Chubu Electric Power Co.,Inc. | Procurement Procedure - Doing Business in Construction Contracting

Doing Business in Construction Contracting Procurement Procedure

Procurement Procedure

Chubu Electric registers (refer to the section "Registration"), as its construction contractors, only those companies with superior operations, technical expertise and so on. Chubu Electric then will designate bidders from the registered companies.

Selection of Bidders

At the request of a department which requires work to be executed, the department of purchasing & contracting invites bidders to submit written estimates. Chubu Electric, in principle, selects appropriate bidders from among those contractors categorically registered with Chubu Electric by taking into account the overall magnitude and contents of each work in question among other factors.

Invitation to Bid

Chubu Electric normally calls for a competitive price bidding by inviting a plurality of bidders. However, it may sometimes request a bid from a specific company due to such factors as the special technology and execution method involved in a speciffic work, the compatibility with facilities in operation, or under some other special circumstances. After requesting bids, we will explain the particulars of the work planned to be contracted, based on the relevant work specifications and so forth.

Submission of Written Bids

The selected bidders are requested to submit written estimates in the prescribed format, with indication of the full name and signature of a contractor, no later than the specified deadline. Once a written estimate is submitted, the bidding company cannot replace its pages, cancel any part of it, or make any other modiffications to the bid tendered. In making and submitting estimates for the work to be contracted with Chubu Electric, the bidders are expected to observe the conditions that Chubu Electric provides.

Selection of Successful Bidder and Calculation of Contract Amount

In principle, upon Chubu Electric's decision of a prospective contractor which submits the lowest total price estimate, Chubu Electric starts price negotiations with that company and enters into a contract with that company when an agreement is reached on all contractual conditions. Nonetheless, Chubu Electric may not always follow this principle such as in cases whereby the received estimates are not considered reasonable or appropriate. When Chubu Electric decides on a contractor, the rest of the bidders will not be notified of this fact in particular.

Contract Execution

Contracts are drafted in writing, in principle, wherein contracted amounts, construction period, terms of payment and other particulars are defined. In entering into contracts with Chubu Electric, the contractors are expected to observe the contract terms that Chubu Electric provides.

Inspection of Work and Payment of Contract Amount

The contractor is required to strictly comply with the contractual time of construction. When the work is completed, Chubu Electric or the competent governmental authority will conduct the prescribed inspection on the work in accordance with the relevant contractual work specifications, design drawings and so on.

Moreover, the work may be subject to governmental inspection in compliance with the laws and ordinances. The contractor has to deliver the work on the same day when it successfully passes the required inspection and is confirmed as complete. When so set forth in the specifications associated with the contract, the contractor may be requested to deliver completed parts of the work on a provisional basis, subject to prior successful approval in the inspection mentioned above and even before the contractual date of delivery.

As a general rule, works accepted will be paid for in full at the end of the month following the one in which the constructed work is delivered. However, works extending over long time periods or large-scale works may be paid for on the basis of piecework or work progress, for example, monthly, every two months, etc.

Others

Compliance with laws

In executing and completing works contracted with Chubu Electric, the contractors are expected to abide by the legal provisions set forth in the "Construction Industry Law", "Employment Security Law", "Labor Standards Law", "Law of Labor Safety and Hygiene", and other laws related to the relevant contract works.

Compensation

Chubu Electric may hold suppliers liable for damages if the construction is completed substantially later than which was originally agreed.

Confidentiality

Both Chubu Electric and suppliers are subject to confidentiality as to classified information that has come to their knowledge in the process of transactions. Both Chubu Electric and suppliers are not to release this classified or other sensitive information to a third person without the written consent.

Flowchart

An image of the flowchart of procurement of Construction