3] Selection and award of contracts to successful applicants
8. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must
-- conform to the essential requirements of the RFP and Procurement Documentation;
-- be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria set forth in the Procurement Documentation;
(3) When the Company evaluates applications and proposals and awards contracts for procurement, the Company will consider functional and performance factors, price and other factors specified in the Procurement Documentation;
(4) The price-cost evaluation may be based on the total life cycle cost of procurement;
(5) In the process of evaluating suppliers, the Company will consider net worth and business activities outside of Japan;
(6) Testing of proposed products or prototypes may be required as part of the selection process. The Company will conduct technical evaluations and system performance evaluations, when used, under the same conditions for all suppliers in the tendering process;
(7) No applicant will be allowed to modify the contents of an application or proposal once submitted; and
(8) The applicant(s) determined to be the most advantageous in terms of the selection criteria shall be selected and be awarded the contract(s).

Supplier's Proposal Process

[1] Introduction of Products
9. The Company will receive the introduction of products by suppliers wishing to enter the Company's procurement.

[2] Reception of Proposals
10. The Company will provide the information necessary (including the selection criteria) to permit suppliers to submit applications and accept applications.

[3] Selection and award of contracts of successful applicants
11. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must conform to the requirements provided by the Company and be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria provided by the Company;
(3) Testing of proposed products or prototypes may be required as part of the selection process;
(4) The Company shall evaluate and select the supplier based on the selection criteria. In the case the Company has not already procured the proposed product or its equivalent, the supplier will be awarded the contract.
(5) The Company will disclose the award of the contract in an appropriate manner when the Company and the selected supplier agree that to do so is for their mutual benefit.

Qualified Suppliers

12. Those suppliers successfully selected through the RFP process and the Supplier's Proposal Process will be considered as Qualified Suppliers.

Follow-on Purchase Process

13. This process will be used in the case the Company purchases the product or additional units of the product from Qualified Suppliers.

[1] Award of Contracts
14. The Company may award the contracts to Qualified Suppliers. In this case, the Company may limit the number of suppliers to be awarded the contracts to an appropriate number for the quantity of the product to be supplied.

III. General

15. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures. The Company will provide information that will improve the efficiency of procurement such as the following: -- names of major procured products by categories
-- value of procured products by categories in a previous fiscal year where possible (macro value). The Company will, to the maximum extent possible, make available on a non-discriminatory basis, information on projected procurements in individual product categories to suppliers upon request.

16. Suppliers requesting to participate in procurement opportunities shall be permitted to submit proposals and shall be considered, provided, in the case of those not yet selected, there is sufficient time to complete the procurement process for a particular procurement opportunity.

17. The Company may limit the number of suppliers as well as the number of Qualified Suppliers permitted to participate in its procurement. This limitation is allowed only when such limitation is needed from the viewpoint of efficient operation of its procurement system.

18. The Company will promptly notify the results to unsuccessful applicants after the completion of the selection.

19. Technical specifications prescribed by the Company will be, where appropriate, (1) specified in terms of performance rather than design or descriptive characteristics, and (2) based on international standards, where such exist, and otherwise based on national technical regulations or recognized national standards, and the Company will give full consideration to using de facto international standards.

20. The Company intends to make changes to its procedures only if such changes (1) are of a de minimus nature, such as changes in its website address or new contact information, or (2) further the Basic Policy set forth in these procedures. In the case of de minimus changes, the Company will, with as much advance notice as possible, issue an announcement in accordance with para.15 and will post such changes on its website before it makes amendments or modifications to its procurement procedures. With respect to non-de minimus changes, the Company will issue an announcement in accordance with para.15 and post these proposed changes on its website. The Company will enact these changes 30 days after the announcement.

21. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.15.

22. All information -- including clarification or amendment of information provided to suppliers, including the RFP, Procurement Documentation, procurement procedures, etc --, will be provided on an equal and simultaneous basis to all potential suppliers in adequate time for such suppliers to consider this information and respond to it.

23. No proprietary information provided by a supplier to the Company or vice versa will be divulged to any other party, or be used for purposes other than those for which it was provided, without the express consent of the party providing such information. The Company will only require proprietary information to the extent that such information is necessary to evaluate the merits of the product, to jointly develop the product, and/or to utilize the product if selected.

I. Basic Policy

1. As its basic policy, throughout its procurement process, the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION (hereinafter referred to as the Company) will:
-- conduct its procurement in an open and transparent manner, taking into account the Company's business needs,
-- provide non-discriminatory and competitive opportunities to both domestic and foreign suppliers, and
-- conduct global and market-driven procurement of competitive products that meet its business needs.

II. Procurement Procedure

[1] Scope
2. This procedure will be used to procure public telecommunications equipment for domestic services. This includes equipment that can be used for both domestic and international services, but is actually used for domestic services. This procedure will not apply to purchases described in the exceptions set forth in Article XXIII of the WTO Agreement on Government Procurement (GPA) or in note 2 to the Government of Japan's Annex 3 to the GPA. Single tendering will be used only in exceptional cases, justified in accordance with the GPA.

[2] Processes
3. This procedure consists of Request for Proposal (RFP) Process, Supplier's Proposal Process and Follow-on Purchase Process. The RFP Process is the process through which the Company procures the product by requesting proposals from suppliers. The Supplier's Proposal Process is the process through which the Company procures the product based on proposals by suppliers. The Follow-on Purchase Process is the process through which the Company purchases the product or additional units of the product from suppliers qualified through the RFP Process or Supplier's Proposal Process.

RFP Process

[1] RFP
4. In this process, the Company will publicly announce requests for proposal (RFP).

5. The RFP will contain the following:
(1) outline of the product;
(2) the addresses and final date for submitting an application;
(3) any information necessary for obtaining Procurement Documentation and other documents and contact points from which further information may be requested.

[2] Procurement Documentation
6. Suppliers responding to the RFP will be provided with Procurement Documentation. The Procurement Documentation will contain information necessary to permit suppliers to submit applications such as the following:
(1) the addresses where applications should be sent;
(2) the contact points where inquiries are received;
(3) closing date for receipt of applications;
(4) any economic and technical requirements, financial guarantees and information required from suppliers;
(5) quantity of the product to be supplied;
(6) a description of the product required or of requirements;
(7) delivery date;
(8) the proposed number of suppliers to be selected;
(9) the criteria for the selection -- including the evaluation factors, and, if any, sub-factors described in terms of priority and their relative importance in the evaluation process -- and award of the contract(s) to the successful applicant(s);
(10) the terms of payment; and
(11) any other terms or conditions.

The Company will provide a minimum of 30 days from the date of issuance of the RFP to submit applications, recognizing that for certain standard off-the-shelf type of products, this period may be shortened.

7. The Company will respond to any reasonable request for clarification of the RFP or Procurement Documentation.

[3] Selection and award of contracts to successful applicants
8. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must
-- conform to the essential requirements of the RFP and Procurement Documentation;
-- be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria set forth in the Procurement Documentation;
(3) When the Company evaluates applications and proposals and awards contracts for procurement, the Company will consider functional and performance factors, price and other factors specified in the Procurement Documentation;
(4) The price-cost evaluation may be based on the total life cycle cost of procurement;
(5) In the process of evaluating suppliers, the Company will consider net worth and business activities outside of Japan;
(6) Testing of proposed products or prototypes may be required as part of the selection process. The Company will conduct technical evaluations and system performance evaluations, when used, under the same conditions for all suppliers in the tendering process;
(7) No applicant will be allowed to modify the contents of an application or proposal once submitted; and
(8) The applicant(s) determined to be the most advantageous in terms of the selection criteria shall be selected and be awarded the contract(s).

Supplier's Proposal Process

[1] Introduction of Products
9. The Company will receive the introduction of products by suppliers wishing to enter the Company's procurement.

[2] Reception of Proposals
10. The Company will provide the information necessary (including the selection criteria) to permit suppliers to submit applications and accept applications.

[3] Selection and award of contracts of successful applicants
11. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must conform to the requirements provided by the Company and be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria provided by the Company;
(3) Testing of proposed products or prototypes may be required as part of the selection process;
(4) The Company shall evaluate and select the supplier based on the selection criteria. In the case the Company has not already procured the proposed product or its equivalent, the supplier will be awarded the contract.
(5) The Company will disclose the award of the contract in an appropriate manner when the Company and the selected supplier agree that to do so is for their mutual benefit.

Qualified Suppliers

12. Those suppliers successfully selected through the RFP process and the Supplier's Proposal Process will be considered as Qualified Suppliers.

Follow-on Purchase Process

13. This process will be used in the case the Company purchases the product or additional units of the product from Qualified Suppliers. In the case the Company makes use of the Holding Company's research results, it may purchase products from the research results through this process. In this case, the Company may treat any supplier qualified by the Holding Company as a Qualified Supplier in this process. The products that are commonly used by NTT EAST and NTT WEST may be purchased jointly with the Holding Company.

[1] Award of Contracts
14. The Company may award the contracts to Qualified Suppliers. In this case, the Company may limit the number of suppliers to be awarded the contracts to an appropriate number for the quantity of the product to be supplied.

III. General

15. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures. The Company will provide information that will improve the efficiency of procurement such as the following:
-- names of major procured products by categories
-- value of procured products by categories in a previous fiscal year where possible (macro value). The Company will, to the maximum extent possible, make available on a non-discriminatory basis, information on projected procurements in individual product categories to suppliers upon request.

16. Suppliers requesting to participate in procurement opportunities shall be permitted to submit proposals and shall be considered, provided, in the case of those not yet selected, there is sufficient time to complete the procurement process for a particular procurement opportunity.

17. The Company may limit the number of suppliers as well as the number of Qualified Suppliers permitted to participate in its procurement. This limitation is allowed only when such limitation is needed from the viewpoint of efficient operation of its procurement system.

18. The Company will promptly notify the results to unsuccessful applicants after the completion of the selection.

19. Technical specifications prescribed by the Company will be, where appropriate, (1) specified in terms of performance rather than design or descriptive characteristics, and (2) based on international standards, where such exist, and otherwise based on national technical regulations or recognized national standards, and the Company will give full consideration to using de facto international standards.

20. The Company intends to make changes to its procedures only if such changes (1) are of a de minimus nature, such as changes in its website address or new contact information, or (2) further the Basic Policy set forth in these procedures. In the case of de minimus changes, the Company will, with as much advance notice as possible, issue an announcement in accordance with para.15 and will post such changes on its website before it makes amendments or modifications to its procurement procedures. With respect to non-de minimus changes, the Company will issue an announcement in accordance with para.15 and post these proposed changes on its website. The Company will enact these changes 30 days after the announcement.

21. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.15.

22. All information -- including clarification or amendment of information provided to suppliers, including the RFP, Procurement Documentation, procurement procedures, etc --, will be provided on an equal and simultaneous basis to all potential suppliers in adequate time for such suppliers to consider this information and respond to it.

23. No proprietary information provided by a supplier to the Company or vice versa will be divulged to any other party, or be used for purposes other than those for which it was provided, without the express consent of the party providing such information. The Company will only require proprietary information to the extent that such information is necessary to evaluate the merits of the product, to jointly develop the product, and/or to utilize the product if selected.

I. Purchase Procedure
[1] Scope
1. This procedure will be used to procure telecommunications equipment for domestic services by NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION (hereinafter referred to as the Company) based on selection by the customer.

[2] Process
2. This procedure will be used to the Purchase Process based on Selection by the Customer. The Purchase Process based on Selection by the Customer is the process in which the Company procures the products selected by the Company's customer.

Purchase Process based on Selection by the Customer

3. In this process, the Company will award the contracts to the suppliers selected by the customer.

II. General

4. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures.
5. The Company will issue an announcement in accordance with para.4, before the Company amends or modifies its purchase procedure.
6. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.4.

I. Basic Policy

1. As its basic policy, throughout its procurement process, the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION (hereinafter referred to as the Company) will:
-- conduct its procurement in an open and transparent manner, taking into account the Company's business needs,
-- provide non-discriminatory and competitive opportunities to both domestic and foreign suppliers, and
-- conduct global and market-driven procurement of competitive products that meet its business needs.

II. Procurement Procedure

[1] Scope
2. This procedure will be used to procure public telecommunications equipment for domestic services. This includes equipment that can be used for both domestic and international services, but is actually used for domestic services. This procedure will not apply to purchases described in the exceptions set forth in Article XXIII of the WTO Agreement on Government Procurement (GPA) or in note 2 to the Government of Japan's Annex 3 to the GPA. Single tendering will be used only in exceptional cases, justified in accordance with the GPA.

[2] Processes
3. This procedure consists of Request for Proposal (RFP) Process, Supplier's Proposal Process and Follow-on Purchase Process. The RFP Process is the process through which the Company procures the product by requesting proposals from suppliers. The Supplier's Proposal Process is the process through which the Company procures the product based on proposals by suppliers. The Follow-on Purchase Process is the process through which the Company purchases the product or additional units of the product from suppliers qualified through the RFP Process or Supplier's Proposal Process.

RFP Process

[1] RFP 4. In this process, the Company will publicly announce requests for proposal (RFP).

5. The RFP will contain the following:
(1) outline of the product;
(2) the addresses and final date for submitting an application;
(3) any information necessary for obtaining Procurement Documentation and other documents and contact points from which further information may be requested.

[2] Procurement Documentation
6. Suppliers responding to the RFP will be provided with Procurement Documentation. The Procurement Documentation will contain information necessary to permit suppliers to submit applications such as the following:
(1) the addresses where applications should be sent;
(2) the contact points where inquiries are received;
(3) closing date for receipt of applications;
(4) any economic and technical requirements, financial guarantees and information required from suppliers;
(5) quantity of the product to be supplied;
(6) a description of the product required or of requirements;
(7) delivery date;
(8) the proposed number of suppliers to be selected;
(9) the criteria for the selection -- including the evaluation factors, and, if any, sub-factors described in terms of priority and their relative importance in the evaluation process -- and award of the contract(s) to the successful applicant(s);
(10) the terms of payment; and
(11) any other terms or conditions.

The Company will provide a minimum of 30 days from the date of issuance of the RFP to submit applications, recognizing that for certain standard off-the-shelf type of products, this period may be shortened.

7. The Company will respond to any reasonable request for clarification of the RFP or Procurement Documentation.

[3] Selection and award of contracts to successful applicants
8. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must
-- conform to the essential requirements of the RFP and Procurement Documentation;
-- be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria set forth in the Procurement Documentation;
(3) When the Company evaluates applications and proposals and awards contracts for procurement, the Company will consider functional and performance factors, price and other factors specified in the Procurement Documentation;
(4) The price-cost evaluation may be based on the total life cycle cost of procurement;
(5) In the process of evaluating suppliers, the Company will consider net worth and business activities outside of Japan;
(6) Testing of proposed products or prototypes may be required as part of the selection process. The Company will conduct technical evaluations and system performance evaluations, when used, under the same conditions for all suppliers in the tendering process;
(7) No applicant will be allowed to modify the contents of an application or proposal once submitted; and
(8) The applicant(s) determined to be the most advantageous in terms of the selection criteria shall be selected and be awarded the contract(s).

Supplier's Proposal Process

[1] Introduction of Products
9. The Company will receive the introduction of products by suppliers wishing to enter the Company's procurement.

[2] Reception of Proposals
10. The Company will provide the information necessary (including the selection criteria) to permit suppliers to submit applications and accept applications.

[3] Selection and award of contracts of successful applicants
11. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must conform to the requirements provided by the Company and be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria provided by the Company;
(3) Testing of proposed products or prototypes may be required as part of the selection process;
(4) The Company shall evaluate and select the supplier based on the selection criteria. In the case the Company has not already procured the proposed product or its equivalent, the supplier will be awarded the contract.
(5) The Company will disclose the award of the contract in an appropriate manner when the Company and the selected supplier agree that to do so is for their mutual benefit.

Qualified Suppliers

12. Those suppliers successfully selected through the RFP process and the Supplier's Proposal Process will be considered as Qualified Suppliers.

Follow-on Purchase Process

13. This process will be used in the case the Company purchases the product or additional units of the product from Qualified Suppliers. In the case the Company makes use of the Holding Company's research results, it may purchase products from the research results through this process. In this case, the Company may treat any supplier qualified by the Holding Company as a Qualified Supplier in this process. The products that are commonly used by NTT WEST and NTT EAST may be purchased jointly with the Holding Company.

[1] Award of Contracts
14. The Company may award the contracts to Qualified Suppliers. In this case, the Company may limit the number of suppliers to be awarded the contracts to an appropriate number for the quantity of the product to be supplied.

III. General

15. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures. The Company will provide information that will improve the efficiency of procurement such as the following:
-- names of major procured products by categories
-- value of procured products by categories in a previous fiscal year where possible (macro value). The Company will, to the maximum extent possible, make available on a non-discriminatory basis, information on projected procurements in individual product categories to suppliers upon request.

16. Suppliers requesting to participate in procurement opportunities shall be permitted to submit proposals and shall be considered, provided, in the case of those not yet selected, there is sufficient time to complete the procurement process for a particular procurement opportunity.

17. The Company may limit the number of suppliers as well as the number of Qualified Suppliers permitted to participate in its procurement. This limitation is allowed only when such limitation is needed from the viewpoint of efficient operation of its procurement system.

18. The Company will promptly notify the results to unsuccessful applicants after the completion of the selection.

19. Technical specifications prescribed by the Company will be, where appropriate, (1) specified in terms of performance rather than design or descriptive characteristics, and (2) based on international standards, where such exist, and otherwise based on national technical regulations or recognized national standards, and the Company will give full consideration to using de facto international standards.

20. The Company intends to make changes to its procedures only if such changes (1) are of a de minimus nature, such as changes in its website address or new contact information, or (2) further the Basic Policy set forth in these procedures. In the case of de minimus changes, the Company will, with as much advance notice as possible, issue an announcement in accordance with para.15 and will post such changes on its website before it makes amendments or modifications to its procurement procedures. With respect to non-de minimus changes, the Company will issue an announcement in accordance with para.15 and post these proposed changes on its website. The Company will enact these changes 30 days after the announcement.

21. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.15.

22. All information -- including clarification or amendment of information provided to suppliers, including the RFP, Procurement Documentation, procurement procedures, etc --, will be provided on an equal and simultaneous basis to all potential suppliers in adequate time for such suppliers to consider this information and respond to it.

23. No proprietary information provided by a supplier to the Company or vice versa will be divulged to any other party, or be used for purposes other than those for which it was provided, without the express consent of the party providing such information. The Company will only require proprietary information to the extent that such information is necessary to evaluate the merits of the product, to jointly develop the product, and/or to utilize the product if selected.

I. Purchase Procedure
[1] Scope
1. This procedure will be used to procure telecommunications equipment for domestic services by NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION (hereinafter referred to as the Company) based on selection by the customer.

[2] Process
2. This procedure will be used to the Purchase Process based on Selection by the Customer. The Purchase Process based on Selection by the Customer is the process in which the Company procures the products selected by the Company's customer.

Purchase Process based on Selection by the Customer

3. In this process, the Company will award the contracts to the suppliers selected by the customer.

II. General

4. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures.
5. The Company will issue an announcement in accordance with para.4, before the Company amends or modifies its purchase procedure.
6. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.4.

Dear Ambassador Barshefsky:

I refer to the recent consultations between the representatives of the Government of Japan and the Government of the United States described in our exchange of letters dated July 1, 1999 regarding the procurement of the Nippon Telegraph and Telephone Corporation (NTT), the NIPPON TELEGRAPH AND TELEPHONE EAST CORPORATION, the NIPPON TELEGRAPH AND TELEPHONE WEST CORPORATION, and the NTT Communications Corporation.

In this connection, I would like to transmit to you herewith the procurement procedures of the NTT Communications Corporation, which is a private company established under the Japanese Commercial Law.

Sincerely,

Kunihiko Saito
Ambassador of Japan

I. Basic Policy

1. As its basic policy, throughout its procurement process, the NTT Communications Corporation (hereinafter referred to as the Company) will:
-- conduct its procurement in an open and transparent manner, taking into account the Company's business needs,
-- provide non-discriminatory and competitive opportunities to both domestic and foreign suppliers, and
-- conduct global and market-driven procurement of competitive products that meet its business needs.

II. Procurement Procedure

[1] Scope
2. This procedure will be used to procure public telecommunications equipment for domestic services. This includes equipment that can be used for both domestic and international services, but is actually used for domestic services. This procedure will not apply to purchases described in the exceptions set forth in Article XXIII of the WTO Agreement on Government Procurement (GPA) or in note 2 to the Government of Japan's Annex 3 to the GPA. Single tendering will be used only in exceptional cases, justified in accordance with the GPA.

[2] Processes
3. This procedure consists of Request for Proposal (RFP) Process, Supplier's Proposal Process and Follow-on Purchase Process. The RFP Process is the process through which the Company procures the product by requesting proposals from suppliers. The Supplier's Proposal Process is the process through which the Company procures the product based on proposals by suppliers. The Follow-on Purchase Process is the process through which the Company purchases the product or additional units of the product from suppliers qualified through the RFP Process or Supplier's Proposal Process.

RFP Process

[1] RFP
4. In this process, the Company will publicly announce requests for proposal (RFP).

5. The RFP will contain the following:
(1) outline of the product;
(2) the addresses and final date for submitting an application;
(3) any information necessary for obtaining Procurement Documentation and other documents and contact points from which further information may be requested.

[2] Procurement Documentation
6. Suppliers responding to the RFP will be provided with Procurement Documentation. The Procurement Documentation will contain information necessary to permit suppliers to submit applications such as the following:
(1) the addresses where applications should be sent;
(2) the contact points where inquiries are received;
(3) closing date for receipt of applications;
(4) any economic and technical requirements, financial guarantees and information required from suppliers;
(5) quantity of the product to be supplied;
(6) a description of the product required or of requirements;
(7) delivery date;
(8) the proposed number of suppliers to be selected;
(9) the criteria for the selection -- including the evaluation factors, and, if any, sub-factors described in terms of priority and their relative importance in the evaluation process -- and award of the contract(s) to the successful applicant(s);
(10) the terms of payment; and
(11) any other terms or conditions.

The Company will provide a minimum of 30 days from the date of issuance of the RFP to submit applications, recognizing that for certain standard off-the-shelf type of products, this period may be shortened.

7. The Company will respond to any reasonable request for clarification of the RFP or Procurement Documentation.

[3] Selection and award of contracts to successful applicants
8. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must
-- conform to the essential requirements of the RFP and Procurement Documentation;
-- be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria set forth in the Procurement Documentation;
(3) When the Company evaluates applications and proposals and awards contracts for procurement, the Company will consider functional and performance factors, price and other factors specified in the Procurement Documentation;
(4) The price-cost evaluation may be based on the total life cycle cost of procurement;
(5) In the process of evaluating suppliers, the Company will consider net worth and business activities outside of Japan;
(6) Testing of proposed products or prototypes may be required as part of the selection process. The Company will conduct technical evaluations and system performance evaluations, when used, under the same conditions for all suppliers in the tendering process;
(7) No applicant will be allowed to modify the contents of an application or proposal once submitted; and
(8) The applicant(s) determined to be the most advantageous in terms of the selection criteria shall be selected and be awarded the contract(s).

Supplier's Proposal Process

[1] Introduction of Products
9. The Company will receive the introduction of products by suppliers wishing to enter the Company's procurement.

[2] Reception of Proposals
10. The Company will provide the information necessary (including the selection criteria) to permit suppliers to submit applications and accept applications.

[3] Selection and award of contracts of successful applicants
11. Selection and award of contracts will be accomplished as follows:
(1) Applications, to be considered for selection, must conform to the requirements provided by the Company and be from suppliers who comply with the conditions for participation;
(2) Applications shall be evaluated in terms of the selection criteria provided by the Company;
(3) Testing of proposed products or prototypes may be required as part of the selection process;
(4) The Company shall evaluate and select the supplier based on the selection criteria. In the case the Company has not already procured the proposed product or its equivalent, the supplier will be awarded the contract.
(5) The Company will disclose the award of the contract in an appropriate manner when the Company and the selected supplier agree that to do so is for their mutual benefit.

Qualified Suppliers

12. Those suppliers successfully selected through the RFP process and the Supplier's Proposal Process will be considered as Qualified Suppliers.

Follow-on Purchase Process

13. This process will be used in the case the Company purchases the product or additional units of the product from Qualified Suppliers. In the case the Company makes use of the Holding Company's research results, it may purchase products from the research results through this process. In this case, the Company may treat any supplier qualified by the Holding Company as a Qualified Supplier in this process.

[1] Award of Contracts
14. The Company may award the contracts to Qualified Suppliers.

In this case, the Company may limit the number of suppliers to be awarded the contracts to an appropriate number for the quantity of the product to be supplied.

III. General

15. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures. The Company will provide information that will improve the efficiency of procurement such as the following:
-- names of major procured products by categories
-- value of procured products by categories in a previous fiscal year where possible (macro value). The Company will, to the maximum extent possible, make available on a non-discriminatory basis, information on projected procurements in individual product categories to suppliers upon request.

16. Suppliers requesting to participate in procurement opportunities shall be permitted to submit proposals and shall be considered, provided, in the case of those not yet selected, there is sufficient time to complete the procurement process for a particular procurement opportunity.

17. The Company may limit the number of suppliers as well as the number of Qualified Suppliers permitted to participate in its procurement. This limitation is allowed only when such limitation is needed from the viewpoint of efficient operation of its procurement system.

18. The Company will promptly notify the results to unsuccessful applicants after the completion of the selection.

19. Technical specifications prescribed by the Company will be, where appropriate, (1) specified in terms of performance rather than design or descriptive characteristics, and (2) based on international standards, where such exist, and otherwise based on national technical regulations or recognized national standards, and the Company will give full consideration to using de facto international standards.

20. The Company intends to make changes to its procedures only if such changes (1) are of a de minimus nature, such as changes in its website address or new contact information, or (2) further the Basic Policy set forth in these procedures. In the case of de minimus changes, the Company will, with as much advance notice as possible, issue an announcement in accordance with para.15 and will post such changes on its website before it makes amendments or modifications to its procurement procedures. With respect to non-de minimus changes, the Company will issue an announcement in accordance with para.15 and post these proposed changes on its website. The Company will enact these changes 30 days after the announcement.

21. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.15.

22. All information -- including clarification or amendment of information provided to suppliers, including the RFP, Procurement Documentation, procurement procedures, etc --, will be provided on an equal and simultaneous basis to all potential suppliers in adequate time for such suppliers to consider this information and respond to it.

23. No proprietary information provided by a supplier to the Company or vice versa will be divulged to any other party, or be used for purposes other than those for which it was provided, without the express consent of the party providing such information. The Company will only require proprietary information to the extent that such information is necessary to evaluate the merits of the product, to jointly develop the product, and/or to utilize the product if selected.

I. Purchase Procedure
[1] Scope
1. This procedure will be used to procure telecommunications equipment for domestic services by NTT Communications Corporation (hereinafter referred to as the Company) based on selection by the customer.

[2] Process
2. This procedure will be used to the Purchase Process based on Selection by the Customer. The Purchase Process based on Selection by the Customer is the process in which the Company procures the products selected by the Company's customer.

Purchase Process based on Selection by the Customer

3. In this process, the Company will award the contracts to the suppliers selected by the customer.

II. General

4. For the convenience of suppliers, the Company will provide relevant information concerning procurement by the Company, including the Company's procurement policy, contact points and the procurement procedures.

5. The Company will issue an announcement in accordance with para.4, before the Company amends or modifies its purchase procedure.

6. The Company will provide procedures for prompt hearing and review of complaints arising in connection with the procurement process and will receive complaints at the contact points in accordance with para.4.

Dear Ambassador Saito:

I acknowledge the receipt of your letter of today's date on the subject of the procurement of NTT Communications Corporation.

I understand that the Government of Japan will, for a period of two years beginning on July 1, 1999, respond favorably to U.S. requests to provide, in cooperation with the NTT Communications Corporation, statistics for fiscal years 1999 and 2000 on its purchases, including information on total value and number of procurements in the following product categories: node, link, access, user system, and operation systems.

Sincerely,

Charlene Barshefsky