Standard Contract-Awarding Procedures

1. Announcement of Construction Works

At the beginning of each fiscal year, TEPCO draws up a list of construction works to be awarded by its Materials & Procurement Department within that fiscal year, with a view to promoting more business relationships with construction companies. The list is organized by types of construction works, and includes such information as names of works, summaries, terms, sites, and planned dates of awarding contracts.
For those companies interested in establishing a business relationship with TEPCO, this list may be viewed at the Materials & Procurement Department's Information Corner at TEPCO's Head Office.

2. Contractor Registration System

TEPCO's contract-awarding policy requires that the records of companies submitting applications be examined to evaluate their technical capabilities and business performances, and those firms which meet criteria set by TEPCO will be registered according to construction works categories. Those companies wishing to receive contract awards are required to go through the contractor registration procedure.
Companies wishing to have their names registered are requested to indicate clearly what type (s) of work they intend to undertake, and to submit relevant corporate documents, financial statements, various records, and constructor's licenses.
It is TEPCO's basic policy to award contracts for a complete set of works as a whole, not a partial construction work. TEPCO desires to maintain favorable, long-term business relationships with contractors. Therefore, those applicants who are deemed unsound in terms of their financial position, or those whom TEPCO feels might have difficulty conducting transactions at the head office level due to their corporate standing, may be refused registration.

Reasons for Rejection

Where license under the Construction Industry Law is not yet obtained
Where there exist excessive debts or capital losses
Where recurring profit or after-tax profit registers in the red for consecutive years
Where the applicant is under corporate liquidation, as specified in the Commercial Law or where the Composition Law or Corporate Reorganization Law is applied to the applicant
Where the applicant has had no experience of undertaking and carrying out similar individual contract works of more than ¥100 million
Where two years have not elapsed since cancellation of prior registration with TEPCO
Various other reasons

For registration, a preliminary evaluation will be made to ascertain whether or not applicants are capable of carrying out works for which they want to receive contract awards, and to peruse their company profiles. After this preliminary evaluation, successful applicants will be requested to apply for registration by filling out and submitting the Registration Application Form, the Company Data Sheet and Financial Data Sheet. These forms are available at the Head Office. The forms must be submitted along with the following set of documents.

Documents to be attached to an application for registration

A record of construction works undertaken in desired categories
A copy of the application for examination of business performance and a set of accompanying documents (required if an application is filed in accordance with Article 27-33 of the Construction Industry Law)
A copy of the application for a construction business license and a set of accompanying documents (required if an application for an examination of business performance is not filed)
A certified copy of the official registration of the applicant's Articles of Incorporation

Evaluation of applications for registration is conducted for each construction works category.
Applications for registration are accepted at any time.
Based on the submitted documents, the applicant's qualifications for registration will be examined thoroughly with respect to the following criteria.

Criteria for Evaluation

Annual volume(two-year average)of construction works completed in each desired category
Net worth as indicated in immediate settlement of accounts
Number of employees engaged in construction business
Analysis of business performance as indicated in immediate settlement of accounts:
Profitability indicators(three items)
Liquidity indicators(three items)
Productivity indicators(three items)
Soundness indicators(three items)
Number of technical employees
Number of years in operation
Past record of transactions with TEPCO

TEPCO will notify all the applicants in writing of the results of the evaluation.
The registration is valid for two years, in principle. Upon expiration of the term of validity, those wishing to continue their registration will be required to complete the prescribed procedure for registration renewal.
The names of registered contractors will be listed in TEPCO's Directory of Registered Contractors.
The Directory of Registered Contractors may be viewed at the Head Office.
It should be noted that the registration of contractors may be canceled in any of the following cases.

Criteria for Cancellation

Where license under the Construction Industry Law has been canceled
Where TEPCO has been damaged in relation to the execution of a contract
Where documents related to registration renewal have not been submitted or any contents of submitted documents have been found to be intentionally falsified
Where, for other special reasons, disqualification is deemed necessary

3. Acceptance of Applications for Project Participation

TEPCO accepts requests fore participation in projects from registered companies only.
A request for participation should state specific information about, among other things, the name of a construction project in which the applicant desires to take part, the reason (s) for desiring participation, and any suggestions on how to reduce project costs. The prescribed Application for Project Participation form is available at the Head Office.
The Application for Project Participation will be used as data on which to select contractors from whom TEPCO invites written estimates.
If the applicant decides to change its choice of the construction project in which it initially requested to participate in, it will be required to submit the Application for Project Participation again.
It should be clearly noted that an application for participation in a construction project may not necessarily lead to a request for a written estimate.
For those applicants who have been unable to receive a request for a written estimate, TEPCO will, upon request, explain the reasons.
An Application for Project Participation to be filed with TEPCO should be completed on the prescribed form described on the following page.

4. Selection of Prospective Contractors

Upon receipt of a request for execution of works from any of TEPCO's divisions, the Materials & Procurement Department will commence the process of selecting prospective contractors from whom to invite estimates.
Those contractors from whom TEPCO invites estimates will be selected from each project classification, in principle, from among the construction companies which have filed the Application for Project Participation.
In the process of selecting prospective contractors, TEPCO gives full consideration to the areas noted below.

Criteria for Selection of Prospective Contractors

Prospective contractors have special skills or techniques and construction methods
Prospective contractors have a thorough, technical knowledge of existing facilities and equipment
Prospective contractors have some relationships to works already undertaken or in process
Prospective contractors are familiar with the locality where a project is due to be undertaken
Prospective contractors are capable of reducing costs, including costs of temporary facilities
Prospective contractors have experience executing similar types of construction works successfully
Prospective contractors are free from disproportion of contracts awarded by TEPCO in view of contract awards on hand

5. Request for Estimates

TEPCO awards contracts for construction works, based in principle, on the competitive estimates among nominees.
However, TEPCO may invite an estimate from only one contractor when a project requires special skills, techniques and construction expertise, or when there is a shortage of time, or in cases involving the repair or refurbishment of existing facilities.
The names of successful contractors from whom TEPCO has invited written estimates, for any project on the competitive estimates system, will be made known to other registered construction companies upon request.
After inviting estimates, TEPCO will furnish all the selected contractors with work specifications and design drawings and detailed information, including the technical aspects of a project.

6. Submitting Estimates

Written estimates of the cost of construction works should be submitted on TEPCO's prescribed form by a specified date. Once submitted, the estimates are not allowed to be replaced or changed. Those estimates which carry no signatures and/or seal impressions or on which the total amount estimated has been altered will be deemed invalid.

7. Fixing Contract Price and Awarding the Contract

TEPCO will conduct price negotiations with the candidate submitting the lowest estimate, and a contract will be awarded after an agreement has been reached.
After a contractor has been selected, TEPCO will notify other candidates upon request.

8. Concluding the Contract

As a rule, a contract will be concluded in writing and specify a contract price, the term of the project, conditions of payment, and other terms and conditions. The contract will contain clauses that provide for particulars, such as compensation for damage from a delay in completion of construction, indemnity during a warranty period, settlement of disputes, and contractual revisions.

9. Inspection and Payment

Upon completion, works will be inspected against work specifications, blue prints, design drawings and other relevant documents to see if they have been carried out as specified in the contract. As a general rule, TEPCO will accept delivery of completed works on the day of successful completion of inspection.
Payment of the contract price is made in lump sum through electronic back transfer by the end of the month following the month during which the completed work is delivered to TEPCO. However, the contract price for work that extends over a long period of time may be paid on a piecework basis or partial payment basis or in monthly installment; under the piecework or partial payment scheme, payment will be made according to the amount of work done. The monthly installment formula represents equal monthly payments.
The method of payment will be specified when TEPCO invites estimates.

10. Advance Notice Contract Awarding

For a project which requires a technical review or other consultation with construction companies before inviting estimates, TEPCO may select a contractor in advance by notifying it of an outline of the project, a planned term of works, etc. This is referred to as the advance notice contract-award formula. Under this scheme, TEPCO will serve an advance notice in writing upon a prospective contractor and, upon decision on the detailed designs, ask it to submit an estimate and then proceed through the ordinary procedures.

11. Others

Parties of the contract will not divulge any information which they have agreed upon as being proprietary without written consent.
During the procurement process, direct all inquiries to the Materials & Procurement Department.