[Code of Federal Regulations]
[Title 7, Volume 11]
[Revised as of January 1, 2006]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1726]
[Page 271-295]
TITLE 7--AGRICULTURE
CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
PART 1726_ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES
Subpart A_General
Sec.
1726.1-1726.9 [Reserved]
1726.10 Introduction.
1726.11 Purpose.
1726.12 Applicability.
1726.13 Waivers.
1726.14 Definitions.
1726.15 ``Buy American''.
1726.16 Debarment and suspension.
1726.17 Restrictions on lobbying.
1726.18 Preloan contracting.
1726.19 Use of competitive procurement.
1726.20 Standards and specifications.
1726.21 New materials.
1726.22 Methods of construction.
1726.23 Qualification of bidders.
1726.24 Standard forms of contracts for borrowers.
1726.25 Subcontracts.
1726.26 Interest on overdue accounts.
1726.27 Contractor's bonds.
1726.28-1726.34 [Reserved]
1726.35 Submission of documents to RUS.
1726.36 Documents subject to RUS approval.
1726.37 OMB control number.
1726.38-1726.49 [Reserved]
Subpart B_Distribution Facilities
1726.50 Distribution line materials and equipment.
1726.51 Distribution line construction.
1726.52-1726.74 [Reserved]
Subpart C_Substation and Transmission Facilities
1726.75 General.
1726.76 Substation and transmission line materials and equipment.
1726.77 Substation and transmission line construction.
1726.78-1726.124 [Reserved]
Subpart D_Generation Facilities
1726.125 Generating plant facilities.
1726.126-1726.149 [Reserved]
Subpart E_Buildings
1726.150 Headquarters buildings.
1726.151-1726.174 [Reserved]
Subpart F_General Plant
1726.175 General plant materials.
1726.176 Communications and control facilities.
1726.177-1726.199 [Reserved]
Subpart G_Procurement Procedures
1726.200 General requirements.
1726.201 Formal competitive bidding.
1726.202 Informal competitive bidding.
1726.203 Multiparty negotiation.
1726.204 Multiparty unit price quotations.
1726.205 Multiparty lump sum quotations.
1726.206-1726.249 [Reserved]
Subpart H_Modifications to RUS Standard Contract Forms
1726.250 General.
1726.251 Prior approved contract modification related to price
escalation on transmission equipment, generation equipment,
and generation construction contracts.
1726.252 Prior approved contract modification related to liability for
special and consequential damages.
1726.253 Prior approved contract modification related to alternative bid
provision for payment to contractor for bulk purchase of
materials.
1726.254 [Reserved]
1726.255 Prior approved contract modifications related to
indemnification.
1726.256-1726.299 [Reserved]
Subpart I_RUS Standard Forms
1726.300 Standard forms of contracts for borrowers.
1726.301 Borrower contractual obligations.
1726.302 Notice and publication of listed contract forms.
1726.303 Promulgation of new or revised contract forms.
1726.304 List of electric program standard contract forms.
1726.305-1726.399 [Reserved]
Subpart J_Contract Closeout
1726.400 Final contract amendment.
1726.401 Material contract closeout.
1726.402 Equipment contract closeout.
1726.403 Project construction contract closeout.
[[Page 272]]
1726.404 Non-site specific construction contract closeout.
1726.405 Inventory of work orders (RUS Form 219).
Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.
Source: 60 FR 10155, Feb. 23, 1995, unless otherwise noted.
Subpart A_General
Sec. Sec. 1726.1-1726.9 [Reserved]
Sec. 1726.10 Introduction.
The policies, procedures and requirements included in this part are
intended to implement provisions of the standard form of loan documents
between the Rural Utilities Service (RUS) and its electric borrowers.
Unless prior written approval is received from RUS, borrowers are
required to comply with RUS policies and procedures as a condition to
RUS providing loans, loan guarantees, or reimbursement of general funds
for the construction and improvement of electric facilities.
Requirements relating to RUS approval of plans and specifications,
duties and responsibilities of the engineer and architect, and
engineering and architectural services contracts, are contained in other
RUS regulations. The terms ``RUS form'', ``RUS standard form'', ``RUS
specification'', ``and RUS bulletin'' have the same meanings as the
terms ``REA form'', ``REA standard form'', ``REA specification'', ``and
REA bulletin'', respectively, unless otherwise noted.
Sec. 1726.11 Purpose.
Each borrower is responsible for the planning, design, construction,
operation and maintenance of its electric system. RUS, as a secured
lender, has a legitimate interest in accomplishing RUS's programmatic
objectives, and in assuring that the costs of construction, materials,
and equipment are reasonable and economical and that the property
securing the loans is constructed adequately to serve the purposes for
which it is intended.
Sec. 1726.12 Applicability.
The requirements of this part apply to the procurement of materials
and equipment for use by electric borrowers in their electric systems
and to the construction of their electric systems if such materials,
equipment, and construction are financed, in whole or in part, with
loans made or guaranteed by RUS, including reimbursable projects. In
order for general fund expenditures for procurement or construction to
be eligible for reimbursement from loan funds, the borrower must comply
with the procedures required by this part. In the case of jointly owned
projects, RUS will determine on a case by case basis the applicability
of the requirements of this part.
Sec. 1726.13 Waivers.
The Administrator may waive, for good cause on a case by case basis,
certain requirements and procedures of this part. RUS reserves the
right, as a condition of providing loans, loan guarantees, or other
assistance, to require any borrower to make any specification, contract,
or contract amendment subject to the approval of the Administrator.
Sec. 1726.14 Definitions.
Terms used in this part have the meanings set forth in 7 CFR 1710.2.
References to specific RUS forms and other RUS documents, and to
specific sections or lines of such forms and documents, shall include
the corresponding forms, documents, sections and lines in any subsequent
revisions of these forms and documents. In addition to the terms defined
in 7 CFR 1710.2, the following terms have the following meanings for the
purposes of this part:
Approval of proposed construction means RUS approval of a
construction work plan or other appropriate engineering study and RUS
approval, for purposes of system financing, of the completion of all
appropriate requirements of part 1794 of this chapter.
Architect means a registered or licensed person employed by the
borrower to provide architectural services for a project and duly
authorized assistants and representatives.
Bona fide bid means a bid which is submitted by a contractor on the
borrower's list of qualified bidders for the specific contract, prior to
bid opening.
[[Page 273]]
``Buy American'' certificate means a certification that the
contractor has complied with the ``Buy American'' requirement (see Sec.
1726.15).
Competitive procurement means procurement of goods or services based
on lowest evaluated bid for similar products or services when three or
more bids are received.
Construction unit means a specifically defined portion of a
construction project containing materials, labor, or both, for purposes
of bidding and payment.
Contracting committee means the committee consisting of three to
five members representing the borrower's management and board of
directors and the engineer. The contracting committee represents the
borrower during contract clarifying discussions or negotiations under
informal competitive bidding or multiparty negotiation, respectively.
Encumbrance means the process of approval for advance of loans funds
by RUS.
Engineer means a registered or licensed person, who may be a staff
employee or an outside consultant, to provide engineering services and
duly authorized assistants and representatives.
Equipment means a major component of an electric system, e.g., a
substation transformer, heat exchanger or a transmission structure.
Force account construction means construction performed by the
borrower's employees.
Formal competitive bidding means the competitive procurement
procedure wherein bidders submit sealed proposals for furnishing the
goods or services stipulated in the specification. Bids are publicly
opened and read at a predetermined time and place. If a contract is
awarded, it must be to the lowest evaluated responsive bidder (see Sec.
1726.201).
Goods or services means materials, equipment, or construction, or
any combination thereof.
Informal competitive bidding means the competitive procurement
procedure which provides for private opening of bids and allows
clarifying discussions between the contracting committee and the
bidders. During the clarifying discussions any exceptions to the bid
documents must be eliminated, or the bid rejected, so that the contract
is awarded to the lowest evaluated responsive bidder (see Sec.
1726.202).
Material means miscellaneous hardware which is combined with
equipment to form an electric system, e.g., poles, insulators, or
conductors.
Minor error or irregularity means a defect or variation in a bid
that is a matter of form and not of substance. Errors or irregularities
are ``minor'' if they can be corrected or waived without being
prejudicial to other bidders and when they do not affect the price,
quantity, quality, or timeliness of construction. A minor error or
irregularity is not an exception for purposes of determining whether a
bid is responsive.
Minor modification or improvement means a project where the cost is
less than $50,000, exclusive of the cost of owner furnished materials.
Multiparty lump sum quotations means the procurement of goods or
services on a lump sum basis, based on the lowest evaluated offering,
when three or more offers are received. (See Sec. 1726.205).
Multiparty negotiation means the procurement procedure where three
or more bids are received and provides for negotiations between the
contracting committee and each bidder to determine the bid which is in
the borrower's best interest (see Sec. 1726.203).
Multiparty unit price quotations means the procurement of goods or
services on a unit price basis, based on the lowest evaluated offering,
when three or more offers are received (See Sec. 1726.204).
Net utility plant (NUP) means Part C, Line 5 of RUS Form 7 for
distribution borrowers or Section B, Line 5 of RUS Form 12a for power
supply borrowers for the immediately preceding calendar year.
Procurement method means a procedure, including, but not limited to,
those in subpart G of this part, that a borrower uses to obtain goods
and services.
Owner furnished materials means materials or equipment or both
supplied by the borrower for installation by the contractor.
[[Page 274]]
Responsive bid means a bid with no exceptions or non-minor errors or
irregularities on any technical requirement or in the contract terms and
conditions.
RUS approval means written approval by the Administrator or a
representative with delegated authority. RUS approval must be in
writing, except in emergency situations where RUS approval may be given
over the telephone followed by a confirming letter.
Unit prices means individual prices for specific construction units
defined in accordance with RUS approved units specified in RUS standard
contract forms.
Sec. 1726.15 ``Buy American''.
The borrower must ensure that all materials and equipment financed
with loans made or guaranteed by RUS complies with the ``Buy American''
provisions of the Rural Electrification Act of 1938 (7 U.S.C. 903 note),
as amended by the North American Free Trade Agreement Implementation Act
(107 Stat 2129). When a ``Buy American'' certificate is required by this
part, this must be on RUS Form 213.
Sec. 1726.16 Debarment and suspension.
Borrowers are required to comply with certain requirements on
debarment and suspension in connection with procurement activities as
set forth in part 3017 of this title, particularly with respect to lower
tier transactions, e.g., procurement contracts for goods or services.
Sec. 1726.17 Restrictions on lobbying.
Borrowers are required to comply with certain restrictions and
requirements in connection with procurement activities as set forth in
part 3018 of this title.
Sec. 1726.18 Preloan contracting.
Borrowers must consult with RUS prior to entering into any contract
for material, equipment, or construction if a construction work plan,
general funds, loan or loan guarantee for the proposed work has not been
approved. While the RUS staff will work with the borrower in such
circumstances, nothing contained in this part is to be construed as
authorizing borrowers to enter into any contract before the availability
of funds has been ascertained by the borrower and all the requirements
of part 1794 of this chapter, Environmental Policies and Procedures for
Electric and Telephone Borrowers, have been fulfilled.
Sec. 1726.19 Use of competitive procurement.
RUS borrowers' procurement is not subject to the provisions of the
Federal Acquisition Regulation (48 CFR chapter 1); however, since
borrowers receive the benefit of Federal financial assistance borrowers
must use competitive procurement to the greatest extent practical. The
borrower must use competitive procurement for obtaining all goods or
services when a RUS loan or loan guarantee is involved except:
(a) As specifically provided for in subparts B through F of this
part; or
(b) A waiver is granted.
Sec. 1726.20 Standards and specifications.
All materials, equipment, and construction must meet the minimum
requirements of all applicable RUS standards and specifications. (See
part 1728 of this chapter, Electric Standards and Specifications for
Materials and Construction, which is applicable regardless of the source
of funding.)
[69 FR 7109, Feb. 13, 2004]
Sec. 1726.21 New materials.
The borrower shall purchase only new materials and equipment unless
otherwise approved by RUS, on a case by case basis, prior to the
purchase.
Sec. 1726.22 Methods of construction.
The borrower is generally responsible for determining whether
construction will be by contract or force account. If construction is by
contract, the borrower must determine whether materials will be supplied
by the contractor or will be furnished by the borrower. RUS reserves the
right to require contract construction in lieu of force account
construction on a case by case basis.
[[Page 275]]
Sec. 1726.23 Qualification of bidders.
(a) Qualified bidder list (QBL). The borrower shall (acting through
its engineer, if applicable) review the qualifications of prospective
bidders for contract construction and for material and equipment
procurement, and select firms qualified for inclusion on the borrower's
list of qualified bidders for each contract. (See also Sec. 1726.16 and
Sec. 1726.17.) A bid may not be solicited from a prospective bidder or
opened by the borrower unless that bidder has been determined to be a
qualified bidder for the contract. When preparing the QBL, in addition
to the actual experience of the borrower, if any, in dealing with a
prospective bidder, the borrower may solicit information from that
bidder or from other parties with firsthand experience regarding the
firm's capabilities and experience. It is also important to consider the
firm's performance record, safety record, and similar factors in
determining whether to include that firm on the QBL, since the borrower
may not evaluate these factors when evaluating a bid from a qualified
and invited bidder.
(b) Conflict of interest. If there is a relationship between the
borrower or engineer and a prospective bidder which might cause the
borrower or engineer to have or appear to have a conflict of interest,
that prospective bidder shall not be included on the QBL unless the
engineer discloses the nature of the relationship to the borrower. In
the case of the borrower, if its employees or directors have a
relationship with a prospective bidder, the prospective bidder shall not
be included on the qualified bidders list unless the nature of the
relationship is disclosed to the board of directors, and the board of
directors specifically approves the inclusion of that bidder in light of
the potential for a conflict of interest.
Sec. 1726.24 Standard forms of contracts for borrowers.
(a) General. The standard loan agreement between RUS and the
borrowers provides that, in accordance with applicable RUS regulations
in this chapter, the borrower shall use standard forms of contracts
promulgated by RUS for construction, procurement, engineering services,
and architectural services financed by a loan made or guaranteed by RUS.
This part implements these provisions of the RUS loan agreement.
Subparts A through H and J of this part prescribe when and how borrowers
are required to use RUS standard forms of contracts in procurement and
construction. Subpart I of this part prescribes the procedures that RUS
follows in promulgating standard contract forms and identifies those
contract forms that borrowers are required to use for procurement and
construction.
(b) Amendments to contracts--(1) Contract forms. The borrower must
use RUS Form 238, Construction or Equipment Contract Amendment, for any
change or addition in any contract for construction or equipment.
(2) Special considerations. Each time an amendment to a construction
contract is executed, the borrower must ensure that contractor's bond is
adequate, that all necessary licenses and permits have been obtained,
and that any environmental requirements associated with the proposed
construction have been met.
(3) Amendment approval requirements. (i) If a RUS approved form of
contract is required by this part, an amendment must not alter the terms
and conditions of the RUS approved form of contract without prior RUS
approval.
(ii) The borrower must make a contract amendment subject to RUS
approval if the underlying contract was made subject to RUS approval and
the total amended contract price exceeds 120 percent of the original
contract price (excluding any escalation provision contained in the
contract).
(iii) Contract amendments, except as provided in paragraph
(b)(3)(ii) of this section, are not subject to RUS approval and need not
be submitted to RUS unless specifically requested by RUS on a case by
case basis.
[60 FR 10155, Feb. 23, 1995, as amended at 63 FR 58286, Oct. 30, 1998;
69 FR 7109, Feb. 13, 2004]
Sec. 1726.25 Subcontracts.
Subcontracts are not subject to RUS approval and need not be
submitted to
[[Page 276]]
RUS unless specifically requested by RUS on a case by case basis.
[69 FR 7109, Feb. 13, 2004]
Sec. 1726.26 Interest on overdue accounts.
Certain RUS contract forms contain a provision concerning payment of
interest on overdue accounts. Prior to issuing the invitation to
bidders, the borrower must insert an interest rate equal to the lowest
``Prime Rate'' listed in the ``Money Rates'' section of the Wall Street
Journal on the date such invitation to bid is issued. If no prime rate
is published on that date, the last such rate published prior to that
date must be used. The rate must not, however, exceed the maximum rate
allowed by any applicable state law.
[63 FR 58286, Oct. 30, 1998]
Sec. 1726.27 Contractor's bonds.
(a) RUS Form 168b, Contractor's Bond, shall be used when a
contractor's bond is required by RUS Forms 200, 257, 786, 790, or 830
unless the contractor's surety has accepted a Small Business
Administration guarantee and the contract is for $1 million or less.
(b) RUS Form 168c, Contractor's Bond, shall be used when a
contractor's bond is required by RUS Forms 200, 257, 786, 790, or 830
and the contractor's surety has accepted a Small Business Administration
guarantee and the contract is for $1 million or less.
(c) Surety companies providing contractor's bonds shall be listed as
acceptable sureties in the U.S. Department of the Treasury Circular No.
570, Companies Holding Certificates of Authority as Acceptable Sureties
on Federal Bonds and as Acceptable Reinsuring Companies. Copies of the
circular and interim changes may be obtained directly from the
Government Printing Office (202) 512-1800. Interim changes are published
in the Federal Register as they occur. The list is also available
through the Internet at http://www.fms.treas.gov/c570/index.html and on
the Department of the Treasury's computerized public bulletin board at
(202) 874-6887.
[63 FR 58286, Oct. 30, 1998, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. Sec. 1726.28-1726.34 [Reserved]
Sec. 1726.35 Submission of documents to RUS.
(a) Where to send documents. Documents required to be submitted to
RUS under this part are to be sent to the office of the borrower's
respective RUS Regional Director, the Power Supply Division Director, or
such other office of RUS as designated by RUS (see part 1700 of this
chapter.)
(b) Borrower certification. When a borrower certification is
required by this part, it must be made by the borrower's manager unless
the board of directors specifically authorizes another person to make
the required certification. In such case, a certified copy of the
specific authorizing resolution must accompany the document or be on
file with RUS.
(c) Contracts requiring RUS approval. The borrower shall submit to
RUS three copies of each contract that is subject to RUS approval under
subparts B through F of this part. At least one copy of each contract
must be an original signed in ink (i.e., no facsimile signature). Each
contract submittal must be accompanied by:
(1) A bid tabulation and evaluation and, if applicable, a written
recommendation of the architect or engineer.
(2) For awards made under the informal competitive bidding procedure
or the multiparty negotiation procedure, a written recommendation of the
contracting committee (See Sec. Sec. 1726.202 and 1726.203).
(3) Three copies of an executed contractor's bond on RUS approved
bond forms as required in the contract form (at least one copy of which
must be an original signed in ink) and one copy of the bid bond or
facsimile of the certified check.
(4) A certification by the borrower or chairperson of the
contracting committee, as applicable, that the appropriate bidding
procedures were followed as required by this part.
(5) A certified copy of the board resolution awarding the contract.
(6) Evidence of clear title to the site for substations and
headquarters construction contracts, if not previously submitted.
[[Page 277]]
(7) Documentation that all reasonable measures were taken to assure
competition if fewer than three bids were received.
(d) Contract amendments requiring RUS approval. The borrower must
submit to RUS three copies of each contract amendment (at least one copy
of which must be an original signed in ink) which is subject to RUS
approval under Sec. 1726.24(b). Each contract amendment submittal to
RUS must be accompanied by:
(1) A certified copy of the board resolution approving the
amendment; and
(2) A bond extension, where necessary.
(e) Encumbrance of loan or loan guarantee funds. (1) For contracts
subject to RUS approval, the submittals required under paragraph (c) of
this section will initiate RUS action to encumber loan or loan guarantee
funds for such contracts.
(2) For contracts not subject to RUS approval (except for generation
projects), loan or loan guarantee funds will normally be encumbered
using RUS Form 219, Inventory of Work Orders, after closeout of the
contracts. In cases where the borrower can show good cause for a need
for immediate cash, the borrower may request encumbrance of loan or loan
guarantee funds based on submittal of a copy of the executed contract,
provided it meets all applicable RUS requirements.
(3) For generation project contracts not subject to RUS approval,
the borrower must submit to RUS the following documentation:
(i) A brief description of the scope of the contract, including
contract identification (name, number, etc.);
(ii) Contract date;
(iii) Contractor's name;
(iv) Contract amount;
(v) Bidding procedure used;
(vi) Borrower certification that:
(A) The board of directors approved the contract;
(B) The bidding procedures and contract award for each contract were
in conformance with the requirements of Part 1726, Electric System
Construction Policies and Procedures;
(C) If a RUS approved form of contract is required by this part, the
terms and conditions of the RUS approved form of contract have not been
altered;
(D) If RUS has approved plans and specifications for the contract,
the contract was awarded on the basis of those plans and specifications;
and
(E) No restriction has been placed on the borrower's right to assign
the contract to RUS or its successors.
(4) Contract amendments. (i) For amendments subject to RUS approval,
the submittals required under paragraph (c) of this section will
initiate RUS action to encumber loan or loan guarantee funds for
contract amendments requiring RUS approval.
(ii) For amendments not subject to RUS approval (except generation
projects), loan or loan guarantee funds will normally be encumbered
using RUS Form 219, Inventory of Work Orders, after closeout of the
contracts. In cases where the borrower can justify a need for immediate
cash, the borrower may request encumbrance of loan or loan guarantee
funds based on submittal of a copy of the executed amendment, providing
it meets all applicable RUS requirements.
(iii) For each generation project contract amendment not subject to
RUS approval, the borrower must submit to RUS the following information
and documentation:
(A) The contract name and number;
(B) The amendment number;
(C) The amendment date;
(D) The dollar amount of the increase or the decrease of the
amendment;
(E) Borrower certification that:
(1) The amendment was approved in accordance with the policy of the
board of directors (the borrower must ensure that RUS has a certified
copy of the board resolution establishing such policy);
(2) If a RUS approved form of contract is required by this part, the
terms and conditions of the RUS approved form of contract has not been
altered; and
(3) No restriction has been placed on the borrower's right to assign
the contract to RUS or its successors.
Sec. 1726.36 Documents subject to RUS approval.
Unless otherwise indicated, the borrower shall make all contracts
and
[[Page 278]]
amendments that are subject to RUS approval effective only upon RUS
approval.
Sec. 1726.37 OMB control number.
The collection of information requirements in this part have been
approved by the Office of Management and Budget and assigned OMB control
number 0572-0107.
Sec. Sec. 1726.38-1726.49 [Reserved]
Subpart B_Distribution Facilities
Sec. 1726.50 Distribution line materials and equipment.
(a) Contract forms. (1) The borrower shall use RUS Form 198,
Equipment Contract, for purchases of equipment where the total cost of
the contract is $500,000 or more.
(2) The borrower may, in its discretion, use RUS Form 198, Equipment
Contract, or a written purchase order for purchases of equipment of less
than $500,000 and for all materials.
(b) Standards and specifications. Distribution line materials and
equipment must meet the minimum requirements of RUS standards as
determined in accordance with the provisions of part 1728 of this
chapter, Electric Standards and Specifications for Materials and
Construction. The borrower must obtain RUS approval prior to purchasing
any unlisted distribution line material or equipment of the types listed
in accordance with the provisions of part 1728 of this chapter.
(c) Procurement procedures. It is the responsibility of each
borrower to determine the procurement method that best meets its needs
for the purchase of material and equipment to be used in distribution
line construction.
(d) Contract approval. Contracts for purchases of distribution line
materials and equipment are not subject to RUS approval and need not be
submitted to RUS unless specifically requested by RUS on a case by case
basis.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. 1726.51 Distribution line construction.
(a) Contract forms. The borrower must use RUS Form 790, or 830, as
outlined in this paragraph (a), for distribution line construction,
except for minor modifications or improvements.
(1) The borrower may use RUS Form 790, Electric System Construction
Contract--Non-Site Specific Construction, under the following
circumstances:
(i) For contracts for which the borrower supplies all materials and
equipment; or
(ii) For non-site specific construction contracts accounted for
under the work order procedure; or
(iii) If neither paragraph (a)(1)(i) or (a)(1)(ii) of this section
are applicable, the borrower may use RUS Form 790 for contracts, up to a
cumulative total of $250,000 or one percent of net utility plant (NUP),
whichever is greater, per calendar year of distribution line
construction, exclusive of the cost of owner furnished materials and
equipment.
(2) The borrower must use RUS Form 830, Electric System Construction
Contract--Project Construction, for all other distribution line
construction.
(b) Procurement procedures. (1) It is the responsibility of each
borrower to determine the procurement method that best meets its needs
to award contracts in amounts of up to a cumulative total of $250,000 or
one percent of NUP, whichever is greater, per calendar year of
distribution line construction (including minor modifications or
improvements), exclusive of the cost of owner furnished materials and
equipment.
(2) In addition to the cumulative total stipulated in paragraph
(b)(1) of this section, a borrower may use Multiparty Unit Price
Quotations to award contracts in amounts of up to a cumulative total of
$350,000 or 1.5 percent of NUP, whichever is greater, per calendar year
of distribution line construction (including minor modifications or
improvements), exclusive of the cost of owner furnished materials and
equipment.
(3) The borrower shall use formal competitive bidding for all other
distribution line contract construction. The amount of contracts bid
using the formal competitive bidding procedure do not apply to the
cumulative total stipulated in paragraph (b)(1) of this section.
[[Page 279]]
(4) An amendment which increases the scope of the contract by adding
a project is not considered competitively bid, therefore, the amount of
that amendment does apply to the cumulative total stipulated in
paragraph (b)(1) of this section.
(c) Contract approval. Contracts for distribution line construction
are not subject to RUS approval and need not be submitted to RUS unless
specifically requested by RUS on a case by case basis.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. Sec. 1726.52-1726.74 [Reserved]
Subpart C_Substation and Transmission Facilities
Sec. 1726.75 General.
As used in this part, ``substations'' includes substations,
switching stations, metering points, and similar facilities.
Sec. 1726.76 Substation and transmission line materials and equipment.
(a) Contract forms. (1) The borrower must use RUS Form 198,
Equipment Contract, for purchases of equipment where the total cost of
the contract is $500,000 or more.
(2) The borrower may, in its discretion, use RUS Form 198, Equipment
Contract, or a written purchase order for purchases of equipment of less
than $500,000 and for all materials.
(b) Standards and specifications. Substation and transmission line
materials and equipment must meet the minimum requirements of RUS
standards as determined in accordance with the provisions of part 1728
of this chapter, Electric Standards and Specifications for Materials and
Construction. The borrower must obtain RUS approval prior to purchasing
of any unlisted substation or transmission line material or equipment of
the types listed in accordance with the provisions of part 1728 of this
chapter.
(c) Procurement procedures. It is the responsibility of each
borrower to determine the procurement method that best meets its needs
for purchase of material and equipment to be used in substation and
transmission line construction.
(d) Contract approval. Contracts for purchases of substation and
transmission line materials and equipment are not subject to RUS
approval and need not be submitted to RUS unless specifically requested
by RUS on a case by case basis.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. 1726.77 Substation and transmission line construction.
(a) Contract forms. The borrower must use RUS Form 830, Electric
System Construction Contract--Project Construction, for construction of
substations, except for minor modifications or improvements.
(b) Procurement procedures. (1) It is the responsibility of each
borrower to determine the procurement method that best meets its needs
to award contracts not requiring RUS approval in amounts of up to a
cumulative total of $250,000 or one percent of NUP (not to exceed
$2,000,000), whichever is greater, per calendar year of substation and
transmission line construction (including minor modifications or
improvements), exclusive of the cost of owner furnished materials and
equipment.
(2) The borrower shall use formal competitive bidding for all other
contract construction, including all contracts requiring RUS approval.
The amount of contracts bid using the formal competitive bidding
procedure do not apply to the cumulative total stipulated in paragraph
(b)(1) of this section.
(3) An amendment which increases the scope of the contract by adding
a project is not considered competitively bid, therefore, the amount of
that amendment does apply to the cumulative total stipulated in
paragraph (b)(1) of this section.
(c) Contract approval. Individual contracts in amounts of $250,000
or more or one percent of NUP (not to exceed $500,000 for distribution
borrowers or $1,500,000 for power supply borrowers), whichever is
greater, exclusive of the cost of owner furnished materials and
[[Page 280]]
equipment, are subject to RUS approval.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. Sec. 1726.78-1726.124 [Reserved]
Subpart D_Generation Facilities
Sec. 1726.125 Generating plant facilities.
This section covers the construction of all portions of a generating
plant, including plant buildings and the generator step-up transformer.
Generally, the transmission switchyard will be covered under this
section during initial construction of the plant. Subpart C of this part
covers subsequent modifications to transmission switchyards. Warehouses
and equipment service type buildings are covered under subpart E of this
part.
(a) Contract forms. (1) The borrower must use RUS Form 198,
Equipment Contract, for the purchase of generating plant equipment in
the amount of $1,500,000 or more and for any generating plant equipment
contract requiring RUS approval.
(2) The borrower must use RUS Form 200, Construction Contract--
Generating, for generating project construction contracts in the amount
of $1,500,000 or more and for any generating project construction
contract requiring RUS approval.
(3) The borrower may, in its discretion, use other contract or
written purchase order forms for those contracts in amounts of less than
$1,500,000 and that do not require RUS approval.
(b) Procurement procedures. (1) It is the responsibility of each
borrower to determine the procurement method that best meets its needs
to award contracts in amounts of less than $1,500,000 each.
(2) If the amount of the contract is $1,500,000 or more or if the
contract requires RUS approval, the borrower must use formal or informal
competitive bidding to award the contract.
(3) Where formal or informal competitive bidding is not applicable,
or does not result in a responsive bid, multiparty negotiation may be
used only after RUS approval is obtained.
(c) Contract approval. During the early stages of generating plant
design or project design, RUS will, in consultation with the borrower
and its consulting engineer, identify the specific contracts which
require RUS approval based on information supplied in the plant design
manual. The following are typical contracts for each type of generating
project which will require RUS approval. Although engineering services
are not covered by this part, they are listed in this paragraph (d) to
emphasize that RUS approval is required for all major generating station
engineering service contracts in accordance with applicable RUS rules.
For types of projects not shown, such as nuclear and alternate energy
projects, RUS will identify the specific contracts which will require
RUS approval on a case by case basis.
(1) Fossil generating stations. Engineering services, steam
generator, turbine generator, flue gas desulfurization system,
particulate removal system, electric wiring and control systems,
mechanical equipment installation (including turbine installation and
plant piping), power plant building (foundation and superstructure),
site preparation, coal unloading and handling facilities, main step-up
substation, cooling towers, and dams or reservoirs.
(2) Diesel and combustion turbine plants. Engineering services,
prime mover and generator, building (foundation and superstructure), and
electrical control systems.
(3) Hydro installations. Engineering services, turbine/generator,
civil works and powerhouse construction, electrical control system, and
mechanical installation.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. Sec. 1726.126-1726.149 [Reserved]
Subpart E_Buildings
Sec. 1726.150 Headquarters buildings.
This section includes headquarters buildings such as warehouses and
equipment service type buildings. Generating plant buildings are covered
under subpart D of this part.
(a) Contract forms. The borrower must use RUS Form 257, Contract to
Construct Buildings, for all contracts for
[[Page 281]]
construction of new headquarters facilities, and additions to, or
modifications of existing headquarters facilities (except for minor
modifications or improvements).
(b) Procurement procedures. A borrower may use Multiparty Lump Sum
Quotations to award contracts in amounts of up to a cumulative total of
$250,000 or one percent of NUP (not to exceed $1,000,000), whichever is
greater, per calendar year of headquarters construction (including minor
modifications or improvements.) The borrower must use formal competitive
bidding for all other headquarters contract construction.
(c) Contract approval. Contracts for headquarters construction are
not subject to RUS approval and need not be submitted to RUS unless
specifically requested by RUS on a case by case basis.
Sec. Sec. 1726.151-1726.174 [Reserved]
Subpart F_General Plant
Sec. 1726.175 General plant materials.
This section covers items such as office furniture and equipment;
transportation equipment and accessories, including mobile radio
systems, stores and shop equipment, laboratory equipment, tools and test
equipment.
(a) Contract forms. The borrower may, in its discretion, use RUS
Form 198, Equipment Contract, or a written purchase order.
(b) Procurement procedures. It is the responsibility of each
borrower to determine the procurement method that best meets its needs
for purchase of general plant material and equipment.
(c) Contract approval. Contracts for the purchase of general plant
items are not subject to RUS approval and need not be submitted to RUS
unless specifically requested by RUS on a case by case basis.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. 1726.176 Communications and control facilities.
This section covers the purchase of microwave and power line carrier
communications systems, load control, and supervisory control and data
acquisition (SCADA) systems. Mobile radio systems are covered as general
plant materials in Sec. 1726.175.
(a) Power line carrier systems. Power line carrier equipment will
frequently be purchased as part of a substation and will be included in
the complete substation plans and specifications. When purchased in this
manner, the requirements of subpart C of this part, Substation and
Transmission Facilities, will apply. If obtained under a contract for
only a power line carrier system, the requirements of paragraph (b) of
this section apply.
(b) Load control systems, communications systems, and SCADA
systems--(1) Contract forms. The borrower must use RUS Form 786,
Electric System Communication and Control Equipment Contract. This form
may be modified to be a ``purchase only'' contract form.
(2) Procurement procedures. (i) It is the responsibility of each
borrower to determine the procurement method that best meets its needs
to award contracts not requiring RUS approval in amounts of up to a
cumulative total of $250,000 or one percent of NUP (not to exceed
$2,000,000), whichever is greater, per calendar year of communications
and control facilities construction (including minor modifications or
improvements.), exclusive of the cost of owner furnished materials and
equipment.
(ii) The borrower must use multiparty negotiation for all other
communications and control facilities contract construction, including
all contracts requiring RUS approval. The amount of contracts bid using
the multiparty negotiation procedure do not apply to the cumulative
total stipulated in paragraph (b)(2)(i) of this section.
(iii) An amendment which increases the scope by adding a project is
not considered competitively bid, therefore, the amount of that
amendment does apply to the cumulative total stipulated in paragraph
(b)(2)(i) of this section.
(3) Contract approval. Individual contracts in amounts of $250,000
or more or one percent of NUP (not to exceed $500,000 for distribution
borrowers or $1,500,000 for power supply borrowers), whichever is
greater, exclusive of the cost of owner furnished materials and
[[Page 282]]
equipment, are subject to RUS approval.
Sec. Sec. 1726.177-1726.199 [Reserved]
Subpart G_Procurement Procedures
Sec. 1726.200 General requirements.
The borrower must use the procedures described in this subpart where
such procedures are required under subparts B through F of this part.
The borrower must ensure that arrangements prior to announcement of the
award of the contract are such that all bidders are treated fairly and
no bidder is given an unfair advantage over other bidders.
Sec. 1726.201 Formal competitive bidding.
Formal competitive bidding is used for distribution, transmission,
and headquarters facilities, and may be used for generation facilities.
The borrower must use the following procedure for formal competitive
bidding:
(a) Selection of qualified bidders. The borrower (acting through its
engineer, if applicable) will compile a list of qualified bidders for
each proposed contract. The borrower will send invitations to bid only
to persons or organizations on its QBL for the specific project (see
Sec. 1726.23).
(b) Invitations to bid. The borrower (acting through its engineer,
if applicable) is responsible for sending out invitations to prospective
bidders, informing them of scheduled bid openings and taking any other
action necessary to procure full, free and competitive bidding. The
borrower should send out a sufficient number of invitations in order to
assure adequate competition and so that at least three bids will be
received. Subject to the foregoing criteria, the determination of how
many and which bidders will be permitted to bid will be the
responsibility of the borrower.
(c) Evaluation basis. Any factors, other than lowest dollar amount
of the bid, which are to be considered in evaluating the proposals of
qualified bidders (e.g., power consumption, losses, etc.) must be stated
in the ``Notice and Instructions to Bidders.'' The borrower will not
evaluate a bidder's performance record, safety record, and similar
factors when evaluating a bid from a qualified and invited bidder. Such
factors are to be considered when determining whether to include a
particular bidder on the qualified bidders list.
(d) Handling of bids received. The borrower or the engineer, as
applicable, will indicate, in writing, the date and time of receipt by
the borrower or the engineer on the outside envelope of each bid and all
letters and other transmittals amending or modifying the bids. Any bid
received at the designated location after the time specified must be
returned to the bidder unopened.
(e) Bid openings. Bid openings are generally conducted by the
engineer in the presence of bidders and a representative of the borrower
and the borrower's attorney. Each bona fide bid must be opened publicly
and reviewed for any irregularities, errors, or exceptions. It must be
verified that any addendum or supplement to the specification has been
acknowledged by the bidder. The adequacy of bid bonds or certified
checks must be verified at this time.
(f) Conditions affecting acceptability of bids. The borrower must
take the following specified action if any of the following exist:
(1) Fewer than three bona fide bids received. If fewer than three
bona fide bids are received for the contract project, the borrower must
determine that all reasonable measures have been taken to assure
competition prior to awarding the contract. This determination must be
documented and such documentation submitted to RUS where required by
subpart A of this part. The borrower may, however, elect to reject all
bids, make changes in the specification or the qualified bidders list or
both and invite new bids.
(2) Significant error or ambiguity in the specification. If a
significant error or ambiguity in the specification is found which could
result in the bidders having varying interpretations of the requirements
of the bid, the borrower must either issue an addendum to each
prospective bidder correcting the error or ambiguity before bids are
received,
[[Page 283]]
or reject all bids and correct the specification. If a significant error
or ambiguity in the specification is discovered after the bids are
opened, the borrower must reject all bids, correct the specification and
invite new bids.
(3) Minor errors or omissions in the specification. If minor errors
or omissions in the specification are found, the borrower must issue an
addendum to each prospective bidder correcting the error or omission
prior to opening any bids. After bid opening, the error or omission must
be corrected in the executed contract.
(4) Minor errors or irregularities in bid. The borrower may waive
minor errors or irregularities in any bid, if the borrower determines
that such minor errors or irregularities were made through inadvertence.
Any such minor errors or irregularities so waived must be corrected on
the bid in which they occur prior to the acceptance thereof by the
borrower.
(5) Non-minor error or irregularity in bid. If a bid contains a non-
minor error or irregularity, the bid must be rejected and the bid price
must not be disclosed.
(6) Unbalanced bid. If a bid contains disproportionate prices
between labor and materials or between various construction units, the
borrower may reject the bid.
(7) No acceptable price quoted. If none of the bidders quote an
acceptable price, the borrower may reject all bids.
(g) Evaluating bids. The borrower (acting through the engineer, if
applicable) must conduct the evaluation of bids on the basis of the
criteria set out in the ``Notice and Instructions to Bidders.'' The
contract, if awarded, must be awarded to the bidder with the lowest
evaluated responsive bid.
(h) Announcement of bids. If possible, the borrower will announce
bids at the bid opening. However, where extensive evaluation is
required, the borrower may elect to adjourn and make formal written
announcement to all bidders at a later time. Any discrepancy in a
rejected bid must be indicated in the bid announcement.
(i) Award of contract. Upon completion of the bid evaluations and
based upon the findings and recommendations of the borrower's management
and engineer, the borrower's board of directors will either:
(1) Resolve to award the contract to the lowest evaluated responsive
bidder; or
(2) Reject all bids.
(j) Certification by the borrower and its engineer. The borrower
shall certify and the engineer shall certify as follows: ``The
procedures for formal competitive bidding, as described in 7 CFR
1726.201, were followed in awarding this contract.'' The certification
executed by and on behalf of the borrower and its engineer shall be
submitted to RUS in writing where required by subpart A of this part.
Sec. 1726.202 Informal competitive bidding.
Informal competitive bidding may be used for equipment purchases and
generation construction. The borrower must use the following procedure
for informal competitive bidding:
(a) Selection of qualified bidders. The borrower (acting through its
engineer, if applicable) will compile a list of qualified bidders for
each proposed contract. The borrower will send invitations to bid only
to persons or organizations on its qualified bidder list for the
specific project (see Sec. 1726.23).
(b) Invitations to bid. The borrower (acting through its engineer,
if applicable) is responsible for sending out invitations to prospective
bidders, informing them of scheduled bid openings and any other action
necessary to procure full, free and competitive bidding. In any event,
however, sufficient invitations need to be sent out to assure
competition and that at least three bids will be received. Subject to
the criteria in the preceding sentence, the determination of how many
and which bidders will be permitted to bid will be the responsibility of
the borrower.
(c) Notice and instructions to bidders. The borrower must indicate
in the ``Notice and Instructions to Bidders'' section of the bid
documents that bids will be opened privately. The borrower may elect to
conduct clarifying discussions with the bidders. If such clarifying
discussions are held, at least the three apparent low evaluated bidders
must be given an equal opportunity to resolve any questions related to
the
[[Page 284]]
substance of the bidder's proposal and to arrive at a final price for a
responsive bid.
(d) Evaluation basis. Any factors, other than lowest dollar amount
of the bid, which are to be considered in evaluating the proposals of
qualified bidders (e.g., power consumption, losses, etc.) must be stated
in the ``Notice and Instructions to Bidders.'' The borrower will not
evaluate a bidder's performance record, safety record, and similar
factors when evaluating a bid from a qualified and invited bidder. Such
factors are to be considered when determining whether to include a
particular bidder on the qualified bidders list.
(e) Handling of bids received. The borrower or the engineer, as
applicable, will indicate, in writing, the date and time of receipt by
the borrower or the engineer on the outside envelope of each bid and all
letters and other transmittals amending or modifying the bids. Any bid
received at the designated location after the time specified must be
returned to the bidder unopened.
(f) Bid opening. The contracting committee will conduct the bid
opening in private. The contracting committee will open each bona fide
bid which has been received prior to the deadline, and review it for any
irregularities, errors, or exceptions. It must be verified that any
addendum to the specification has been acknowledged by each bidder. The
adequacy of bid bonds or certified checks must also be verified.
(g) Conditions affecting acceptability of bids. The borrower must
take the following specified action if any of the following exist:
(1) Fewer than three bona fide bids received. If fewer than three
bona fide bids are received for the contract project, the borrower must
determine that all reasonable measures have been taken to assure
competition prior to awarding the contract. This determination must be
documented and such documentation submitted to RUS where required by
subpart A of this part. The borrower may, however, elect to reject all
bids, make changes in the specification or the qualified bidders list or
both and invite new bids.
(2) Significant error or ambiguity in the specification. If a
significant error or ambiguity in the specification is found which could
result in the bidders having varying interpretations of the requirements
of the bid, the borrower must either issue an addendum to each
prospective bidder correcting the error or ambiguity before bids are
received, or reject all bids and correct the specification. If a
significant error or ambiguity in the specification is discovered after
the bids are opened, the borrower must reject all bids, correct the
specification and invite new bids.
(h) Clarification of proposals. The contracting committee may elect
not to hold any clarifying discussions and recommend awarding the
contract to the low responsive bidder. Otherwise, the contracting
committee must give at least each of the three apparent lowest evaluated
bidders an equal opportunity to participate in discussions for the
purpose of resolving questions regarding the specification and contract
terms and to arrive at a final price. Neither prices of other bids nor
relative ranking of any bidder are to be revealed under any
circumstances. Such discussions may be held by telephone or similar
means provided at least each of the three apparent lowest evaluated
bidders have an equal opportunity to participate. Upon completion of the
clarifying discussions, the contracting committee will determine the
lowest evaluated responsive bid. If no bids are responsive after the
contracting committee has completed clarifying discussions, no contract
award can be made under the informal bidding procedure.
(i) Award of the contract. Upon completion of the bid evaluations,
the contracting committee will promptly report all findings and
recommendations to the borrower's board of directors. The board will
either:
(1) Resolve to award the contract to the lowest evaluated responsive
bidder; or
(2) Reject all bids.
(j) Certifications by the contracting committee. The chairperson of
the contracting committee shall certify as follows: ``The procedures for
informal competitive bidding as described in 7 CFR 1726.202 were
followed in awarding
[[Page 285]]
this contract.'' The certification executed by the chairperson of the
contracting committee shall be submitted to RUS in writing where
required by subpart A of this part.
Sec. 1726.203 Multiparty negotiation.
Multiparty negotiation may only be used where permitted under
subpart F of this part or where prior RUS approval has been obtained.
The borrower must use the following procedure for multiparty
negotiation:
(a) Selection of qualified bidders. The borrower (acting through its
engineer, if applicable) will compile a list of qualified bidders for
each proposed contract. The borrower will send invitations to bid only
to persons or organizations on its qualified bidder list for the
specific project (see Sec. 1726.23).
(b) Invitations to bid. The borrower (acting through its engineer,
if applicable) is responsible for sending out invitations to prospective
bidders, informing them of scheduled bid openings and any other action
necessary to procure full, free and competitive bidding. In any event,
however, sufficient invitations need to be sent out to assure
competition and so that at least three bids will be received. Subject to
the criteria in the preceding sentence, the determination of how many
and which bidders will be permitted to bid will be the responsibility of
the borrower.
(c) Notice and instructions to bidders. The borrower must indicate
in the ``Notice and Instructions to Bidders'' section of the bid
documents that bids will be opened privately. The borrower may elect to
conduct negotiations with the bidders. If such negotiations are held, at
least the three apparent low evaluated bidders must be given an equal
opportunity to resolve any questions related to the substance of the
bidder's proposal and to arrive at a final price.
(d) Evaluation basis. Any factors, other than lowest dollar amount
of the bid, which are to be considered in evaluating the proposals of
qualified bidders (e.g., power consumption, losses, etc.) must be stated
in the ``Notice and Instructions to Bidders.'' The borrower will not
evaluate a bidder's performance record, safety record, and similar
factors when evaluating a bid from a qualified and invited bidder. Such
factors are to be considered when determining whether to include a
particular bidder on the qualified bidders list.
(e) Handling of bids received. The borrower or the engineer, as
applicable, will indicate, in writing, the date and time of receipt by
the borrower or the engineer on the outside envelope of each bid and all
letters and other transmittals amending or modifying the bids. Any bid
received at the designated location after the time specified must be
returned to the bidder unopened.
(f) Bid opening. The contracting committee will conduct the bid
opening in private. The contracting committee will open each bona fide
bid which has been received prior to the deadline, and review it for any
irregularities, errors, or exceptions. It must be verified that any
addendum to the specification has been acknowledged by each bidder. The
adequacy of bid bonds or certified checks must also be verified.
(g) Conditions affecting acceptability of bids. The borrower must
take the following specified action if any of the following exist:
(1) Fewer than three bona fide bids received. If fewer than three
bona fide bids are received for the contract project, the borrower must
determine that all reasonable measures have been taken to assure
competition prior to awarding the contract. This determination must be
documented and such documentation submitted to RUS where required by
subpart A of this part. The borrower may, however, elect to reject all
bids, make changes in the specification or the qualified bidders list or
both and invite new bids.
(2) Significant error or ambiguity in the specification. If a
significant error or ambiguity in the specification is found which could
result in the bidders having varying interpretations of the requirements
of the bid, the borrower must either issue an addendum to each
prospective bidder correcting the error or ambiguity before bids are
received, or reject all bids and correct the specification. If a
significant error or ambiguity in the specification is discovered after
the bids are opened, the borrower must reject all bids, correct the
specification and invite new bids.
[[Page 286]]
(h) Negotiations. The contracting committee may elect not to hold
any negotiations and recommend award of the contract. Otherwise, the
contracting committee must give at least each of the three apparent
lowest evaluated bidders an equal opportunity to participate in
negotiations for the purpose of resolving questions regarding the
specification and contract terms and to arrive at a final price. Neither
prices of other bids nor relative ranking of any bidder are to be
revealed under any circumstances. Such discussions may be held by
telephone or similar means provided at least each of the three apparent
lowest evaluated bidders have an equal opportunity to participate. Upon
completion of the negotiations, the contracting committee will determine
the bid that is in the borrower's best interest.
(i) Award of the contract. Upon completion of the bid evaluations,
the contracting committee will promptly report all findings and
recommendations to the borrower's board of directors. The board will
either:
(1) Resolve to award the contract to the selected bidder; or
(2) Reject all bids.
(j) Certifications by the contracting committee. The chairperson of
the contracting committee shall certify as follows: ``The procedures for
multiparty negotiation as described in 7 CFR 1726.203 were followed in
awarding this contract.'' The certification executed by the chairperson
of the contracting committee shall be submitted to RUS in writing where
required by subpart A of this part.
Sec. 1726.204 Multiparty unit price quotations.
The borrower or its engineer must contact a sufficient number of
suppliers or contractors to assure competition and so that at least
three bids will be received. On the basis of written unit price
quotations, the borrower will select the supplier or contractor based on
the lowest evaluated cost.
Sec. 1726.205 Multiparty lump sum quotations.
The borrower or its engineer must contact a sufficient number of
suppliers or contractors to assure competition and so that at least
three bids will be received. On the basis of written lump sum
quotations, the borrower will select the supplier or contractor based on
the lowest evaluated cost.
Sec. Sec. 1726.206-1726.249 [Reserved]
Subpart H_Modifications to RUS Standard Contract Forms
Sec. 1726.250 General.
RUS provides standard forms of contract for the procurement of
materials, equipment, and construction and for contract amendments and
various related forms for use by RUS borrowers. See Sec. 1726.304 for a
listing of these forms and how to obtain them. The standard forms of
contract shall be used by the borrowers in accordance with the
provisions of this part. RUS will give prior approval to certain
modifications to these forms without changing the applicable
requirements for RUS approval. Such approved modifications are set forth
in this subpart. These are the only modifications given prior RUS
approval.
[69 FR 7109, Feb. 13, 2004]
Sec. 1726.251 Prior approved contract modification related to price
escalation on transmission equipment, generation equipment,
and generation construction contracts.
(a) General. Where the borrower encounters reluctance among
manufacturers, suppliers, and contractors to bid a firm price on
transmission equipment or generation equipment, materials or
construction, modifications may be made in the RUS standard form of
contracts. These modifications, if applicable, may include, as an
alternative to the standard form, provisions for adjusting a base price
either upward or downward as determined by changes in specified indexes
between the time of the bid and the time the work is performed or
materials are procured by the contractor for such work. A large number
of labor and materials indexes are published monthly by the Bureau of
Labor Statistics (BLS). The borrower (acting through its engineer, if
applicable) will select the indexes for the particular item to be used
in the price adjustment clause. Suppliers'
[[Page 287]]
corporate indexes may not be used. Labor and materials indexes are
reported in the BLS's monthly publications entitled ``Employment and
Earnings'' and ``Producer Prices and Price Indexes.'' These publications
may be ordered through the Superintendent of Documents, U.S. Government
Printing Office, Washington, DC 20402, or any of the BLS regional
offices.
(b) Material and equipment contracts. The approved provisions needed
to reflect the modifications to provide for price escalation in the
material or equipment contract forms for generation facilities are as
follows:
(1) Insert new paragraphs in the Notice and Instructions to Bidders
as follows:
``Proposals are invited on the basis of firm prices (or prices with
a stated maximum percentage escalation) or on the basis of nonfirm
prices to be adjusted as provided for below or on both bases. The owner
may award the contract on either basis.
Nonfirm prices. The prices are subject to adjustment upward or
downward based on change in the Bureau of Labor Statistics labor and
material indexes.
A proportion of ---- percent [the borrower will enter the
appropriate percentage amount] of the contract price shall be deemed to
represent labor cost and shall be adjusted based on changes in the
Bureau of Labor Statistics, Average Hourly Earnings Rate---- [the
borrower will enter the appropriate BLS index] from the month in which
the bids are opened to the month in which the labor is incorporated in
the equipment or materials. The adjustment for labor costs shall be
obtained by applying the percentage of increase or decrease in such
index, calculated to the nearest one-tenth of one percent, to the
percentage of the contract prices deemed to represent labor costs. A
portion of ---- percent [the borrower will enter the appropriate
percentage amount] of the contract price shall be deemed to represent
material costs and shall be adjusted based on changes in the Bureau of
Labor Statistics, material index ---- [the borrower will enter the
appropriate BLS index] for the period and in a manner similar to the
labor cost adjustment.''
(2) Insert the following in the contract documents under the
``Proposal'' section:
``Firm Price $--------
Nonfirm Price $--------''
(3) For equipment that uses a large quantity of insulating oil, the
borrower may insert the following in the contract documents under the
``Proposal'' section:
``The price for insulating oil shall be adjusted upward or downward
based on the change in the Bureau of Labor Statistics Refined Petroleum
Rate (057) from the month in which the bids are opened to the month in
which the oil is purchased by the equipment supplier. Contracts shall be
evaluated based on an estimated cost of ---- cents per gallon [the
borrower will enter the appropriate cost] for oil. Such adjustment, if
any, shall not change the contract amount for purpose of applying any
other adjustments to the contract prices.''
(c) Construction contracts. The approved provisions needed to
reflect the modifications to provide for price escalation in the
construction contract forms for generation facilities are as follows:
(1) Insert new paragraphs in the ``Notice and Instructions'' to
Bidders as follows:
``Proposals are invited on the basis of firm prices (or prices with
a stated maximum percentage escalation) or on the basis of nonfirm
prices to be adjusted as provided for below or on both bases. The owner
may award the contract on either basis.
Nonfirm Prices--The prices are subject to adjustment upward or
downward based on changes in the Bureau of Labor Statistics labor and
material indexes.
A proportion of ---- percent [the borrower will enter the
appropriate percentage amount] of the contract price shall be deemed to
represent shop labor costs and shall be adjusted based on changes in the
Bureau of Labor Statistics, Average Hourly Earnings Rate ---- [the
borrower will enter the appropriate BLS index] from the month in which
bids are opened to the month in which the work is accomplished. The
adjustment for shop labor costs shall be obtained by applying the
percentage increase or decrease in such index, to the percentage of each
partial payment deemed to represent shop labor costs. A portion of ----
percent [the borrower will enter the appropriate percentage amount] of
the contract prices shall be deemed to represent material costs and
shall be adjusted based on changes in the Bureau of Labor Statistics,
Producer Price Index, ---- [the borrower will enter the appropriate BLS
index] for the period and in a manner similar to the shop labor costs
adjustment. A portion of ---- percent [the borrower will enter the
appropriate percentage amount] of the contract price shall be deemed to
represent field labor costs and
[[Page 288]]
shall be adjusted based on changes in the Bureau of Labor Statistics,
Average Hourly Earnings Rate ---- [the borrower will enter the
appropriate BLS index], for the period and in a manner similar to the
shop labor costs adjustment.''
(2) Insert the following in the contract documents under the
``Proposal'' section:
``Firm Price $--------
Nonfirm Price $--------''
Sec. 1726.252 Prior approved contract modification related to
liability for special and consequential damages.
This section applies only to transmission equipment purchases and
generation contracts. Where the borrower anticipates difficulty in
obtaining responsive bids on RUS standard contract forms due to a lack
of limitation with respect to special and consequential damages, and
where the borrower believes that such a modification will encourage
competition through the receipt of an alternative bid which limits the
bidder's liability for special and consequential damages, the borrower
may make the following approved phrase modifications in the RUS standard
contract form on which the borrower solicits bids:
(a) Insert new paragraphs in the ``Notice and Instructions to
Bidders'' as follows:
``Proposals are invited on the basis of alternative Liability Clause
Numbers 1 and 2. The Owner will determine on which Liability Clause
basis the award will be made. Any other liability clauses in the
proposal or any other modifications will be considered not responsive
and unacceptable. These Liability Clauses are defined as follows:
Liability Clause Number 1. This will include unmodified all of the
standard terms and conditions of the form of contract furnished by the
Owner and attached hereto.
Liability Clause Number 2. This will include the following
paragraph, in addition to all of the standard terms and conditions,
otherwise unmodified, of the form of contract furnished by the Owner and
attached hereto:
`Except for the Bidder's willful delay or refusal to perform the
contract in accordance with its terms, the Bidder's liability to the
Owner for special or consequential damages on account of breach of this
contract shall not exceed in total an amount equal to ---- percent [the
borrower will insert an appropriate percentage between 0 and 100
percent, inclusive] of the contract price.' ''
(b) Insert the following in the contract documents under the
``Proposal'' section:
``Price $ (Based on Liability Clause 1)--------
Price $ (Based on Liability Clause 2)--------''
(c) Insert the following in the acceptance section of the standard
contract form:
``This contract is based on Liability Clause Number--------.''
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004]
Sec. 1726.253 Prior approved contract modification related to
alternative bid provision for payment to contractor for bulk
purchase of materials.
When construction is to be performed over an extended period of
time, but large quantities of material are to be purchased by the
contractor at the beginning of the project (e.g., cable for URD
installations), the borrower may allow alternative bids providing for
payment to the contractor of 90 percent of the cost of such materials
within 30 days of delivery of those materials at the job site. The
borrower will retain the right to award the contract with or without the
alternative payment provision, however, the contract still must be
awarded on the basis of the lowest evaluated responsive bid for the
alternative accepted.
Sec. 1726.254 [Reserved]
Sec. 1726.255 Prior approved contract modifications related to
indemnification.
(a) As an alternative to the indemnification provision required in
RUS standard construction contract forms in those jurisdictions
requiring specific language concerning the requirement that the
indemnitor indemnify the indemnitee for the indemnitee's own negligence,
the borrower may add the words ``otherwise this provision shall
[[Page 289]]
apply to any alleged negligence or condition caused by the Owner'' so
that the first paragraph reads as follows:
``i. To the maximum extent permitted by law, Bidder shall defend,
indemnify, and hold harmless Owner and Owner's directors, officers, and
employees from all claims, causes of action, losses, liabilities, and
expenses (including reasonable attorney's fees) for personal loss,
injury, or death to persons (including but not limited to Bidder's
employees) and loss, damage to or destruction of Owner's property or the
property of any other person or entity (including but not limited to
Bidder's property) in any manner arising out of or connected with the
Contract, or the materials or equipment supplied or services performed
by Bidder, its subcontractors and suppliers of any tier. But nothing
herein shall be construed as making Bidder liable for any injury, death,
loss, damage, or destruction caused by the sole negligence of Owner,
otherwise this provision shall apply to any negligence or condition
caused by the Owner.''
(b) As an alternative to the indemnification provision required in
RUS standard construction contract forms in those jurisdictions that
have a legal prohibition against one party indemnifying another for the
other's negligence, the borrower may replace the words ``defend,
indemnify, and hold harmless'' with the words `` shall pay on behalf
of'' so that the first paragraph reads as follows:
``i. To the maximum extent permitted by law, Bidder shall pay on
behalf of Owner and Owner's directors, officers, and employees from all
claims, causes of action, losses, liabilities, and expenses (including
reasonable attorney's fees) for personal loss, injury, or death to
persons (including but not limited to Bidder's employees) and loss,
damage to or destruction of Owner's property or the property of any
other person or entity (including but not limited to Bidder's property)
in any manner arising out of or connected with the Contract, or the
materials or equipment supplied or services performed by Bidder, its
subcontractors and suppliers of any tier. But nothing herein shall be
construed as making Bidder liable for any injury, death, loss, damage,
or destruction caused by the sole negligence of Owner, otherwise this
provision shall apply to any negligence or condition caused by the
Owner.''
(c) If the alternative indemnification provision in paragraph (a) or
(b) of this section is chosen by the borrower, the language of paragraph
(a) or (b) of this section would be inserted in lieu of paragraph (i) of
the section indicated in the RUS standard construction contract forms as
follows:
(1) RUS Form 198, Equipment Contract, article IV, section 1(d).
(2) RUS Form 200, Construction Contract--Generating, article IV,
section 1(d).
(3) RUS Form 257, Contract to Construct Buildings, article IV,
section 1(d).
(4) RUS Form 786, Electric System Communications and Control
Equipment Contract, article IV, section 1(d).
(5) RUS Form 790, Electric System Construction Contract--Non-Site
Specific Construction, article IV, section 1(g).
(6) RUS Form 830, Electric System Construction Contract--Project
Construction, article IV, section 1(g).
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004]
Sec. Sec. 1726.256-1726.299 [Reserved]
Subpart I_RUS Standard Forms
Sec. 1726.300 Standard forms of contracts for borrowers.
(a) General. The standard loan agreement between RUS and its
borrowers provides that, in accordance with applicable RUS regulations
in this chapter, the borrower shall use standard forms of contract
promulgated by RUS for construction, procurement, engineering services,
and architectural services financed by a loan made or guaranteed by RUS.
(See section 5.16 of appendix A to subpart C of part 1718 of this
chapter.) This subpart prescribes RUS procedures in promulgating
standard contract forms and identifies those forms that borrowers are
required to use.
(b) Contract forms. RUS promulgates standard contract forms,
identified in the List of Required Contract Forms, Sec. 1726.304(c),
that borrowers are required to use in accordance with the provisions of
this part. In addition, RUS promulgates standard contract forms
contained in Sec. 1726.304(d) that the borrowers may but are not
required to use in the construction of their electric systems. Borrowers
are not required to
[[Page 290]]
use these guidance contract forms in the absence of an agreement to do
so.
[63 FR 58286, Oct. 30, 1998]
Sec. 1726.301 Borrower contractual obligations.
(a) Loan agreement. As a condition of a loan or loan guarantee under
the Rural Electrification Act, borrowers are normally required to enter
into RUS loan agreements pursuant to which the borrower agrees to use
RUS standard forms of contracts for construction, procurement,
engineering services and architectural services financed in whole or in
part by the RUS loan. Normally, this obligation is contained in section
5.16 of the loan contract. To comply with the provisions of the loan
agreements as implemented by this part, borrowers must use those forms
of contract (hereinafter sometimes called ``listed contract forms'')
identified in the List of Required Contract Forms, Sec. 1724.304(c).
(b) Compliance. If a borrower is required by this part or by its
loan agreement with RUS to use a listed standard form of contract, the
borrower shall use the listed contract form in the format available from
RUS, either paper or electronic format. Exact electronic reproduction is
acceptable. The approved RUS standard forms of contract shall not be
retyped, changed, modified, or altered in any manner not specifically
authorized in this part or approved by RUS in writing on a case-by-case
basis. Any modifications approved by RUS on a case-by-case basis must be
clearly shown so as to indicate the modification difference from the
standard form of contract.
(c) Amendment. Where a borrower has entered into a contract in the
form required by this part, no change may be made in the terms of the
contract, by amendment, waiver or otherwise, without the prior written
approval of RUS.
(d) Waiver. RUS may waive for good cause, on a case by case basis,
the requirements imposed on a borrower pursuant to this part. Borrowers
seeking a waiver by RUS must provide RUS with a written request
explaining the need for the waiver. Waiver requests should be made prior
to issuing the bid package to bidders.
(e) Violations. A failure on the part of the borrower to use listed
contracts as prescribed in this part is a violation of the terms of its
loan agreement with RUS and RUS may exercise any and all remedies
available under the terms of the agreement or otherwise.
[63 FR 58286, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004]
Sec. 1726.302 Notice and publication of listed contract forms.
(a) Notice. Upon initially entering into a loan agreement with RUS,
borrowers will be provided with all listed contract forms. Thereafter,
new or revised listed contract forms promulgated by RUS, including RUS
approved exceptions and alternatives, will be sent by regular or
electronic mail to the address of the borrower as identified in its loan
agreement with RUS.
(b) Availability. Listed standard forms of contract are available
from: Rural Utilities Service, Program Development and Regulatory
Analysis, U.S. Department of Agriculture, Stop 1522, 1400 Independence
Avenue, SW., Washington DC 20250-1522, telephone number (202) 720-8674.
The listed standard forms of contract are also available on the RUS Web
site at: http://www.usda.gov/rus/electric/forms/index.htm. The listed
standard forms of contract can be found in Sec. 1724.304(c), List of
Required Contract Forms.
[63 FR 58287, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004]
Sec. 1726.303 Promulgation of new or revised contract forms.
RUS may, from time to time, undertake to promulgate new contract
forms or revise or eliminate existing contract forms. In so doing, RUS
shall publish notice of rulemaking in the Federal Register announcing,
as appropriate, a revision in, or a proposal to amend Sec. 1726.304,
List of Electric Program Standard Contract Forms. The amendment may
change the existing identification of a listed contract form; for
example, changing the issuance date of a listed contract form or by
identifying a new required contract form. The notice of rulemaking will
describe the new standard contract form or the substantive change in the
listed contract form, as the case may be, and the
[[Page 291]]
issues involved. The standard contract form or relevant portions thereof
may be appended to the supplementary information section of the notice
of rulemaking. As appropriate, the document shall provide an opportunity
for interested persons to provide comments. A copy of each such Federal
Register document will be sent by regular or electronic mail to all
borrowers.
[63 FR 58287, Oct. 30, 1998]
Sec. 1726.304 List of electric program standard contract forms.
(a) General. This section contains a list of RUS electric program
standard contract forms. Paragraph (c) of this section contains the list
of required contract forms, i.e., those forms of contracts that
borrowers are required to use by the terms of their RUS loan agreements
as implemented by the provisions of this part. Paragraph (d) of this
section sets forth the list of guidance contract forms, i.e., those
forms of contracts provided as guidance to borrowers in the construction
of their systems. See Sec. 1726.302(b) for availability of these forms.
(b) Issuance date. Where required by this part to use a standard
form of contract in connection with RUS financing, the borrower shall
use that form identified by issuance date in the List of Required
Contract Forms in paragraph (c) of this section, as most recently
published as of the date the borrower issues the bid package to bidders.
(c) List of required contract forms.
(1) RUS Form 168b, Rev. 2-04, Contractor's Bond. This form is used
to obtain a surety bond and is used with RUS Forms 200, 257, 786, 790,
and 830.
(2) RUS Form 168c, Rev. 2-04, Contractor's Bond (less than $1
million). This form is used in lieu of RUS Form 168b to obtain a surety
bond when contractor's surety has accepted a Small Business
Administration guarantee.
(3) RUS Form 187, Rev. 2-04, Certificate of Completion, Contract
Construction. This form is used for the closeout of RUS Forms 200, 257,
786, and 830.
(4) RUS Form 198, Rev. 4-04, Equipment Contract. This form is used
for equipment purchases.
(5) RUS Form 200, Rev. 2-04, Construction Contract--Generating. This
form is used for generating plant construction or for the furnishing and
installation of major items of equipment.
(6) RUS Form 213, Rev. 2-04, Certificate (``Buy American''). This
form is used to document compliance with the ``Buy American''
requirement.
(7) RUS Form 224, Rev. 2-04, Waiver and Release of Lien. This form
is used for the closeout of RUS Forms 198, 200, 257, 786, 790, and 830.
(8) RUS Form 231, Rev. 2-04, Certificate of Contractor. This form is
used for the closeout of RUS Forms 198, 200, 257, 786, 790, and 830.
(9) RUS Form 238, Rev. 2-04, Construction or Equipment Contract
Amendment. This form is used for amendments.
(10) RUS Form 254, Rev. 2-04, Construction Inventory. This form is
used for the closeout of RUS Form 830. Minor electronic modifications
are acceptable for RUS Form 254.
(11) RUS Form 257, Rev. 2-04, Contract to Construct Buildings. This
form is used to construct headquarters buildings and other structure
construction.
(12) RUS Form 307, Rev. 2-04, Bid Bond. This form is used to obtain
a bid bond.
(13) RUS Form 786, Rev. 2-04, Electric System Communications and
Control Equipment Contract (including installation). This form is used
for delivery and installation of equipment for system communications.
(14) RUS Form 790, Rev. 2-04, Electric System Construction
Contract--Non-Site Specific Construction. This form is used for limited
distribution construction accounted for under work order procedure.
(15) RUS Form 792b, Rev. 2-04, Certificate of Construction and
Indemnity Agreement. This form is used for the closeout of RUS Form 790.
(16) RUS Form 830, Rev. 2-04, Electric System Construction
Contract--Project Construction. This form is used for distribution and
transmission line project construction.
(d) List of guidance contract forms. RUS does not currently publish
any guidance forms for electric borrowers.
[63 FR 58287, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004; 69
FR 52595, Aug. 27, 2004]
[[Page 292]]
Sec. Sec. 1726.305-1726.399 [Reserved]
Subpart J_Contract Closeout
Sec. 1726.400 Final contract amendment.
As needed, a final contract amendment will be prepared and processed
in accordance with Sec. 1726.24(b) prior to or in conjunction with the
closeout of the contract.
Sec. 1726.401 Material contract closeout.
(a) Delivery inspection. The borrower (acting through its engineer,
if applicable) will verify that all materials are delivered in proper
quantities, in good condition, and in compliance with applicable
specifications.
(b) Closeout documents. The borrower (acting through its engineer,
if applicable) will obtain from the supplier a ``Buy American''
certificate, RUS Form 213, any manufacturer's guarantee(s) and, if
applicable, a copy of RUS Form 224, Waiver and Release of Lien. Closeout
documents for materials contracts need not be submitted to RUS unless
specifically requested by RUS on a case by case basis.
(c) Final payment. Upon completion of the actions required under
paragraphs (a) and (b) of this section, the borrower shall make final
payment to the supplier in accordance with the provisions of the
material contract or written purchase order.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004]
Sec. 1726.402 Equipment contract closeout.
This section is applicable to contracts executed on RUS Form 198.
(a) Final inspection and testing of equipment. The borrower (acting
through its engineer, if applicable) will perform the final inspection
and testing of equipment as appropriate for the specific equipment. The
borrower (acting through its engineer, if applicable) will schedule such
inspection and testing at a time mutually agreeable to the borrower,
engineer, and the supplier or manufacturer. Within thirty (30) days
after completion of the inspection and testing, the borrower (acting
through its engineer, if applicable) will prepare a report of the
inspection and testing, obtain a copy of the report from the engineer,
and submit a copy to the supplier or manufacturer. This report must
include a detailed description of the methods of conducting the test(s),
observed data, comparison of guaranteed and actual performance, and
recommendations concerning acceptance. The borrower will obtain from the
engineer a written certification stating that the equipment has been
installed, placed in satisfactory operation and tested, and meets the
contract requirements. Where more than one-hundred and eighty (180) days
have elapsed since the delivery of the equipment and the equipment has
not been installed or tested, the contract may be closed out upon
certification by the engineer that the equipment has been inspected and
appears to be in accordance with the contract requirements.
(b) Closeout documents. (1) The borrower (acting through its
engineer, if applicable) will obtain the following executed documents:
(i) Certification by the project engineer in accordance with
paragraph (a) of this section.
(ii) All guarantees or warranties.
(iii) A ``Buy American'' certificate, RUS Form 213, from the
supplier or manufacturer.
(2) Closeout documents for materials contracts need not be submitted
to RUS unless specifically requested by RUS.
(c) Final payment. Upon completion of the actions required under
paragraphs (a) and (b) of this section, the borrower will make final
payment to the supplier or manufacturer in accordance with the
provisions of the equipment contract.
Sec. 1726.403 Project construction contract closeout.
This section is applicable to contracts executed on RUS Forms 200,
257, 786, and 830.
(a) Final test of equipment supplied under a construction contract.
If equipment is supplied under a construction contract, the borrower
(acting through its architect or engineer, if applicable) will perform
the final inspection and testing of equipment as appropriate for the
specific equipment. The borrower
[[Page 293]]
(acting through its architect or engineer, if applicable) will schedule
such inspection and testing at a time mutually agreeable to the
borrower, architect or engineer, and the contractor. Within thirty (30)
days after completion of the inspection and testing, the borrower
(acting through its architect or engineer, if applicable) will prepare a
report of the inspection and testing, obtain a copy of the report from
its architect or engineer, and submit a copy to the contractor. This
report must include a detailed description of the methods of conducting
the test(s), observed data, comparison of guaranteed and actual
performance, and recommendations concerning acceptance. The borrower
will obtain from its architect or engineer a written certification
stating that the equipment has been installed, placed in satisfactory
operation and tested, and meets the contract requirements. Where more
than one-hundred and eighty (180) days have elapsed since the delivery
of the equipment and the equipment has not been installed or tested, the
contract may be closed out upon certification by its architect or
engineer that the equipment has been inspected and appears to be in
accordance with the contract requirements.
(b) Final inspection of construction. The borrower will require the
contractor to notify the architect or engineer when construction is
complete. The borrower (acting through the architect or engineer, if
applicable) will schedule such final inspection at a time mutually
agreeable to the borrower, architect or engineer, contractor, and the
respective RUS General Field Representative (GFR), if the GFR has
notified the borrower or its architect or engineer of a desire to
observe the final inspection. The borrower (acting through its architect
or engineer, if applicable) will perform a final inspection of the
construction and notify the contractor of any required changes or
corrections.
(c) Closeout documents. (1) Upon satisfactory completion of
construction (including all changes and corrections by the contractor),
the borrower (acting through its architect or engineer, if applicable)
will obtain executed copies of the following documents:
(i) RUS Form 187, Certificate of Completion, Contract Construction.
(ii) RUS Form 213, ``Buy American'' certificate.
(iii) RUS Form 224, Waiver and Release of Lien, from each
manufacturer, supplier, and contractor which has furnished material or
services or both in connection with the construction.
(iv) RUS Form 231, Certificate of Contractor.
(v) RUS Form 254, Construction Inventory, including all supporting
documents, such as RUS Forms 254a-c, construction change orders, and
amendments for contracts executed on RUS Form 830.
(vi) Certification by the project architect or engineer in
accordance with Sec. 1726.403(a), if applicable.
(vii) Final design documents, as outlined in part 1724 of this
chapter.
(2) Distribution of closeout documents. (i) The borrower will retain
one copy of each of the documents identified in paragraph (c)(1) of this
section in accordance with applicable RUS requirements regarding
retention of records.
(ii) For contracts subject to RUS approval, the borrower will submit
the following closeout documents for RUS approval (through the GFR
except for generation projects):
(A) RUS Form 187, Certificate of Completion, Contract Construction.
(B) RUS Form 231, Certificate of Contractor.
(C) RUS Form 254, Construction Inventory, including all supporting
documents, such as RUS Forms 254a-c and construction change orders, for
contracts executed on RUS Form 830.
(iii) For contracts not subject to RUS approval, the closeout is not
subject to RUS approval. The borrower will send one copy of RUS Form 187
to RUS for information prior to or in conjunction with the applicable
RUS Form 219, Inventory of Work Orders. The remaining closeout documents
need not be sent to RUS unless specifically requested by RUS.
(d) Final payment. (1) The borrower will make final payment to the
contractor upon completion of approval of all closeout documents by the
parties to the contract, in accordance with the terms of the
construction contract.
[[Page 294]]
(2)(i) Upon receipt of final payment by the contractor, the borrower
will obtain from the contractor a certification of receipt of final
payment in the following form:
``The undersigned acknowledges receipt of the final contract payment
of $---- as satisfaction in full of all claims of the undersigned under
the construction contract between the undersigned and ---- (borrower),
dated as amended, and as complete performance by the latter of all
obligations to be performed by it pursuant thereto. The total amount
received under this contract is shown above.''
(ii) The certification in paragraph (d)(2)(i) of this section is to
be executed for the contractor by: the sole owner, a partner, or an
officer of the corporation. Where this certification is executed for the
corporation by a person other than the president, a certified copy of
the authorization from the corporate board must be included with the
certification. This certification is not a replacement for itemized
invoices.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004]
Sec. 1726.404 Non-site specific construction contract closeout.
This section is applicable to contracts executed on RUS Form 790.
(a) Final test of equipment supplied under a construction contract.
If equipment is supplied under a construction contract, the borrower
(acting through its engineer, if applicable) will perform the final
inspection and testing of equipment as appropriate for the specific
equipment. The borrower (acting through its engineer, if applicable)
will schedule such inspection and testing at a time mutually agreeable
to the borrower, its engineer, and the contractor. Within thirty (30)
days after completion of the inspection and testing, the borrower
(acting through its engineer, if applicable) will prepare a report of
the inspection and testing, obtain a copy of the report from its
engineer, and submit a copy to the contractor. This report must include
a detailed description of the methods of conducting the test(s),
observed data, comparison of guaranteed and actual performance, and
recommendations concerning acceptance. The borrower will obtain from the
engineer a written certification stating that the equipment has been
installed, placed in satisfactory operation and tested, and meets the
contract requirements. Where more than one-hundred and eighty (180) days
have elapsed since the delivery of the equipment and the equipment has
not been installed or tested, the contract may be closed out upon
certification by the engineer that the equipment has been inspected and
appears to be in accordance with the contract requirements.
(b) Final inspection of construction. The borrower will require the
contractor to notify its engineer when construction of a section of the
project is complete. The borrower (acting through its engineer, if
applicable) will schedule such final inspection at a time mutually
agreeable to the borrower, its engineer, contractor, and the respective
GFR, if the GFR has notified the borrower or its engineer of a desire to
observe the final inspection. The borrower (acting through its engineer,
if applicable) will perform a final inspection of the construction of
that section of the project and notify the contractor of any required
changes or corrections.
(c) Closeout documents. (1) Upon satisfactory completion of
construction of a section of the project (including all changes and
corrections by the contractor), the borrower (acting through its
engineer, if applicable) will obtain executed copies of the following
documents:
(i) RUS Form 792b, Certificate of Contractor and Indemnity Agreement
(ii) RUS Form 213, ``Buy American'' certificate.
(iii) Certification by the project engineer in accordance with
paragraph (a) of this section, if applicable.
(iv) Final design documents, as outlined in part 1724 of this
chapter.
(2) Distribution of closeout documents. (i) The borrower will retain
one copy of each of the documents identified in paragraph (c)(1) of this
section in accordance with applicable RUS requirements regarding
retention of records.
(ii) For contracts not subject to RUS approval, the closeout is not
subject to
[[Page 295]]
RUS approval and the closeout documents need not be sent to RUS unless
specifically requested by RUS.
[60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7111, Feb. 13, 2004]
Sec. 1726.405 Inventory of work orders (RUS Form 219).
Upon completion of the contract closeout, the borrower shall
complete RUS Form 219, Inventory of Work Orders, in accordance with part
1717, Post-Loan Policies and Procedures Common to Insured and Guaranteed
Electric Loans, of this chapter.