the stage 2+ upgrade generales... · 2018-07-05 · b. stage 2+ pt8 configuration upgrade...

2018-P00025

PUERTO RICO ELECTRIC POWER AUTHORITY

HYDRO GAS MAYAGÜEZ POWER PLANT TURBINE 4B REPAIRS AND UPGRADE

APPEAR

AS FIRST PARTY: The Puerto Ríco Electric Power Authority, hereinafter referred to asPREPA, a public corporation and government instrumentality of the Commonwealth ofPuerto Rico, created by Act of May 2, 1941, No. 83, as amended, represented in thisact by its Executive Director, engineer Ricardo Luis Ramos Rodriguez, of legal age,married and resident of Caguas, Puerto Rico.

AS SECOND PARTY: ARG Precision Corp, as an exclusive representative inPuerto Rico of PW Power System, Inc. (manufacturer of the Power Turbines),hereinafter referred to as Contractor, a corporation organized and existing under thelaws of Puerto Rico, represented in this act by its President, mister Armando JoséRodriguez Gutiérrez, of legal age, married, and resident of San Juan, by virtue ofCorporate Resolution, of August 30, 2017.

Both, PREPA and Contractor which are hereinafter as a "Party"

-11('andjointly as "Parties".

WITNESSETH

(ffirkb IN CONSIDERATION of the mutual covenants hereinafter stated, the parties agreethemselves, their personal representatives, successors and assignees as follows:

ARTICLE 1. Scope of Work

The Contractor shall furnish all labor, materials, supervision, tools, and thenecessary equipment, required for the refurbishment of the Power Turbine (PT)PT BA# serie 80285/model # PT8-CW for the Mayagüez Hydro Gas Station PowerTurbine Unit 4B Upgrade; in strict accordance with the provisions of this Contract, andContractor's Proposal, dated April 3, 2017 all of which are hereby made a part hereof(Services).

Provided that prior to the inspection and acceptance by PREPA, as part of itsobligations herein stated, the Contractor shall deliver to PREPA a full package ofcertifications of parts removed, inspected and installed. A full and detailed report of thework performed in the turbine.

As per established in the Contractor's Proposal, dated April 3, 2017, the Services shallalso include:

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A. Stage 2+ upgrade configuration (SB 14B01) is to address the high stress on the inletsupport structure during thermal transient conditions. The Stage 2+ upgradeprovides the following improvements:

1. Extended duct to reduce gas path ingestion.

2. Added heat shield and cooling flow to reduce temperature on the #7 bearingsupport.

3. Improved bearing support geometry to reduce thermal stress.

4. Vane thru bolt and nut to eliminate bolt cracking.

5. Improved duct bolted joint to eliminate liberation.

B. Stage 2+ PT8 configuration upgrade incorporates changes as follows:

1. Extended inner duct to reduce axial gap and recirculation. Improved material ataft flange.

2. Added heat shield and cooling air.

3. Redesigned #7 bearing with support outer flange.

4. Improved spacer blocks material and geometry which engages #7 support.

5. Improved retaining ring segments material.

6. Improved duct bolt retention with 2 bolt retention feature ("Bear Claw").

7. Improved vane bolts with thru bolts and self-locking nut retention feature.

C. The Stage 2+ upgrade also includes the Stage 2 (i.e. SBs 11B06 and 12B03)durability improvements to the PT Rotor (items 6,7, and 8). The Stage 2/2+ upgradeincorporates the latest design changes and is recommended for PREPA PT 80285given the stress / cracking encountered on the #7 bearing supportand 2nd Inner Airseal. Stage -2/2+ Incorporates changes as follows:

1. Revised Inlet Case.

2. New outer vane support.

3. Revised outer inlet duct.

4. Revised no.7 support.

5. New 1St vanes.

6. New 1st stage side plate.


7. New 1st stage blade stop plate.

8. New 2nd stage inner air seal.

9. Integrated 1St stage inner honeycomb air seal.

D. Inbound/Outbound Marine Transportation

E. Pickup and delivery at Mayagüez Power Plant

F. Inland Marine and Ocean Cargo Insurances

Schedule:

1. Shop work - 70 days

2. Transportation -- 40 days

ARTICLE 2. Definitions/Z.-

A3 Whenever the words defined in this Article or pronouns used instead are mentioned inthis Contract, they shall have the meanings here given:

oik 2.1. Engineer - shall mean PREPA's Generation Director, acting directly or through hisproperly authorized agents.

2.2 Contracting Officer - shall mean PREPA's Executive Director, acting directly orthrough hís properly authorized agents.

2.3 Contract - shall mean, collectively, the documents listed below and allsupplementary documents thereto that are incorporated by reference. In the eventof a conflict between any such documents, the following shall constitute the orderof priority governing the interpretation of the Contract:

a. Contractb. Contractor's Proposals dated April 3, 2017 (Contractor Proposal)c. Performance and Payment Bond as approved by PREPA's Risk Manager and

Treasurer.

In case of any difference between the terms and conditions of this Contract and theterms of Contractor's Proposals, the terms and conditions of this Contract shallgovern.

ARTICLE 3. Consideration

In accordance with the terms and conditions herein contained, PREPA agrees to pay,


and Contractor accept, as full payment for the complete performance of all the Services,the amount of two million six hundred and eighty seven thousands, and seventeendollars with thirteen cents (Proposal Number ARG0705-02242017 PT80285 Stage2+ -$2,687,017.13 + Transportation and Insurances pass through costs), plus any additionalamount due for extra services or changes ordered and accepted by the Engineer not toexceed three million dollars ($3,000,000), hereinafter the Contract Price.

The Parties agrees that the total cost for the Services will be paid in full the day after ofPREPA's evaluation and acceptance of the equipment in Connecticut and Contractorpresentation of the corresponding invoice. The payment shall be made by electronictransfer (wire) to Contractor's Oriental Bank commercial account number 7872169881(route number221571415). The Contractor shall be responsible to pay PREPA the fee($25) required to make the electronic transfer.

PREPA shall reimburse the Contractor for the costs of transportation of the equipmentat cost plus 10% and insurance (including the Performance and Payment Bond), a passthrough cost. The reimbursement of the insurance cost will be made by PREPA withinthe three (3) working days after PREPA's approval of Contractor invoice with thesupporting documents (original of the invoices of the payment made by Contractor).The reimbursement of transportation cost will be made within the three (3) working daysafter PREPA's approval of the Contractors invoice that will be submitted after thedelivery of the equipment in the Hydro Gas Mayagüez Power Plant.

The funds for the payment of Services performed by Contractor will be made fromaccount PID 16978.

The invoices submitted by Contractor must be approved by the Engineer,and must be accompanied by the proper supporting documents (such as certificationsof parts removed, inspected and installed and a full and a detailed report of the workperformed in each turbine, and the invoices of the costs of transportation, bonds andinsurances).

All invoices submitted by Contractor shall include the following Certification in order toproceed with its payment. This is an essential requirement and those invoices withoutthis Certification will not be processed for payment:

No Interest Certification:

Under penalty of absolute nullity, I hereby certify that no employee, officialor director of PREPA is a party or has any interest in the profits or benefitsto be obtained under this Contract, or if any employee, official or director ofPREPA has any interest in the profits or benefits under this Contract awaiver has been previously obtained. I, also certify that the only


consideration to provide the Services) under this Contract is the paymentagreed with PREPA's authorized representative.

The total amount of this invoice is fair and correct. The Services were providedand no payment has been received for said concept.

Contractor's Signature

The demand of the obligations of either party under this Contract will be subjectto the filing of the Contract at the Office of the Comptroller of the Commonwealth ofPuerto Rico, in compliance with Act of October 30, 1975, Not 18, as amended.

ARTICLE 4. Commencement and Completion of Work

4.1. Refurbishment and InspectionThe refurbishment and inspection of all turbine components shall be completed in onehundred and twenty (120) consecutive days after pick up date at PREPA's MayagüezPower Plant.

4.2. Shipment of EquipmentContractor shall be responsible for the transportation and delivery of the PowerTurbines from Mayaguez Hydro Gas site to the facilities of PW Power System, Inc., inConnecticut within 20 days. Once all the services under this contract is completed,contractor is responsible for the transportation and delivery of the Power Turbines fromthe facilities of PW Power System, Inc., in Connecticut to Mayaguez Hydro Gas sitewithin 20 days after PREPA's evaluation and acceptance of the equipment inConnecticut.

4.3. Schedule of Proposed ProgressAll work on a particular unit shall be carried out on a continuous schedule following thecommencement date specified by PREPA and the proposed work schedule submitted inContractors Proposal and accepted by PREPA.

ARTICLE 5. Suspension of Work

The Contracting Officer or the Engineer may, at any time, suspend the whole or anyportion of the work under this Contract, but this right to suspend the work shall not beconstrued as denying the Contractor actual reasonable, and necessary expenses due todelays, caused by such suspension, it being understood that expenses will not beallowed for such suspension when ordered by the Contracting Officer or the Engineeron account of a Force Majeure Event, as defined in Article 11, Force Majeure, hereinbelow. The cause of such suspension shall be put in writing by the Contracting Officer

Contract TS -M08.17 - Mayaguez Hydro Gas Station Power Turbine Upgrade of 26

or the Engineer within two (2) working days after the suspension or as soon aspracticable.

ARTICLE 6. Specifications and Drawings

Anything called for in the specifications and not shown in the drawings, or shown in thedrawings and not mentioned in the specifications shall be deemed to have been calledfor or shown in both. in case of any difference between drawings and specifications,the specifications shall govern. In case of discrepancy in the specifications anddrawings, the matter shall immediately be submitted to the Engineer, without whosedecision said discrepancy in the specifications and drawings shall not be adjusted byContractor, and Contractor shall not proceed with the work affected thereby until he hasreceived written orders from the Engineer.

The Engineer will, from time to time, furnish such additional detailed drawings or other

ninformation as he may consider necessary for carrying out the work.

¡ ` ARTICLE 7. Changes and/or Extra Work

0201'The Engineer may, at any time, make changes in the Scope of Services to beperformed and/or order extra work under a Contract. When Contractor and PREPAhave agreed to the scope and nature of such changes in writing, the terms impacted bythe changes will be revised and the Contract will be amended by the Parties to reflectthe changes agreed and/or schedules required. Contractor shall not proceed with anychange until and unless such Contract amendment is issued.

ARTICLE 8. inspection

All Services shall be subject to inspection, examination, and test by PREPA inspectors'at all reasonable times. PREPA shall have the right to reject defective material,equipment or workmanship or require its correction in accordance with the requirementsof this Contract and Contractor's Proposal. Defective materials or workmanship shall beremedied in accordance with Article 30. Warranty. Contractor shall promptly removerejected material from PREPA's sites or direct"PREPA as to its disposal (disposal to beprovided at Contractor's expense). At Contractor's or subcontractor's facilities,Contractor shall furnish promptly all reasonable facilities, labor and materials necessaryfor the safe and convenient inspection and tests that may be required by the inspectors.All inspections and tests by PREPA shall be performed in such manners as not tounnecessarily delay the work.


ARTICLE 9. Access to Work

The Contractor shall permit all persons appointed or authorized by PREPA to visit andinspect the work, or any part thereof at all times, and places during the progress of it.

ARTICLE 10. Force Majeure

The parties hereto shall be excused from performing hereunder and shall not be liablein damages or otherwise, if and only to the extent that they shall be unable to perform,or are prevented from performing by a force majeure event. For purposes of thisContract, force majeure means any cause without the fault or negligence, and beyondthe reasonable control of, the party claiming the occurrence of a force majeure event.Force Majeure may include, but not be limited to, the following: Acts of God, industrialdisturbances, acts of the public enemy, war, blockages, boycotts, riots, insurrections,epidemics, earthquakes, storms, floods, civil disturbances, lockouts, fires, explosions,interruptions of services due to the acts or failure to act of any governmental authority,provided that these events, or any other claimed as a force majeure event, and/or itseffects, are beyond the reasonable control and without the fault or negligence of theparty claiming the force majeure, and that such party, within ten (10) days after theoccurrence of the alleged force majeure, gives the other party written notice describing

X the particulars of the occurrence and its estimated duration. The burden of proof as towhether a force majeure has occurred shall be on the party claiming the force majeure.

OA)ARTICLE 11. Penalties for Delays

If the Contractor fails to complete the work, or any separable part thereof, within thetime established in the Article 4, Commencement and Completion of Work, theContractor shall pay to PREPA a penalty of five thousand dollars ($5,000) for each dayof delay in completing the work/services or separable part thereof of Article 4. Thesepenalties shall be the Contractor's sole and exclusive liability for delays. In the eventthat the Contractor, due to his delay, had pay the total amount of the penalty as abovementioned, and has failed to complete the work or any part separable thereof, it couldbe considered a breach of the Contract, and PREPA may terminate the Contract,execute the performance bond and pursue any other remedies under this Contract, lawor equity.

In case of delay, the Contractor shall within two (2) days from the beginning of any suchdelay notify the Engineer in writing of the causes of delay, who shall ascertain the factsand the extent of the delay and extend the time for completing the work when, in hisjudgment, the findings of facts justify such an extension, and his findings of factsthereon shall be final and conclusive on the parties hereto, subject only to appeal by theContractor as provided in Article 24, Disputes, hereof; provided that, no claim shall bemade by the Contractor against PREPA, its agents, contractors, subcontractors,


employees, successors, assignees, for any cause whatsoever, during the progress ofany portion of the work embraced in the Contract. Any damages caused by delays orhindrances exclusively by PREPA shall be considered as fully compensated for by theextensions of time as provided above.

If PREPA does not terminate the right of the Contractor to proceed, the Contractor shallcontinue the work, in which event shall pay to PREPA a penalty in the amount set forthabove for each calendar day of delay until the work is completed, and the Contractorand his sureties shall be liable for the amount thereof; provided that, the right of theContractor to proceed shall not be terminated or the Contractor charged with a penaltybecause of any delays in the completion of the work due to force majeure events orsituations, or failures on the part of PREPA to carry out its obligations.

PREPA shall have the right to the payment or to the withholding of Contractor's

4 Jn payments in case of Contractor's delay in completion of the work. The Contractorr " agrees that the penalty shall not be subject to reduction, moderation or modification,

since this penalty is a pecuniary punishment for the delay, and not a liquidation ofdamages.

ARTICLE 12. Liabilities

12.1 Civil ResponsibilityThe appearing parties agree that their responsibilities for damages under thisContract will be governed by the Puerto Rico Civil Code and its case law, asdictated by the Supreme Court of Puerto Rico.

12.2 Indirect or Consequential DamagesThe Contractor shall not be responsible for indirect or consequential damagesthat may occur in relation to the Services performed.

12.3. Direct Damages to PREPA's PropertyThe Contractor shall be insured for all direct damages to PREPA's property thatoccur as a result of his fault or negligence in connection with the prosecution ofthe work, and shall be responsible for the proper care and protection of allmaterials, and equipment delivered and work performed until completion of work.The Contractor's total liabilities for damages shall be up to twice the ContractPrice.

12.4. Protection against the Occurrence of DamagesThe Contractor agrees to make, use, provide, and take all proper, reasonablynecessary and sufficient precautions, safeguards, and protection against theoccurrence or happenings of injuries, death and/or damages to any person orproperty during the progress of the work and Services. In the performance of its

Contract TS -M08-1 7 - Mayaguez Hydro Gas Station Power Turbine Upgrade of 26

obligations under the Contract, Contractor agrees to comply with all applicablelocal and federal laws and regulations.

12.5 Save and Harmless ClauseThe Contractor agrees to indemnify and save harmless PREPA for all expensesand costs of any nature (including attorneys' fees) incurred by PREPA arising outof any claim made by any person for personal injuries, including death, sustainedby any person, including the employees of Contractor, and for damages to thirdparty property to the extent such injuries, death or third party damages arecaused by the fault, negligent acts or omission of Contractor, its employees,subcontractors or affiliated companies, arising out of its or their performanceand/or failure to perform work and Services.

12.6. Save Harmless for Operation of PREPA's EquipmentThe operation of PREPA's equipment by PREPA at its plant site is within theexclusive control of PREPA. PREPA shall indemnify and save harmless theContractor from loss, expense or liability imposed upon the Contractor for anyinjury to a person, including death resulting therefrom or damage to any propertyresulting from the operation of such equipment by PREPA.

6w/ If the Contractor is allowed to operate PREPA's equipment at the plant site, theContractor shall indemnify and save harmless PREPA from loss, expense orliability imposed upon PREPA for any injury to a person, including death resultingthere from or damage to any property resulting from the operation of suchequipment by the Contractor.

12.7 Contractor's LiabilityThe overall aggregate liability of Contractor with respect to any and all claimsarising out of the performance or non-performance of obligations under theContract, regardless of any legal theory or cause of action under which suchliability may arise, shall be up to twice the Contract Price (which includesauthorized changes). However, the foregoing dollar limitation shall not apply toliability arising from third party claims for bodily injury or third party propertydamage to the extent such liability results from Contractor's fault or negligent actsor omissions while working under the Contract.

ARTICLE 13. Independent Contractor

The Contractor shall be considered as an independent contractor, for ail materialpurposes under this Contract, and all persons engaged or contracted by the Contractorfor the performance of its obligations herein, shall be considered as its employees oragents or those of its subcontractors, and not as employees or agents of PREPA,


In consequence, the Contractor is not entitled to any fringe benefits, such as, but notlimited to: vacations, sick leave, and other.

ARTICLE 14. Termination

Notwithstanding anything to the contrary in this Contract regarding its term, PREPAmay, at any moment, terminate, cancel or accelerate its expiration, after givingContractor a not less than ten (10) days prior notice, when in PREPA's judgment suchaction responds to PREPA's best interest. Provided that, in the event the Contractorfails to comply with any of its obligations under the Contract, PREPA may declare animmediate Contract termination, cancellation or rescission, without prior notice to theContractor. If the Contract is so terminated, Contractor shall be compensated forServices performed and duly evidenced through the date of termination as calculatedpursuant to Contractors Proposal. The exercise of its right to terminate, cancel orrescind the Contract shall not be understood as a waiver by PREPA to any otherremedy it may have under this Contract or under the law for delays or breach incurredby the Contractor in the performance of its obligations under the Contract.

ARTICLE 15. insurance and Bonds

The Contractor shall secure and maintain in full force and effect during the life of thisContract as provided herein, policies of insurance covering all operations engaged in bythe Contract as follows:

15.1 Commercial General Liability Insurance:The Contractor shall provide a Commercial General Liability Insurance with limitsof $1,000,000 per occurrence and $1,000,000 aggregate.

15.2 Commercial Automobile Liability Insurance:The Contractor shall provide a Commercial Automobile Liability Insurance withlimits of $1,000,000 combined single limit covering all owned, non -owned andhired automobiles.

15.4 Professional Liability Insurance:The Contractor shall provide a Professional Liability Insurance with limits of$1,000,000 per claim and $1,000,000 aggregate.

15.5 Inland Marine Insurance:Contractor shall provide Inland Marine Insurance coverage with a limit equal tothe replacement cost of the equipment, parts and materials to be delivered intransit by land.

15.6 Ocean Cargo Insurance:

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Contractor shall provide Ocean Cargo Insurance coverage with a limit equal tothe replacement cost of the equipment, parts and materials to be delivered intransit by cargo vessel.

Requirements Under the Policies:

The Commercial General Liability and Commercial Automobile Liability Insurancerequired under this Contract shall be endorsed to include:a. As Additional Insured:

Puerto Rico Electric Power AuthorityRisk Management OfficePO Box 364267San Juan, PR 00936-4267

b. A 30 day cancellation or nonrenewable notice to be sent to the above address.c. An endorsement including this Contract under contractual liability coverage and

identifying it by number, date and parties to the contract.d. Waiver of Subrogation in favor of PREPA.e. Breach of Warranties or Conditions:

"The Breach of any of the Warranties or Conditions in this policy by the Insured shallnot prejudice PREPA'S rights under this policy."

Bonds:

As a Contract security, the Contractor shall furnish at the time of the execution of theContract:a. A Performance Bond in the amount of one hundred percent (100%) of the Contract

Price, with good and sufficient surety satisfactory to PREPA guaranteeing that theContractor will well and faithfully perform the contract work.

b. A Payment Bond in the amount of one hundred percent (100%) of the ContractPrice, with good and sufficient surety satisfactory to PREPA to guarantee the promptpayment of ail labor, supervision, equipment and materials required in theperformance of the work.

c. All bonds shall be issue in the official form of PREPA.

Furnishing of Policies:

All required policies of insurance and bonds shall be in a form acceptable to PREPAand shall be issued only by insurance companies authorized to do business inPuerto Rico.The Contractor shall furnish a certificate of insurance in original signed by an authorizedrepresentative of the insurer in Puerto Rico, describing the coverage afforded."


ARTICLE 16. Permits and Licenses

The Contractor shall obtain, maintain and submit evidence of all the licenses, permitsand authorizations required to perform ail services and tasks under this Contract, andshall send all notices, pay all fees, and related costs and will comply and will have itssubcontractors and agents comply with all laws, ordinances, rules, and regulationsapplicable to the work, in accordance with the drawings an specifications. Should theContractor find any discrepancy between the drawings and specifications and thepermits, laws, ordinances, rules, and regulations referred to herein, the Contractor shallproceed immediately to notify PREPA of the discrepancy and shall not continue with thework until PREPA issues and notifies an order informing the Contractor what changesare necessary and when to proceed with the work as changed.

ARTICLE 17. Contingent Fees

The Contractor warrants that it has not employed any person to solicit or secure thisContract upon any agreement for a commission percentage, brokerage or contingentfee. Breach of this warranty shall give PREPA the right to annul the Contract or, at itsdiscretion to the price or consideration the amount of suchcommission, percentage, brokerage or contingent fees. This warranty shall not apply tocommissions payable by the Contractor upon Contract or sales secured or madethrough bona fide established commercial or selling agencies.

ARTICLE 18. Official not to Benefit

No officer, employee or agent of PREPA, or of the Government of the Commonwealthof Puerto Rico, shall be admitted to any share or part of this Contract or to any benefitthat may arise therefrom.

In addition to the restrictions and limitations established under the provisions of ActNo.' 1-2012, as amended, retired or former officers or employees of PREPA, whosework was in any way related to the award or management of services orders orcontracts, shall in no way benefit from any contract with PREPA for a period of two (2)years after leaving employment with or ceasing services to PREPA.

ARTICLE 19. Conflict of Interest

The Contractor certifies that he does not receive payment or benefit of any nature forservices rendered regularly through an appointment to a governmental agency, body.public corporation or municipality of Puerto Rico. The Contractor also certifies that hemay have contracts with other governmental agencies or bodies, but such conditiondoes not constitute a conflict of interest for the Contractor.


ARTICLE 20. Claims for Labor and Materials

The Contractor shall, at his own expense, assume the defense of and save harmlessPREPA from claims arising out of and in connection with Contractor furnished labor andmaterials, and PREPA shall not suffer any mechanics or other liens to remainoutstanding against any property used in connection with the Services; and shall, onrequest, furnish satisfactory evidence that all persons who have done work or furnishedmaterials have been fully paid. If the Contractor fails to comply with his obligations inthis respect, PREPA may take such liens or claims and may withhold from any moniesdue to the Contractor such amounts as may be necessary to satisfy and discharge anysuch claims and any cost and expense incidental thereto.

ARTICLE 21. Patents and Copyrights

The Contractor, at its own expense, shall defend any suit or action brought againstPREPA based on a claim that any equipment or part thereof, copyright or un -copyrighted composition, secret process, patented or unpatented invention, article, orappliance manufactured or used in the performance of this Contract, including their useby PREPA, constitutes an infringement of any patents or copyrights of the UnitedStates, if notified promptly in writing by PREPA, and given the authority, information,and assistance for the defense of the same, and the Contractor shall pay all damagesand costs awarded therein against PREPA. If in such suit the equipment or any partthereof, or the composition, secret process, invention, article or appliance, is held toconstitute infringement and its use is enjoined, the Contractor, at its option andexpense, shall either procure for PREPA the right to continue using the same or replaceit with non -infringing equipment, composition, secret process, invention, article orappliance, or modify it so it becomes non -infringing; or remove it and refund thepurchase price.

ARTICLE 22. Waivers

No waiver of any breach of this Contract shall be held to be a waiver of any othersubsequent breach. All remedies afforded by PREPA in this Contract shall be takenand construed as cumulative, that is, in addition to every other remedy provided hereinor by law.

ARTICLE 23. Correction of Work after Final Payment

Neither the final certificate for payment nor any provision in the Contract Documentsshall relieve Contractor of its responsibility for faulty Services in accordance withArticle 30, Warranty, of this Contract. All questions arising under this Article shall bedecided by the Engineer, subject to appeal by the Contractor as provided in Article 24,Disputes.


ARTICLE 24. -isputes

Except as otherwise specifically provided in this Contract, all disputes concerningquestions of fact arising under this Contract shall be decided by Engineer, subject towritten appeal by the Contractor within thirty (30) days to the Executive Director. Assoon as practicable thereafter, the Executive Director shall inform each party hereto ofhis decision regarding the dispute. If such challenge is made, either party may pursueits remedy at law or equity. Contractor, at its option, may elect to accept such decisionor pursue remedies at law or equity. In the meantime, Contractor shall diligentlyproceed with work as ordered. In the event of a dispute arising during the warrantyperiod, the Performance and Payment Bond shall be used to guarantee that Contractorwill well and faithfully perform the warranty remedies as set forth in Article 30,Warranty.

ARTICLE 25. Laws to be Observe

Contractor shall observe and comply with any and all federal, state and municipal laws,ordinances and regulations that in any manner affect the work or services, theequipment or the materials used in the proposed rehabilitation, assembly ytransportation and those employed in the work or the carrying out of the work, and shallobserve all such orders and decrees as exist at present or may be enacted prior to thecompletion of the work by agencies or courts having any jurisdiction or authority overthe work. Contractor shall save harmless and indemnify PREPA and itsrepresentatives, officers, agents and servants for fines and penalties paid by PREPA,including attorney's fees, to governmental authorities as sole result of Contractor'sviolation of any such law, ordinance, regulation, order or decree, whether by theContractor or its subsidiaries, affiliates and employees, subject to limits of liability inArticle 12, Liabilities.

ARTICLE 26. Change of Law

During the term of this Contract, any change in law, including, but not limited to changesin applicable tax law, which causes an increase in Contractor's costs when supplyingthe services to be acquired by PREPA, shall be of Contractor's responsibility andPREPA shall not be obliged to make additional payments nor to pay additional sums tothe Contract Price originally agreed for those products or services.

ARTICLE 27. Choice of Law

This Contract shall be governed by and construed ín accordance with the laws of theCommonwealth of Puerto Rico. Also, the contracting parties expressly agree that onlythe state courts of Puerto Rico will be the courts of competent an exclusive jurisdiction


to decide over the judicial controversies that the appearing parties may have amongthem regarding the terms and conditions of this Contract.

ARTICLE 28. Separr [biiity

If a court of competent jurisdiction declares any of the Contract provisions as null orinvalid, such holding will not affect the validity and effectiveness of the remainingprovisions of the Contract and the parties agree to comply with their respectiveobligations under such provisions not included by the judicial declaration.

ARTICLE 29. Discrimination

The Contractor certifies that he is an employer with equal opportunity employment, anddo not discriminate by race reason, color, religion, political ideas, sex, nationality, age ormental or physical condition.

ARTICLE 30. Warranty

/1:5f)-- The Contractor warrants that all materials, parts, equipment used, and work performedunder this Contract comply in all respect with its terms and conditions; that they are free

c(fWfrom defects in materials and workmanship; that they are suitable and adequate for thepurposes for which they were _designed and for such other purposes, if any, as arespecified in the Contract, and that the services provided under this Contract will conformwith the highest standards of care and practice appropriate to their nature.The warranty period will begin the day after PREPA has inspected and accepted theequipment in Connecticut and will continue for a period of twelve (12) months. TheContractor will, upon written notice by PREPA, fully remedy, free of expense to PREPA,such defects as may develop on said services, materials, parts or equipment, providedthat they have been properly stored, installed, maintained, and operated within thespecified parameters. The Performance Bond shall cover and serve as guarantee forthis Warranty.

For those materials, parts, equipment, which prove defective, or deficient during theWarranty period, whether cause by material failure, deficient installation, or wronglyoperation under the supervision and guidance of the Contractor he shall at his ownexpense, repair or replace, transport -in, from the Contractor's facilities to PREPA's siteand transport -out from PREPA's site to the Contractor's facilities, such damagematerials, parts and/or equipments. The Contractor shall be responsible for alldamages caused by the failure of defective parts or deficient installation of thematerials, or equipments and shall remove, replace, transport and install, at his ownexpenses, all materials, parts or equipments damage caused by the failure of thedefective parts supply by the Contractor or deficient installation of the materials orequipments cover in the Warranty. The Performance Bond shall cover and serve as


guarantee for the Contractor's failure, in whole or in part, to properly perform hisobligations under this Contract.

Prior to sign the Contract, the Contractor shall be responsible to obtain and deliver toPREPA, a written guarantee from the manufacturer of the units, PW Power System, Inc.accepting the terms and conditions of the Warranty, as stated in this ARTICLE, and itscommitment to honor the same.

ARTICLE 31. Notice

Any notice to be given hereunder shall be in writing and will be sufficiently served whendelivered in person or properly mailed to the following addresses:

To PREPA: Puerto Rico Electric Power AuthorityPO Box 364267San Juan, Puerto Rico 00936-4267

Attention: Eng. Justo L. González TorresActing Generation Director

To Contractor: ARG Precision Corp.PMB 911 PO Box 2500Toa Baja, Puerto Rico 00951

Attention: Eng. Armando Rodriguez

ARTICLE 32. Quality Assurance Clause

The Contractor shall establish an adequate quality control program adequate to satisfyall applicable regulation and requirements specified in the procurement documents.The program shall contain all those measures necessary to assure that all basictechnical requisites are fulfilled.

PREPA reserves the right to conduct audits and inspections to the facilities, activities,and/or documents (limited to inspection and quality control documents) when estimatedand without previous notification necessary in order to assure that the quality controlprogram is adequate and is being properly implemented. The Contractor shall allowPREPA access to its facilities and documents (limited to inspection and quality controldocuments), so that PREPA, through audits and inspections can verify the quality of thepurchased products or services.


in every case in which the materials or services to be furnished to PREPA aresubcontracted partially or totally, by the Contractor, the Contractor shall request thesubcontractor to accept and comply with all the requirements of this Quality AssuranceArticle.

ARTICLE 33. Certifications and

33.1

ocrarnents

Prior to the execution of this Contract, Contractor will have to submit the followingdocuments or certifications:a. Certification issued by the Treasury Department of Puerto Rico which

indicates that Contractor does not owe taxes to the Commonwealth ofPuerto Rico; or is paying such taxes by an installment plan in. full compliancewith its terms.

b. An Income Tax Return Filing Certificate, issued by the Treasury Departmentof Puerto Rico assuring that Contractor has filed his income Tax Return forthe last five (5) tax years.

c. Certification issued by the Treasury Department of Puerto Rico whichindicates that Contractor does not owe Puerto Rico Sales and Use Taxes tothe Commonwealth of Puerto Rico; or is paying such taxes by an installmentplan and is in full compliance with its terms.

d. A Puerto Rico Sales and Use Tax Filing Certificate, issued by the TreasuryDepartment of Puerto Rico assuring that Contractor has filed his Puerto RicoSales and Use Tax for the last sixty (60) contributory periods.

e. A copy of Contractor's Certificate of Merchant's Registration issued by theTreasury Department of Puerto Rico.

f. Certification issued by the Municipal Revenues Collection Center (MRCC),assuring that Contractor does not owe any tax accruing during the last five (5)years to such governmental agency. To request such Certification,Contractor will use the form issued by the MRCC.

g. A Personal Property Tax Filing Certification, issued by the MRCC whichindicates that Contractor has filed their Personal Property Tax Return for thelast five (5) contributory terms.

h. Certification, issued by the Child Support Administration, assuring thatContractor is in compliance with the withholdings required by law as anemployer.

. Certificate, issued by the Department of Labor and Human Resources ofPuerto Rico, assuring that Contractor has paid to the Department of Laborand Human Resources of Puerto Rico its employees' contributions accruingduring the last five (5) years in accordance with the Puerto Rico EmploymentSecurity Act (unemployment, temporary disability or sickness or socialsecurity for drivers/chauffeurs); or is paying such contributions by aninstallment plan in full compliance with its terms. To request such


Certification, Contractor will use the form issued by the Department of Laborand Human Resources of Puerto Rico.

j. Good Standing Certificate and Certificate of Authorization to do business inPuerto Rico, both issued by the Department of State of Puerto Rico.

k. A sworn statement to the effect that, as of the effective date, neitherContractor nor any of its chairperson, vice chairperson, directors, executivedirector, any member of its board of directors or board of officials, or anyperson performing equivalent functions for Contractor; or its subsidiaries oralter egos has pled guilty to, has been convicted of, or is under judicial,legislative, or administrative investigation in Puerto Rico, the United States ofAmerica, or any other country for any of the crimes enumerated in Act ofDecember 29, 2000, No. 458, as amended, 3 L.P.R.A. §928-9281, or itsequivalent for purposes of this Act 458.In accordance with Article 6 of Act 458-2000, as amended, Contractor

1(ó)714//i

acknowledges that its conviction or guilty plea for any of the crimes asenumerated in such Act shall entail, in addition to any other applicablepenalty, the automatic rescission of this Contract. In addition, but only to the

3 extent required by Act 458-2000, PREPA shall have the right to demand thereimbursement of payments made pursuant to this Contract that directly resultfrom the committed crime.

33.2 It shall be Contractor responsibility, also, to require all subcontracted third partiesto comply with all the previous Certifications and agrees to notify PREPA of suchcompliance within ten (10) working days of subcontracting such third party.

33.3 If any of the previously required Certifications shows a debt, and Contractor hasrequested a review or adjustment of this debt, Contractor will certify that it hasmade such request at the time of the Contract execution. If the requested reviewor adjustment is denied and such determination is final, Contractor will provide,immediately, to PREPA a proof of payment of this debt; otherwise, Contractoraccepts that the owed amount be offset by PREPA and retained at the origin,deducted from the corresponding payments.

33.4 Contractor recognizes that submittal of the aforementioned certifications anddocuments is an essential condition of this Contract; and even in the case thatthey are partially incorrect, there will be sufficient cause for PREPA to terminate,cancel or rescind the Contract, and Contractor have to refund all paymentsreceived.

ARTICLE 34. Safety Provisions

34.1. The Contractor shall have an Occupational Safety and Health Program. A copyof this Program will be delivered to the Labor Safety Division. The Program shallcomply with the following minimum requirements of a health and safety program:a. ft shall comply with all requirements from all applicable regulations included in

the 29 CFR. The Program shall have been updated within the past year from


the delivery date to PREPA.b. It shall establish the mechanisms used to update and audit compliance with

itself.c. It shall include an accident or incident investigation procedure. This

procedure will always include the preparation of a report, which will besubmitted to the Labor Safety Division of PREPA.

34.2. The Contractor shall submit, for evaluation by the Labor Safety Division, a copyof a Site Specific Work Plan. This plan shall include, but not limited to, thefollowing aspects:a. Objectives of the Work Planb. Description of the activities to be donec. Occupational safety and health considerations to be addressed before

commencement of the project.d. Procedures for achieving compliance with the applicable regulations,

including, but not limited to:i. Occupational Exposure to Lead (29 CFR 1926.62)ii. Scaffolds (29 CFR 1926 Subpart L)

iii. Confined Spaces (29 CFR 1910.146)iv. Occupational Exposure to Noise (29 CFR 1910.95)v. Hazardous Materials (29 CFR 1910 Subpart H)vi. Personal Protective Equipment (29 CFR Subpart 1)

vii. Hazard Communication (29 CFR 1910.1200)viii. HAZWOPER (29 CFR 1910.120)

ix. Fire Protection (29 CFR 1910 Subpart L)x. Materials Handling and Storage (29CFR 1910 Subpart N)

xi. Commercial Diving (29 CFR 1910 Subpart T)xii. Respiratory Protection (29 CFR 1910.134)xiii. Fall Protection (29 CFR 1926 Subpart M)xiv. Electrical (29 CFR 1926 Subpart K)xv. Welding (29 CFR 1926 Subpart J)xvi. Excavations (29 CFR 1926 Subpart P)xvii. Demolitions (29 CFR 1926 Subpart T)xviii. Blasting & Explosives (29 CFR 1926 Subpart U)xix. Ventilation (29 CFR 1926.57)xx. Tools, Hand and Powered (1926 Subpart I)xxi. Electric industry (29 CFR 1910.269)xxii. Lockout Tagout (29 CFR 1910.147)

xxiii. Asbestos (29 CFR 19101001)e. It will also include any other regulation or guidelines related to safety and health

that could be applicable to the scope of work, and contingency procedures thatinclude how to proceed in an emergency situation, such as fire or chemical spill,among others.

f. Present a list of all specialized personnel needed. Also, include copy of all


g.

h.

35.3.

34.4.

34.5.

34.6.

1k.

training certificates, licenses or certifications required, according to the scope ofwork. For example: pesticides applicator, electrician, spill responder, refrigerationtechnician, DOT training for hazardous substances, etc. All these certificatesand licenses shall be up to date.Copy of the Material Safety Data Sheets (MSDS) of all chemical products to beused during the project, shall be evaluated and approved by the HazardCommunication Section of the Safety Division of PREPA.Present evidence of compliance with medical surveillanceaccording to scope of work.

i. Present evidence of compliance with Fit Test requirements for the userespirators that make a face seal.Present a list of annual training for the use of personal protective equipment.Present a list of safety equipment and materials to be used during the project.Procedures a procedure to verify the work area after each workday and at theend of the project.

m. The Contractor and Subcontractor shall adhere to a 100% drug ! alcohol freework zone. At minimum, pre -project and post accident testing is required. Apositive post accident test or positive pre -project test will result in workerdismissal from the project. Testing will be performed in following closely theSAMHSA standards (Substance Abuse and Mental Health ServicesAdministration).Before commencement of work, the Contractor shall take part in a coordinationmeeting with a Safety Officer and the project manager on PREPA's behalf.During this meeting the areas to be worked on will be toured, the site -specificwork plan will be discussed and reviewed, and amendments to it could berequired.If the contracted services include demolition activities (as defined per ANSIA1O.6 -1990: Demolition - the dismantling, razing or wrecking of any fixedbuilding or structure or any_ part thereof) that will be carried out in buildings orstructures, that because of their construction date or prior use, are suspected tocontain asbestos, lead based paint or other hazardous materials, the Contractorwill require a certification from the project manager or owner stating that thebuilding or structure is free of such materials.The Contractor services including activities inside buildings occupied by workingpersonnel, that could create a hazard to their safety or health, will be offeredAFTER PREPA'S WORKING HOURS. The Contractor will take all stepsnecessary to assure the area will be free of nuisance odors or vapors beforePREPA personnel is to reoccupy. All these will be done in coordination with thelocal supervisor of PREPA.The Contractor shall assure that all wastes are characterized before removedand properly disposed, in accordance with all applicable laws and regulations,after completion of work, at the end of every work shift and after the completionof the project.

requirements,

of


34.7. All chemical products to be used shall be evaluated and approved by the HazardCommunication Section of the Safety Division of PREPA and shall be classifiedas Approved or Conditionally Approved.

34.8. Welding operations will comply with the requirements of OSHA, ANSI and NFPA.34.9. If the project involves the handling of non -asbestos insulation or other dust

generating materials, like gypsum board, steps shall be taken to prevent therelease of the dust to adjacent areas.

34.10. The Contractor shall take all reasonable precautions for the safety of, and shallprovide all reasonable protection to prevent damage, injury or loss to allemployees on the work and all other persons who may be affected. Thisincludes the work, property, material and equipment on or off the site, under thecare, custody or control of the Contractor or any of his subcontractors.

34.11. The Contractor shall comply with all applicable laws, ordinances, rules,regulations and lawful orders of any public authority having jurisdiction for thesafety of persons or property or to protect them from damage, injury or loss. Heshall erect and maintain, as required by existing conditions and progress of thework, all reasonable safeguards for safety and protection, including postingdanger signs and other warnings against hazards, promulgating safetyregulations and notifying owners and users of adjacent utilities.

34.12. The Contractor shall designate a Safety Officer at the site whose duty shall bethe prevention of accidents and the implement of both the Safety and HealthProgram and the Site Specific Work Plan approved by PREPA's Safety Division.The Contractor shall present evidence that their Safety Officer has an effectivetraining of 30 hours in Occupational Safety and Health Standards forConstruction Industry from an approved OSHA Training Center.

34.13. Compliance with all safety provisions by subcontractors shall be the responsibilityof the Contractor.

34.14. The Contractor agrees that it shall perform all work in compliance with federal,state and local occupational safety and health regulations, as described in theSite Specific Work Plan.

34.15. The Contractor will obtain and maintain, during the duration of the contract, theproper permits from all federal, state and local regulatory authorities or otherapplicable government agency with respect to discharge, disposal, use, storage,handling and transportation of hazardous chemicals and substances as andwhen applicable law or regulation requires. For projects or incidents requiringnotification to EPA or EQB, the Bidder shall immediately, upon becoming aware,notify the Plant Environmental Control Supervisor.

34.16. The Contractor will not cause or permit any hazardous chemical or productcontaining a hazardous chemical to be at, or in the vicinity of, any place whereany employee, agent, or contractor of PREPA, or employee of any such agent orcontractor, may be at risk or exposed to hazard as a result thereof during normaluse or any foreseeable emergency.

34.17. The Contractor will defend, indemnify and hold harmless, PREPA, its employees,


agents or assignees for any and all direct liabilities and expenses arising out ofBidder noncompliance with these clauses irrespective of any other terms of thisagreement.

34.18. PREPA may unilaterally terminate this contract upon the Contractor's non-observance of any of the foregoing or for any failure to comply with any of thesafety provisions on this Contract upon thirty (30) days of a written notice to theContractor.

ARTICLE 35. Environmental Conditions

35.1. The Contractor agrees to indemnify PREPA for all expenses and costs of anynature arising out of any claim due to an environmental violation, caused by hisagents, employees, subcontractors or assigns during the performance or non-performance of its obligations under the Contract.

Orti35.2. The Contractor should have available, and close to the working area, the

necessary equipment to control, pick-up and clean up any spill that could occurduring the performance of the work required by the Contract. The equipment

AL1/2 should include all the necessary materials for the waste disposal.

35.3. All equipment to be used in the work area should be free of oil, transmission fluidor hydraulic fluid leakages. If the equipment develops a leakage during the workprocess, it should be repaired or replaced immediately. While the leakingequipment is removed of the work or it is repaired, it is the Contractor'sresponsibility the replacement of cloth or absorbent material and drip pans.

35.4. The Contractor shall inform and coordinate with the Plan Environmental ControlSupervisor any work to be done to avoid any environmental violation.

35.5. The Contractor shall comply with all the arrangements established in the ConsentDecree between PREPA and the Environmental Protection Agency (EPA).

35.6. The Contractor shall dispose of all waste generated because of this work,according to the Environmental regulations. The use of PREPA's waste disposalequipment is not permitted.

35.7. All chemical products to be used shall be classified as "Approved" or "ConditionalApproved" by PREPA's Hazard Communication Section and by Substances andWastes Management Department, before entering the work area of PREPA'spremises.

35.8. The Contractor, upon completion of the work, must leave all the work area clean,organized and free of contaminants. The storage area for the removedequipments and parts must be appropriate to avoid contaminants dispersion tothe ground or water.

35.9. All chemical analysis shall be performed by an approved laboratory and shall beincluded in PREPA's Materials Management Division Supplier's Register ascompanies that are properly qualified and evaluated to perform this type of work.

35.10. The disposal of non -hazardous and hazardous waste material shall be done in aTreatment Storage Disposal Facility (TSDF) previously approved by PREPA.


35.11. The Contractor shall submit evidence of compliance with DOT's HazardousMaterials Transportation, 49 CFR 172 Sub. Part H (DOT).

35.12. All remedial actions and environmental work will be performed by a companypreviously approved by PREPA.

35.13. All work shall be performed according to the Best Management Practice Plan(BMPP), which is part of the Special Conditions of the NPDES Permit.

35.14. Any chemical product should not reach any internal waste stream or outfall of thePlant in order to comply with the NPDES Permit.

35.15. Temporary storage areas of construction and disposal materials shall beprotected with dikes. In the absence of dikes, the Contractor shall preparetemporary areas with dikes to avoid materials exposure.

35.16. All the construction and disposal materials shall be covered to avoid rainfallexposure during the work activities.

35.17. The Contractor shall keep a chemical inventory for products with ingredients

97114A/

regulated by the EPA's Toxic Release Inventory (SARA title Ill, 313). TheContractor should do a quantity report for all the material used and disposed inthe project. This report will include a copy for all the analysis taken during the

PS / t project and a copy or copies of the manifest of the waste generated. This reportshould be submitted to the Plant Environmental Control Supervisor and to thePlanning and Environmental Division.

35.18. The Contractor shall be responsible to obtain the requirement air permits for thecontrol of fugitive emission that may be causes by process or work operations.

ARTICLE 36. Income Tax Withhoiding

PREPA will deduct and withhold at a source to Contractor the equivalent of sevenpercent (7%) from payments for services rendered under this Contract, in compliancewith the New Puerto Rico Internal Revenue Code, Law 1-2011, as amended,Section 1062.03. Notwithstanding, the withholding to be done by PREPA as hereinstated could be increased to twenty percent (20%) in the event Contractor is a non-resident individual, which is a U.S. citizen, or to twenty nine percent (29%) in the eventContractor is a non-resident and non U.S. citizen individual; or a foreign corporation orpartnership which is not dedicated to industry or business in Puerto Rico, as providedby the New Puerto Rico Internal Revenue Code, Law 1-2011, as amended,Section 1062.08.

if a Release Letter has been issued to Contractor by the Treasury Department,Contractor is responsible for submitting a copy of said Release Letter to PREPA forevery calendar year; otherwise, payments under the Contract shall remain subject towithholding at source by PREPA. All invoices shall be segregated by concepts(services, materials, equipment, etc.) to identify the amounts subject to withholding andavoid undue deductions.


ARTICLE 37. Subcontracting and Assignment

Contractor shall not subcontract its obligations under this Contract, without PREPA'sprevious written authorization for such actions. Provided, that no subcontract shall beconsidered for PREPA's approval, except when the following requirements are met: (1)Contractor delivers PREPA a copy of the subcontract, not less than thirty (30) days priorto the effective date of the proposed subcontract; (2) the subcontract includes, as acondition for its legal validity and enforceability, a provision whereby PREPA has theright to substitute, subrogate or assume Contractor's rights under the subcontract, inthe event that PREPA declares Contractor in breach or default of any of the Contractterms and conditions; and (3) the subcontract includes, as a condition for its validity andenforceability, a provision establishing for the subcontractor the obligation to complywith all of Contractor's obligations under the Contract (mirror image clause), except for

e such obligations, terms and conditions which exclusively related with works or servicesnot included under the subcontract.

60iiAny assignment of any rights or duties under this Contract, by either Party, shall be onlywith the prior written consent of the other Party. If Contractor decides to assign due orpayable, to which he is entitled for services rendered or goods provided during the termof this Contract to any third party, provisions in ARTICLE 38, Transfer of Funds, shallapply.

ARTICLE 38. Transfer of Funds

If Contractor decides to assign or transfer an amount, due or payable, to which he isentitled for services rendered or goods provided during the term of this Contract,Contractor shall notify PREPA of such transfer of funds, in accordance to the provisionsof Act 21-2012. Said notice shall clearly indicate the rights granted, including a copy ofthe contract under which the assignments were made, the exact amount of funds to beassigned or transferred, and specific identification information regarding the assignee(full name of the person or company), address and any other contact information.

Contractor acknowledges and agrees that PREPA may deduct any amount, due orpayable under this Contract, that Contractor owes, PREPA may retain any said amountif Cóntractor fails to fulfill its obligations and responsibilities under this Contract, or aclaim arises for warranty or defects regarding the services rendered or goods providedunder this Contract. Contractor also acknowledges and agrees that PREPA's paymentobligation under any assignment of funds will cease upon payment of the outstandingamounts under this Contract. PREPA shall not be required to make payments ortransfer any funds for an amount that exceeds the payment to which Contractor isentitled to under this Contract.

contract TS -M08-17 - Mayaguez Hydro Gas Station Power Turbine Upgrade of 26

Contractor's aforementioned notice of assignment of funds shall be accompanied by acashier's check or money order payment of two hundred dollars ($200), payable to"Puerto Rico Electric Power Authority", for administrative costs for processing saidassignment.

ARTICLE 39. Delivery of Equipment

Contractor shall deliver the Power Turbines in Hydro Gas Power Plant in Mayaguez andshall be responsible for custom clearance and duty payments, if any.

ARTICLE 40. Novation

Contractor and PREPA expressly agree that no amendment which could be made tothis Agreement, during its term, shall be understood as a contractual novation, unlessboth Parties agree to the contrary, specifically and in writing. The previous provisionshall be equally applicable in such other cases where PREPA gives Contractor a timeextension for the compliance of any of its obligations under the Agreement or wherePREPA dispenses the claim or demand of any of its credits or rights under thisAgreement.

ARTICLE 41. Subcontractors

Contractor shall not assign nor subcontract its rights and obligations under thisAgreement, except in the event PREPA give written authorization for such actions.Provided, that no subcontract shall be considered for PREPA's approval, except whenthe following requirements are met: (1) Contractor delivers to PREPA a copy of thesubcontract, not less than thirty (30) days prior to the effective date of the proposedsubcontract; (2) the subcontract includes, as a condition for its legal validity andenforceability, a provision whereby PREPA has the right to substitute, subrogate orassume Contractor' rights under the subcontract, in the event that PREPA declaresContractor in breach or default of any of the Agreement terms and conditions; and (3)the subcontract includes, as a condition for its validity and enforceability, a provisionestablishing for the subcontractor the obligation to comply with all Contractor'obligations under the Agreement (mirror image clause), except for such obligations,terms and conditions which exclusively related with works or services not includedunder the subcontract. A request to subcontract shall specify the issues or matters thatwill be referred to the subcontractor. These services shall be paid as part of theAgreement Amount to be paid under this Agreement, as stated in Article 3,

Consideration.


ARTICLE 42. Mandatory Clauses Pursuant Act 3-2017 and Circular Letter 141-17dated January 30, 2017

Both parties acknowledge and agree that the contracted services herein may beprovided to another entity of the Executive Branch which enters into an interagencyagreement with PREPA or by direct disposition of the Secretariat of Government.These services will be performed under the same terms and conditions in terms ofhours of work and compensation set forth in this Agreement. For the purpose of thisclause, the term "entity of the Executive Branch" includes all agencies of the.Government of Puerto Rico, as well as public instrumentalities, public corporations andthe Office of the Governor.

The Secretariat of the Executive Branch shall have the power to terminate thisAgreement at any time.

ARTICLE 43. Complete Agreement

This document, together with all attachments referred to herein, constitutes the entireAgreement between the parties as to this subject matter and supersede allcommunications, negotiations, and agreements of the Parties, whether written or oral,other than these, made prior to the signing of this Contract. In case of conflict the termsand conditions of this Contract, as signed by the parties, shall prevail.

IN WITNESS THERE F, the parties hereto have executed this Contract as this J 2-day of ('G Ij 2a/ In San Juan, Puerto Rico.

Pu ico El c Power Authority/ ARG P n Corporation

icardo Luis Ramos Rodríguez Armando Jo Rodríguez errezExecutive Director PresidentSocial Security Number 66-04033747 Social Security Number 66-0534248

fadames13107

Text Box

fadames13107

Text Box

AIQC MFC1SICN CCU).PMB 911 PO Box 2500

Toa Baja PR 00951Tel. 787-261-8644

Email: admira®areprecisionpr.com

Date: April 3, 2017

Proposal No: ARG0705-02242017 PT80285Stage2+

Eng. Wilfrido RodriguezPREPAMayaguez, Puerto Rico

Subject: PT 80285 Stage 2+ Proposal

Exhibits:A. Pre -Induction EstimateB. Acceptance Certificate

Dear engineer Rodriguez,

ARG Precision Comp. (ARG) ís pleased to provide PREPA ("Buyer") with the followingproposal to perform a Stage 2+ Upgrade on PREPA PT 80285 at the WGPW Repair Depot.

The scope of services provided for this proposal is outlined herein. Please note that this offer isvalid for a period of thirty -days (30) from the date of this letter.

We are confident that this offer meets your needs; however, if you have any questions, please donot hesitate to call the undersigned at (787) 644-8644 or (787) 261-8644.

Sincerely,

Armando J. Ro i guez, PEPresidentARG Precision Corp.Email: AJRodriguez(argprecision.com

1

/WC CCM.PlIAB 911 PO Box 2500

Toa Baja PR 00951Tel. 787-261-8644

Email: admin(Paargpreoislonpr.com

SCOPE OF WORK

ARG/PWPS (SELLER) RESPONSIBILITIES:

43iu

1) ARG/PWPS will provide the following:

a. Background - PT80285 (PREPA unit 4B) had reported high vibrations andduring borescope inspection found a crack in the 2nd Inner Airseal radial arm anddistortion of up to 0.121". ARG/PWPS recommended removing from service on10/15/2016.

b. Service - Induction and disassembly, and Stage 2+ upgrade of PT 80285 asdescribed in attached Exhibit B Pre -Induction Estimate.

Please note this is a time and material proposal. Although Exhibit A identifies the likely fallout,additional or less fallout is possible and not contemplated in this proposal.

c. Once the PT has been inducted and disassembled, Buyer will be advised of thestatus of the disassembly process and can review the intended scope of work forrepair. Upon completion of bench inspection, a Gate 2 Estimate will be providedto advise Buyer the estimated price to complete the workscope and any additionalrepairs, if additional fallout is encountered. If Buyer wishes that PWPS proceedwith the additional repairs, a purchase order supplement will be required at thattime.

BUYER RESPONSIBILITIES:

2) Buyer will provide the following:

a. Inbound and Outbound transportation. Although ARG may assist with thelogistics, Buyer is responsible for the costs and insurance required fortransportation (i.e. transportation or transportation insurance costs are notincluded in the pricing below). If ARG arranges the transportation onBuyers' behalf, Buyer shall be charged at cost plus 10% handling fee.

2

ALC lalECtS1N C11.PMB 911 PO Box 2500

Toa Baja PR 00951Tel. 787-261-8644

Email: adminnargpreclslonpr.com

PRICING, PERIOD OF PERFORMANCE AND PAYMENT

PRICING

Product DescriptionInduction & Disassembly, Stage 2+ upgrade PT 80285

PRICE

$2,687,017.13

PERIOD OF PERFORMANCE

Schedule will be mutually agreed to once a signed proposal and purchase order are received fromBuyer. Estimated turn -around -time is dependent on the findings of the induction anddisassembly process and material availability.

PAYMENT

ARC and PREPA shall visit the PWPS Repair Depot in Bloomfield, CT when the services havebeen completed, to inspect the equipment and perform final acceptance. If acceptable, PREPAshall sign the attached Acceptance Certificate in Exhibit C, and PREPA will make 100% paymentto ARG within 24 hours of signing of the Acceptance Certificate. Shipment will occur once ARGhas confirmed full payment has been received.

Invoices will be submitted per the following schedule:

Payment Milestone_

DueInspections & Reports

(paid within 24 hours)

_percentage

$ 140,000.00

Final Acceptance by PREPA at PWPS Repair Depot

(paid within 24 hours) $2,547,017.13

Note: Transportation and bonds will be invoiced separately.

Armando J. Rodr uez, PEPresidentARG Precision Corp.Email: AJRodriguez(ilargprecision.com

3

PWPS GATED ESTIMATE WORKSHEET (PRICE SUMMARY)

Exhibit BPT Serial #: 80285 Model #: PT8- Pre-Inductic 3117)2017 $ 2,547,017.13CCW

Bench Induction & Report $140,000.00Sates Order #:SHOP VISIT 8: #1 Discount 0.00

$2,887,017.13

Customer. PREPA, Mayaguez

PRE -INDUCTION ES TI MA TE3117%2017

Inlet Module,:

Rotor Module;.

Exhaust Module

Consumables:

Labor:

NEW Material Vendor (OVN) Sub Total Notes:

S 1,810,776.89 $ 17,884.02 $ 1,828,460,91

S 408,598.76

s 41,298.72

i 31.376.81 # 439,975,58

$ 14,845.80 $ 56,144.52

$ 54,367.13

$ 168,069.00

ESTItiLAi PRICE TOTAL: $ 2,547,017,13

now; FRE INWUC HON Eetinano to based on Defined Workacope and does not include Ben«, inspec lion fallout outside of hardware not Identified by Ma Workscopo. Additlonahy Parts centringiuspeetinn and or reiurhisl,neorehe, ravieW or further c zsrorrnerdlsposltion will be reticurd In RIO Gale 2 Earirnaio, Port Custom., I1.W .W.

MATERIAL REPLACED, BASED ON CONDITION FOUND (SCRAP), SERVICE BULLETIN MODIFICATION ORROTABLE EXCHANGE

5)74 450001

STAGE 2+ UPGRADE

00100 10511111, 7/1 94114541

00419111.22

16.010.1.16

014x41rtr0r 12 7uis70511

18[ií Aux.- 11580 VPO0M6 2399I561 520 013 2+ V01088210 0RM 14-61AL l H 15,206.03 0 8,286.83

14LR 4001. 11106 *000.160 0.6002060 000. 670 24 001000220-01 9600 011291511215 5 BA 1 4,779:22 1 23,694.10

50 i 01105 0301T. 11006 0000108 2601/I850 /00 OTO 24 001068212-01 1171 0010R .DUCT 80 6 100,210.60 1 100,2/0.60

11100 4801. 11E06 0996006 0E02I0106 505 820 24 001068207 0855 00780 7108 600005? 1 60 0 76,585.08 1 76,555;80

1 65600 33041. 14201 0000800 05911 1085986-01 V01086155-01 080 I0405 DUCT 1 60 / 94,209.15 1'94,209.15

667! 511.51 5251. 11606 *000100 60002515) 702 610 24 701056069-01 0111 100.15 0151 1 15, / 394,607.88 i 394,607.89

1011, 1950. 14101 0000168 05911 1085607-01 021086154-01 0060

000

17 8000002

.6F116200

1 80 233,499.69 4 233,499,59

9 32,886.891992, 11800 60000006 /00 001 24 +01080213-01 1 14 1,208.69

Op1j 1110? 0002. 14001 0009400 0.000 1086970 001086167 8850 50012205000 0200 1 08 4 4,403.42 04,403.42

11111 0980, 14001 5553045,0 6100 1085960 001086150 0561 9021108100 0190 5 TA 0 3,722.25 0 18:611.25

11001 0UY. 11006 090025,5 60900890 /00 050 24. +01089226 0060 110 6093. 61650502 20 EA 6 1,774.36 435.487.15

11151 4081. 14501 *000008 (1676 5/8) 091006153 0135 HEAT 852560 1 84 0'29,400.65 8 29,400.65

e. 1 1115? AS41. 14201 *101001 100159 (30 60 26) 001086159 000 DUCT 801050 26 0A 0464.40 1 12,074.46

21.2ei 15281 4500, 11006 0500601 005001509 NOR PTO 24 1,1413308 -06 8100 0011 (0967000510) 30 /A 0 37.24 0 1.317,08

Fp111 80117 4802. 11506 0009501 U3002190 500. 070 24 00N3308-24 000 B01T(001R12VN0) 200 00 631.17 0 6,233.62

160.00 As.. -11506 *000301 1100111200 402 0T0 24 V9786375 I00 [I01 (00700-14110 200 BA 6 49.34 1 9,857.62

Mat 4851. 14101 *061421 1201 3.83308-13 801086169 0004 BOLT (1098R V.Vi) 100 RA 6 83.17 0 8,317.16

W 0 I11.{7 4565. 14001 0009900 00403554-11 9000 OUT (I1010+000) 100 04 4 40.70 44,870.30

IYa 100.00' 0315. 11606 0036001 009200301.0600824 00163308-13 028 090.7 (001900002) 45 50 0 6.63 2,013.00

01261 4807. 11806 1100045E 60011I6ID 502 610 20 003008227 905 61.678 (00100 0005) 46 00 0 65.01 6 2,475.41

10100 1500. 11106 V20R1D8 80071800005 62)24 091085311 6055 04118 000 100 BA 1 6,611.66 4 661,164.04

-.Olr-a1 511.9, 4986. 14801 003614915 (560 0/5j 001086160-02 11611 8170S0B0-1O46S0L1, 676603100

5000011

u

1 04 0 601.63 0801,63

Ctl FI I0La2 Á20Y. 14501 0008405 (008 5/6) +91066160-03 81M 11514111112-20121011, *70117280

007008?

12 OA 247,62 1 3,511.45

[011? 46101, 14601 UPGRADE 01086 (30 to 26) V2493399-33 0008 501,1 (21R50 DUCT) 26 RA 0 62.53 0 1,625.71

10. 468Y, 14201 0000008 (185 0/0) 001086160-01 12M 00502090-177680LT, 676110100

SUPPORT

SO 04 0 100.58 4 5,42e,89

GO OBSY.-- 1100 9011502 DV110 220 24 9pGMG6 6 - -0202067I00

v010á606 : M6M 2,09-1161115.110121.21~3 8A 0 4G67473.0 ---p06,

46,01.1716

a

A

J4.`i. A567, 12103 5212203 001 TO 670 2+ 0,500000 360

0I61057100

091006110 0516 6142-1111,70160 111101121,281452 1 9.2 6 103,172.72 6 105,112.72

50003 3540'. 11004 ON'.RAD5 08011I000 0028T 21 6D75T05T201

091000220 BOW 814. 6000-

410,024011,19000,1814,20

1 BA 1 51,305.00 011..305.00

80160 A611. 11206

0000490 6000I050 005 020 24 6

02600+5001V01006229 O6M

OTOp-01308.1061 00860001

2001122,15210,151 60 0 41,210.42

4 41,210.42

011.97 4187. 1007016 6813103 8110e6135 5060 0002-171600200 62N, 1 ?A 6 5,639.29 05.639.29

650.08 10101. 1005000 6613903 +01086120 8800 eAGBR-875051t100 5521 1 0A 4 2,563.31 6 2.563.31

17100 0917. Bumf, 51314 DUCT 1/0161100 v91065989 000 00706 DM 104011159 15 IA $ 297.73tP 13.397.65

19 1081? 45540. 1005559 011050060 NPG061MOK V01005569 0155 6021 0I10-15158.

10.36611.2501.12225

1 BA 11 1,858.23 0 1,055.23

155.19 04311. 0(00020) 020WC01502 001005839 81410 180111,17I05 009I00 1 0A 8 6,767.15 06,767.15

Isla? 000T, 0%p20260 212WCqQ41 V91489482-38 10N 001061 0017 1 01 664.92 464.02

-Kw

'

211.2T 4540. 1511030400 01010.c810711 V0189361-12 8654 00184 3001 405 1 T1 $ 54.46 554.45

0060? 0000. 019861703 li1PW6&RIt 70776703 1190 1/0 107 27 00 8 14.18 6 382,00

001..0 0400. 00640150 00611080011 V0009357-10 064 004-01420,001,.250- 280.4911.219 24 13 1 12.51 1300.25

15111 0052. 611061700 111.1408141112 001085709-01 0010 01111004820011-2141,10112.501,01=2

3 RA $ 17,769-04 0 17,768.04

58 1111.11 00.0. 1141161212 90,61604:61 *91083636-01 060 BOIR01B8Y 0P-1tI0T,47eR0

0068200

1 G $ 12,703.23 6 12,703.23

00 5E106 1120. 1005642 000007152 8894100/800 +01006642 B660 801?-OgcR,.200.281.936.D1 162 BA $ 37.63 I 6,096.22

176 60500 2400. 1051516-01 02002003:. 052 00 1006006.800006000 001005656-01 0016 01-80Lí-01.101140,.3125-

24E2,010,82A0

64 01 $ 130.74 0 1,830.37

50205 3012. 1085616-02 R10VIR60 900 00 0570M0 5060061005 001005656-02 160 002,1-05400100,:3125-

2102.116,855842 04 $ 86.88 0 3,648.00

VENDOR OVERHAULS and/or REPAIRS

STAGE 2+ UPGRADE

laTISLIAL,..u,,...

., vít "na

,S'," ROTORASSY-

1086501 VERIFY ARD MACHINE FRONT AND REARSNAP DIAMETERS

VQ1086501 OVERHAULED DISK T1 1 8A $ 3,751,00 9-3,751.00

ROTORA95Y.

1086501 FPI IAA VOS 1460, ATTACHED. V01086501. OVERHAULED DISK T1 1 EA $ 899.94 $ 899.94

-1 ROTORA$SY.

1086012 INCORPORATE SO 11006 TO UPGRADE TO

9/N 1086102.

VQ1086102 OVERHAULED DISK 12 1 EA $ 7,623,00 $ 7,623.00

" ROTORASST.

1086012 VERIFY ~MACHINE FRONT AND REARSNAP DIAEETERS

VQ1086102 OVERHAULED DISK 12 1 EA $ 3,751.00 $ 3,751.00

'^"4 ROTOR

A90Y.

1086012 FPI IAN VOS 1460, ATTACHED. V01086102 OVERHAULED DISK 12 1 EA 9 099.94 9 099.94

IrN4ScCI1EDULED EVENT MATERIAL* " OSLO

ASSY.

1000250 MAC1IIUE TO 00601Fr617 DD EnsToNS VQ1085257 OVERHAULED BUSHING NO. 7 1 EA - $ 3,625,00 $ 3,025.00

'.'7' INLETASSY,

100701á OVERHAUL TO .INCLUDE CARBON

REPLACEMENT AND ID BORE REPAIR.

/01087016 OVERHAULED SEAL FACE #7 1 EA 9 8,256.35 $ 8,256.35

11p INLETASSY.

1085949-01 TURBINE SR 80164. EXCESSIVE BEARAT HELD LEADING EDGE AHD FOD

V01085949-01 OVERHAULED STRUT AIR 1 EA 9 742.29 9 742.29

INLETROSY.

1085390-01 TURBINE SR 80164 -AIRFOILDEFORMATION

VQ1085390-01 OVERHAULED STRUT OIL 1 EA 9 5,660.38 $ 5,660,38

'- ROTOR

ASSY,1085542-01 REMOVE 515) BROKEN BOLTS (.3125-

24) AND CHASE AIL REMAINING 11135~rang TN PAVE

VQ1085542-01 OVERHAULED CASE ROTOR 1 EA $ 2,178.00 9 2,178.00

," ROTORASSY.

1086013 INCORPORATE 89 11807 TO UPGRADE TOP/N 1086103,

V01086103 OVERHAULED DISK 13 1 EA 9 7,623.00 $ 7,623.00

°,1 ROTOR

956Y.

1086013 VERIFY AND MACHINE FRONT AND REAR

SNAP DIAMETERS

VQ1086103 OVERHAULED DISK 13 1 EA $ 3,751,00 $ 3,751.00

' ROTOR

ASSY.

1086013 FBI IAN VOS 1460, ATTACHED. VQ1086103 OVERHAULED DI877 13 1 EA $ 899.94 9 899.94

,t-. Ei0(AU5T:ASE

10E7019 OVERHAUL TO INCLUDE CARBONREPLACEMENT AND ID BORE REPAIR.

V01087019 OVERHAULED SEAL. FACE"49 1 EA $ 7,422.90 $ 7,4.12.90_

,, ÉXHRUSTCASE

1667015 OVERHAUL TO INCLUDE CARBON

REPLACI0(ROT AND ID BORE REPAIR.

VQ1087019 OVERHAULED SEAL FACE #8 1. EA 9 7,422.90 $ 7,422,90

INLET:

ROTOR:

EXHAUST:

MSC I 'L T1( ED EVENT

$ 16,924.87

INLET: $ 17,684.02

ROTOR: $ 14,451.94

EXHAUST: $ 14,845.80

MATERIAL REPLACED, BASED ON CONDITION FOUND (SCRAP), SERVICE BULLETIN MODIFICATIONOR ROTABLE EXCHANGE

yN ,mms Amp III CMA

»,t1 Amein en MIMMILliMMIW!

IMMM7Mam 9M, 911 NU. 14 trQ E4fAt.

ROTOR

ASSY.

1085656-03 ÁEQU1RED PER SD UPGRADE

WORESCOPE

V01005656-01 NEW BOLT-MACHINE,.3125-24X2.320,SLAB

42 EA $ 72.12 $ 3,028.87

ROTOR

ASSY.

1085118 REQUIRED PER SO UPGRADEWORKSCOPE

001085116 NEW NUT-PLAIN,HEX 98 EA $ 34.79 $ 3,409.17

ROTORASST.

1085769 EXPECTED REPLACEMENT 001085760 NEW 80LT-MACHINE,.3125-24X.625,HEX

176 EA $ 48.52 $ 8,539.70

ROTORASSY.

1088204 EXPECTED REPLACEMENT 001088204 NEW BOLT-MACHINE,.3125-24X.625,H8X

16 EA $ 121.00 $ 1,936.00

ROTORASSY.

UPGRADE 59511807 UPGRADE VQ1086083 NEW SEAI.-AIR,POWER

TURBINE, 3STAGE

1 EA $ 87,715.15 $ 87,715.15

ROTORASSY.

UPGRADE 1611807 UPGRADE VQ1086082 NEW STOP-BLAE,INNER,3STAGE 1 EA $ 46,074.10 $ 46,074.10

ROTOR

ASSY.

1085487 SB11807 UPGRADE VQ4023466 NEW NUT OPTION (IC) 162 EA $ 15.79 $ 2,558.06

EXHAUST "

CASE

1085560 EXPECTED REPLACEMENT 001085560 - NEW SEAL RING -METAL,

11.997X.250X.122251 5A ' 2,755.11 $ 2,755.11

EXHAUSTcISE

1085560 EXPECTED REPLACEMENT V01005560 NEW SEAL RING -METAL,

11.997X.250X.122251 EA 2,755.11 $ 2,755.11

EXHAUSTCASE

EXPECTED REPLACEMENT VQ1085388-05 NEW PLATE-IDENT,PT8-6C 1 EA 23.84 $ 23.84

EXHAUSTCASE

UPGRADE EXPECTED REPLACEMENT 001086128 NEW BEARING-I8BEARING 1 EA 35,764.66$ 35,764.66

INLET:

ROTOR:

~UST:EXTERNALS:

CONOTTION POUIID

INLET:

ROTOR:

EXHAUST:

EXTERNALS:

$ 1,749,277.35

$ 249,762.24

$ -

$ -

SCRIP

4 61,499.5.4

$ 164,836.62

$ 41,298.72

1

PW Power5ystems PW Power %Atetns, Inc.628 Hebron Avenue, Suite 400Glastonbury CT 116033

n m ae npwry .4 .ás MITSUBISHI HEAVY INDUSTRIE$. LTD. VsV'vV.P4ytl5.Wijl

Exhibit C

Repair Certificate of Conformance

Customer Purchase Order No:

GG/PT Serial Number: 80285 PWPS

Sales Order No:

Description: PT8 Industrial Power Turbine

Date:

This Certificate of Conformance signifies compliance to the applicablePW Power Systems technical and quality requirements.

Date Issued:

Robert Yanko /PWPS Representative (Type/Print) / (Signature)

/PREPA Representative (Type/Print) / (Signature)

PWPS Document No. PSF ADS 447Revision: Initial Issue

Effective: 04-02-2015