ENGINEERING, PROCUREMENT, AND CONSTRUCTION MANAGEMENT AGREEMENT
THIS ENGINEERING, PROCUREMENT, AND CONSTRUCTION MANAGEMENT AGREEMENT
(the "AGREEMENT") is entered into by and between GILAT NETWORKS COLOMBIA S.A.
E.S.P., ("GILAT"), a Colombian company with offices at Calle, Xx. 0-00, Xxxxx 0,
Xxxxxx, Xxxxxxxx, and GILAT COLOMBIA S.A. E.S.P. ("GILAT COLOMBIA"), a Colombian
company with offices at Xx 00-X Xx. 0000, Xx. 000, Xxxxxx, Xxxxxxxx.
RECITALS
WHEREAS, The Ministry of Communications in Colombia issued a tender
for the Telecentros project (the "Project") and in November 2002, Gilat was
awarded this Project; and
WHEREAS, in 1999 Gilat Colombia was awarded the Compartel I project
from the Ministry of Communications of Colombia and has the experience required
for providing implementing and operating broadband Internet access services; and
WHEREAS, since December 2002 Gilat Colombia has been providing to
Gilat, and Gilat is obtaining from Gilat Colombia, engineering, procurement and
construction management services relating to the implementation and operation of
broadband Internet access services for the execution of the Project and which
will ultimately services customers in Latin America.
NOW, THEREFORE, in consideration of the mutual undertakings herein,
the Parties hereto mutually agree as follows:
1. PREAMBLE, HEADINGS, AND INTERPRETATION
1.1 The Preamble and Exhibit to this Agreement constitute an integral part
thereof.
1.2 The Headings in this Agreement are intended strictly for convenience
and shall not be used to interpret or construe its provisions.
2. SCOPE OF SERVICES
2.1 Gilat Colombia shall provide Gilat with the engineering, procurement,
and construction management services relating to the Project as more fully set
out in EXHIBIT A attached hereto (the "Services").
2.2 The Services shall include (a) certain design and engineering elements
required for the implementation of the Project, (b) negotiations on behalf of
Gilat with respect to amendments to the scope of the Project in accordance with
the changes made by the Ministry of Communications, and (c) consultation efforts
to improve the profitability of the Project for Gilat.
2.3 Gilat Colombia shall perform the Services efficiently, diligently, and
competently, and in accordance with the time schedule set forth in EXHIBIT A.
3. MANAGEMENT AND PERFORMANCE
3.1 Each Party shall appoint a project coordinator having day-to-day
responsibility for overseeing and coordinating the activities contemplated
herein, including scheduling and presiding over meetings, status/review
sessions, and coordinating its own people. Each Party may remove and/or replace
its project coordinator after first providing the other party with prior written
notice.
3.2 In the event Gilat Colombia anticipates at any time that it will not
reach one or more milestones or complete one or more assignments within the
prescribed timetable, Gilat Colombia shall immediately so inform Gilat by
written notice, submit proposed revisions to the timetable and milestones that
reflect Gilat Colombia's best estimates of what can realistically be achieved,
and continue to work under the original timetable and milestones until otherwise
directed by Gilat. Without derogating from any other rights or remedies to which
Gilat may be entitled, any unexcused delay by Gilat Colombia in the performance
of the Services shall be grounds for declaring Gilat Colombia in breach of this
Agreement.
3.3 Gilat Colombia shall prepare and submit to Gilat monthly reports of
its performance and progress, setting forth Gilat Colombia's activities for such
monthly period. Moreover, Gilat Colombia shall provide Gilat with any additional
information which Gilat may reasonably request from time to time.
3.4 Gilat Colombia shall maintain a competent technical organization, and
shall employ trained technical personnel who are capable of dealing with all of
the technical efforts required to perform the Services.
3.5 In the event Gilat registers a complaint regarding the conduct or
condition of a Gilat Colombia employee, then upon the request of Gilat, Gilat
Colombia shall promptly remove and replace such employee from any service
provided under the Agreement.
4. INSURANCE
During the term of this Agreement, Gilat Colombia shall maintain in force,
at its own expense, the following policies of insurance with a reputable
insurance carrier:
(a) Worker's Compensation and Employer's Liability insurance, in
accordance with the statutory requirements of Colombia, covering all employees,
agents, and others employed or retained by Gilat Colombia, who are engaged in
performing the Services under this Agreement.
(b) Comprehensive General Liability/Third-Party Liability Insurance,
covering bodily injury or death suffered by third parties, and loss of or damage
to property, occurring in connection with the performance of the Services.
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(c) In the event that the operation of automobiles or other vehicles
shall be required by Gilat Colombia, its employees, or agents, in the
performance of the Services, Comprehensive Automobile Liability Insurance,
covering use of all vehicles used by Gilat Colombia in connection with the
performance of the Services.
5. COMPLIANCE WITH LAWS
5.1 Gilat Colombia shall comply with all applicable country, state,
provincial, and local laws, statutes, rules, regulations, and government orders,
including, but not limited to, those dealing with employment benefits and
practices, and workplace safety matters.
5.2 Gilat Colombia shall obtain and maintain during the term of this
Agreement any and all licenses, permits, and authorizations required by law to
perform the Services, and shall comply with all necessary governmental
approvals, licenses, permits, and consents in connection with the performance of
the Services, including, but not limited to, any and all safety licensing
requirements as are or may be promulgated by authorized governmental
authorities.
5.3 Gilat Colombia represents and warrants that neither (a) the execution
of this Agreement, nor (b) Gilat Colombia's performance of the Services, shall
violate any applicable law, rule, or regulation; any contracts with third
parties; or any third-party rights in any patent, trademark, copyright, trade
secret, or similar right.
6. FEES AND PAYMENT
6.1 In consideration of the Services to be performed by Gilat Colombia
pursuant to this Agreement, Gilat shall pay Gilat Colombia an
aggregate amount of US$3,230,000.00 (three million two hundred and
thirty thousand United States dollars) of the Compartel II Projects.
(the "FEES").
6.2 The Fees shall be paid in installments in accordance with the payment
schedule detailed in EXHIBIT B, with each installment to be paid upon
completion of each respective milestone or submission of required
deliverable, and against the presentation of an invoice.
6.3 The consideration which Gilat Colombia shall receive as compensation
for its performance of the Services is a "firm fixed price." Any cost
of labor or materials for completing the Services or for redeisgns,
fixing failed equipment or other malfunctions requested by Gilat as a
result of inconsistencies with the description of Services described
in EXHIBIT A shall be borne by Gilat Colombia.
6.4 OUT-OF-POCKET COSTS & TAXES. Except as otherwise set forth in this
Agreement, the Fees include all of Gilat Colombia's out-of-pocket costs and
expenses incident to the performance of the Services, including costs for
travel, photocopying, overnight courier, long-distance telephone, and the like,
and all applicable taxes.
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6.5 INVOICES & PAYMENT. The Fees shall be invoiced upon the successful
completion of each respective milestone. Gilat shall make payment to Gilat
Colombia within current plus sixty (60) days after receipt of the invoice;
provided, however, that in the event that Gilat gives Gilat Colombia written
notice that the relevant milestone has not been successfully met or of the
existence of any defect or problem with the Services rendered, Gilat may suspend
payment of the Fees until Gilat Colombia has successfully completed the relevant
milestone or corrected such defect.
7. LIMITATION OF LIABILITY
7.1 Gilat shall not be liable to Gilat Colombia for any claim arising out
of this Agreement in an amount exceeding the total Fees to be paid to Gilat
Colombia pursuant to this Agreement.
7.2 In no event shall either Party be liable to the other Party for any
indirect, exemplary, special, incidental, or consequential damages (including
loss of profit) arising out of or otherwise relating to the performance or
non-performance of this Agreement, even if such Party shall have been advised of
the possibility or likelihood of such damages.
8. TERM AND TERMINATION
8.1 This Agreement shall be deemed effective as of December 1, 2002 (the
"EFFECTIVE DATE"), and shall continue in effect until June 30, 2003, unless
terminated earlier by mutual agreement of the Parties or pursuant to the terms
of this Agreement. The Agreement may be extended by mutual agreement of the
Parties.
8.2 Either Party may, in addition to any other relief, terminate this
Agreement if the other Party breaches any material provision hereof and fails
within thirty (30) days after receipt of notice of default to correct such
default or to commence corrective action reasonably acceptable to the aggrieved
Party and proceed with due diligence to completion.
8.3 Either Party shall be in default hereof if it becomes insolvent, makes
an assignment for the benefit of its creditors, a receiver is appointed or a
petition in Bankruptcy is filed with respect to the party and is not dismissed
within sixty (60) days.
8.4 Upon termination of this Agreement for any reason, each Party shall
promptly return to the other Party any and all of the other Party's materials
and equipment of whatever nature or kind which is in the control or possession
of such Party, including all materials incorporating the proprietary information
of the other Party.
9. CONFIDENTIALITY
9.1 During the term of this Agreement, each Party may provide the other
Party with certain Confidential Information (defined in Section 9.2 below) which
may be necessary for the performance of the Services. The receiving Party shall
maintain in confidence and protect the secrecy of all Confidential Information
of the disclosing Party. The receiving Party agrees that it shall not disclose,
transfer, use, copy, or allow access to any such Confidential Information to any
third parties, except for those who have a need to
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know such Confidential Information in order for the receiving Party to perform
its obligations pursuant to this Agreement, and who are bound by contractual
obligations of confidentiality and limitation of use sufficient to give effect
to this Section 9. In no event shall the receiving Party disclose any such
Confidential Information to any competitor of the disclosing Party. The
receiving Party shall use at least the same standard of care to protect the
Confidential Information as it uses to protect its own confidential information,
and to ensure that its employees, agents, and representatives do not disclose or
make any unauthorized use of the Confidential Information.
9.2 As used herein, the term "Confidential Information" shall mean all
information (a) which is identified as confidential or proprietary to disclosing
Party, or (b) which may reasonably be deemed to be confidential or proprietary
to the disclosing Party, including but not limited to scientific, technical, or
business data, information, design, processes, procedures, formula, or
improvements; but shall not include information which: (i) was in the receiving
Party's possession prior to its disclosure, as shown by prior written records;
(ii) is or becomes available to the public through no fault of the receiving
Party; (iii) is rightfully received by the receiving Party from a third party
without a duty of confidentiality; (iv) is subsequently independently developed
by the receiving Party, as evidenced by available written records; and (v) was
disclosed by operation of law.
9.3 Without the prior written consent of the other Party, neither Party
shall advertise, publicize, or publish the fact that Gilat Colombia has
furnished or contracted to furnish to Gilat the Services covered by this
Agreement.
9.4 The provisions of this Section 9 shall survive the expiration or
termination of this Agreement.
10. RELATIONSHIP OF THE PARTIES
10.1 The Parties are and shall be independent contractors to one another,
and nothing herein shall be deemed to cause this Agreement to create an agency,
partnership, or joint venture between the Parties. Neither Party shall have the
authority to act for or to bind the other Party in any way, or to execute
agreements on behalf of the other Party. Nothing in this Agreement shall be
interpreted or construed as creating or establishing the relationship of
employer and employee between Gilat and Gilat Colombia.
10.2 Except as expressly specified in this Agreement, this Agreement shall
not impose nor imply any minimum purchase requirements or commitments upon
Gilat. Contractor acknowledges and agrees that Gilat is entitled to consume
services similar to the Services from any other source without restriction,
penalty, or obligation to Gilat Colombia.
10.3 Gilat Colombia shall be responsible for all of its expenses in
connection with the Agreement, such as, but not limited to, salaries, social
payments, insurance premiums, office expenses, correspondence, and any and all
taxes and expenses which may be imposed on Gilat Colombia with respect to this
Agreement.
11. MISCELLANEOUS
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11.1 ENTIRE AGREEMENT. This Agreement (including the accompanying Exhibits)
constitutes the entire agreement and understanding of the Parties hereto, and
supersedes all prior representations, proposals, discussions, and
communications, whether oral or in writing, had or entered into prior to the
signing of this Agreement.
11.2 ALTERATION. No alteration of or modification to any of the provisions
of this Agreement shall be valid unless made in writing and signed by both
Parties.
11.3 NO WAIVER. The failure of any Party hereto to enforce at any time or
for any period any provision of this Agreement shall not be construed as a
waiver of such right or provision and such Party shall be entitled to enforce
such right or provision at any time as it shall see fit.
11.4 TIME IS OF THE ESSENCE. Gilat Colombia acknowledges that performance
of its obligations as set forth in this Agreement within the time frame detailed
herein is imperative as time is of the essence to Gilat and any delay in the
successful completion of Gilat Colombia's undertakings may cause Gilat
substantial damages due to Gilat's inability to fulfill its obligations to the
Ministry of Communications. Gilat Colombia shall be liable to Gilat for any
damages caused to Gilat due to any such delays.
11.5 FORCE MAJEURE. No Party shall be liable to any other Party, by reason
of any delay or failure to perform its obligations under this Agreement which is
due to any cause beyond the reasonable control of such Party, including but not
limited to acts of God, war, governmental action, labor disturbances, fire, or
flood; nor shall any such delay or failure be considered a breach of this
Agreement, provided that the Party claiming such delay under this Section gives
prompt notice of its claim to the other Parties and provided further that such
delay does not continue for longer than six (6) months.
11.6 GOVERNING LAW. This Agreement shall be governed and construed in all
respects in accordance with the laws of the state of Colombia.
11.7 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but such counterparts shall
together constitute but one and the same instrument.
11.8 NOTICES. All notices required or permitted hereunder shall be in
writing and addressed to the respective Party as set forth herein, unless
another address shall have been designated, and shall be delivered by hand, by
fax, or by registered or certified mail, postage prepaid.
(THE FOLLOWING HAS BEEN INTENTIONALLY LEFT BLANK)
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IN WITNESS WHEREOF, the Parties hereto have executed this Agreement:
GILAT COLOMBIA S.A. E.S.P. GILAT NETWORKS COLOMBIA S.A. E.S.P.
("GILAT-COLOMBIA") ("GILAT")
By: XXXXXXX XXXXXXX By: XXXXX DEL CAMPO
----------------------------- --------------------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxx Del Campo
--------------------------- ------------------------------
Title: Attorney-in-Fact Title: Attorney-in-Fact
-------------------------- -----------------------------
Date: June 30, 2003 Date: June 30, 2003
--------------------------- ------------------------------
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EXHIBIT A
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1. DESIGN OF TELECENTROS, SUBMISSION OF FIRST PART OF SITE SURVEY AND
INSTALLATIONSTO GILAT COLOMBIA AS PER THE FOLLOWING CRITERIA:ON:
(a) The Telecenters will be located within 300 meters of any of the following
entities or establishments:
o Mayor's Office or local administration headquarters
o Health center
o Public educational institution
o Cultural house
o Local library
o or in a main road within the location.
(b) Gilat Colombia will provide to Gilat information from field visits
defining, as a minimum, two alternatives per location with the proper civil work
design and quotation, and proposing one location, duly justified, according to
the above location criteria and explaining the advantages of such location.
(c) All recommendations for the physical location of other public telephones
will strictly comply with the following considerations:
o Public telephones will be installed outdoors, or in community or
business establishments allowing for general public access.
o For the selection of the establishment, the operator will carry out an
information and agreement process within the community, which will be
properly documented through acts, for the selection of the location of
Public Telephones, to be signed by the installation personnel and by
all members of the community participating in this selection process.
(d) Gilat Colombia will provide a data base with the results of the site survey
including the following information:
a) Name of department, municipality, and location
b) DANE code for the location
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c) Type of location (i.e. municipal center, populated center)
d) Geographical coordinates
e) Estimated population
f) Number of households in the location
g) Number of community and household phones, and Public Telephones
existing in the location, indicating the number in service
h) Access roads to the location
i) Distance and travel time to a municipal center or a populated center
with more than 50 telephone lines
j) Availability of electrical power (interconnection, portable power
plants, solar solutions) and time of service, discriminated by type of
solution
k) Number of educational centers existing in the location; level, and
number of students
l) Number of health centers existing in the location; level, and
personnel
m) Photographs of location (at least 5)
n) A clear map of the location, including:
o Physical layout of households and commercial, administrative,
social establishments in the location
o Marking of the main points of reference in the location, and
entities or administrative institutions (local, social, or
cultural), such as: main square, church, local administration
headquarters, educational establishments, police precinct,
cultural house, library, health centers, medical centers, etc.
o Main streets and access roads
o) Certificate signed by an official from the municipal administration
(Mayor, Secretary of Government or Secretary of Planning), confirming
that a visit was made to the municipal administration offices
involving the project's general characteristics and resulting in the
subsequent location of a Telecenter and Public Telephones in the
location. The certificate will include pertinent remarks.
p) Supported description of the location's technical limitations, if any.
q) Additional information required to define, among others, the location
of the Telecenter and the Public Telephones in the location, and their
required characteristics.
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r) Two suggestions for location of the Telecenter and the Public
Telephones inside the location, meeting conditions in required in this
document.
INSTALLATION PLAN.
Each delivery of the Installation Plan will include the following:
a) A monthly program, indicating the number of Telecenters to be
commissioned.
b) A tentative list of locations to be covered, through which the minimal
requirements will be met.
c) A monthly program for commissioning of each Telecenter and the Public
Telephones, by location, describing, among others, the progress status
of the following activities: equipment and supplies distribution,
preparation of the establishment, installation of infrastructure at
the Telecenter, status of service operation, promotional activities.
Exact location, according to the urban nomenclature in each municipality, of
locations where Telecenters are going to be installed.
2. DETAILED ENGINEERING AND OPERATION REPORT OPERATION PLAN
The design and configuration of the networks shall comply with the quality and
service level requirements set forth in the Terms and Conditions of the Project.
All equipment proposed in the hub design, installation, plan and operating plan
shall be manufactured (or assembled, as the case may be) by manufacturers or
vendors having ISO 9000 certification for such equipment product lines.
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Gilat Colombia shall secure the pertinent concessions, authorizations, permits,
licenses and registrations for the provision of services and for the
establishment and operation of networks.
The telecommunications infrastructure and the terminal equipment to be proposed
for use by Gilat will meet technical norms established in Colombia for the
provision of services offered at the Telecenters and in the Public Telephones.
The provision of services will meet current Colombian norms.
Gilat Colombia will deliver a report, which will amplify and detail the approach
on the technical, operational, and organizational solution used by the
Verification and Evaluation Committee to consider the proposal. This report will
be delivered by May.
This report will contain the following, as a minimum:
a) Introduction and justification of the proposed technical solution
b) Description of technologies
- Description of preparation of switching and transmission
infrastructure, and of the access network, and the rate system as
applicable, and physical requirements.
- Description of all equipment (terminals, ancillary equipment,
etc.) and of equipment considered for the Telecenters and Public
Telephones, including ISO 9000 certifications;
- Description of the electrical power solution, including ISO 9000
c) Network topology diagrams
d) Description of the manner in which the basic technical plans will be
met
e) Description of maintenance structure
f) Description of the management, administration, and control system
g) Description of the centralized database
h) Description of the claims telephone center
i) Description of the interconnection scheme
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j) Description of the payment scheme distribution (if through a
prepayment scheme). If Gilat Colombia consider prepayment solutions,
it will submit the distribution network structure.
Gilat Colombia will structure for the provision of services and the Public
Telephones in a manner that meets:
(i) the Fundamental Basic Plans adopted by the Ministry of
Communications;.
(ii) the National Numbering Plan contained in Decree 554 of March 20 of
1998 and in norms modifying, adding, or replacing it;
(iii) the National Signaling Plan, according to Decree 2609 of December 23,
1993, and with norms modifying, adding, or replacing it, especially
the National Signaling Norm adopted through Resolution 541 of 1998
from the Ministry of Communications.
(iv) the National Synchronization Plan, according to Resolution 036 of
January 12, 1994, from the Ministry of Communications, and norms
modifying, adding, or replacing it;
(v) the National Routing Plan, according to Decree 2607 of December 23,
1993, and norms modifying, adding, or replacing it. (vi) current
norms, especially Resolution 087 of 1997 from the Telecommunications
Regulatory Commission, and other norms modifying, adding, or replacing
it.
3. CONTENT AND TRAINING PLAN
Regarding Training, Gilat Colombia has to provide:
a) Training schedule (dates and organization), and the agenda proposed for
the training sessions on the Telecenter Program and on administrative
tasks, directed to the Telecenter administrators.
b) The methodology to be used for the mandatory training sessions directed
to the users. c) Responsibilities and commitments of the Telecenter
administrator, regarding training sessions to be offered there.
Regarding content, Gilat Colombia will include the following in the plan, as a
minimum:
a) A list of sections to be included in the Telecenter PC home page
b) A list of links proposed
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c) A detailed description of the methodology and the form to encourage
local population to publish news and general interest issues in the
home page designed by the operator.
d) A description of the link updating methodology
e) A list and detailed description of programs licensed and in multimedia
format and in Spanish, to be installed in the Telecenter PCs in
fulfillment.
4. PROMOTION PLAN
The plan prepared by Gilat Colombia will containing the following:
a) A proposed agenda for demonstration sessions for users of the
Telecenters.
b) Programming of demonstration sessions.
c) The design of a global media plan allowing to develop activities of
promotion
5. DESIGN AND INSTALLATION OF PILOTS
The Pilot Telecenter and Public Telephones will demonstrate that the proposed
infrastructure allows for the provision of services according to conditions and
characteristics required. Conclusions from technical tests made on the pilot
Telecenter will be included in the approval of the Detailed Engineering and
Operation Report.
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2 Pilots
13 additional "roll-outs"
6. GENERAL ADMINISTRATIVE WORK PER HOURS OF LABOR PROVIDED BY GILAT COLOMBIA
AND AFFILIATED ENTITIES.
Gilat Colombia will provide legal advise in regulatory matters, contracts,
negotiations with other operators, financial and logistic services, preparation
of business plan, accounting information and presentations.
7. CENTRALIZED DATABASE
Gilat Colombia will design, a centralized database containing all information
generated by the management, administration, and control systems from the claims
telephone center mentioned and from maintenance and repairs reports for each
Telecenter and Public Telephone.
Information generated by each of the above sources will be loaded into the
database within the 24 hours following the event. Information stored will be
used by the operator, the Ministry of Columbia and the auditor for calculation
of quality metrics.
8. DESIGN OF TELECENTROS AND SUBMISSION OF SECOND PART OF SITE SURVEY. Same as
number 1SECOND PHASE OF INSTALLATION PLAN Same as number 2, letter B
9.
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EXHIBIT B
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MILESTONE AS PER EXHIBIT A PAYMENT IN DUE DATE FOR
U.S. DOLLARS COMPLETION
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1. Design, Surveys & Installation Plan $940,000 May 31, 2003
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2. Engineering Plan and Operational report $980,000 May 31, 2003
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3. Content & Training Plan $140,000 May 31, 2003
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4. Promotion Plan $100,000 May 31, 2003
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5. Design and Installation Pilots $500,000 June 30, 2003
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6. General Administrative Work $300,000 June 30, 2003
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7. Design of centralization DataBase $190,000 June 30, 2003
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8. Design and submission of Second part surveys $90,000 June 30, 2003
and installation Plan
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TOTAL $3.24 MILLION
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