D-5200

WTR-4.OO ~ 22 1998

MEMORANDUM

To: Regional Director, PN, MP, LC, UC, GP

Attention: PN-3300, MIP-440, LC-4450, UC-284, GP-2100

From Act1n~Margaret Sibley ~

Director, Program Analysis Office

Subject: Guidance for Submitting a Request for a Variance from the 25-Year Term of

Contract Policy

The purpose ofthis memorandum is to clarify the procedure forrequesting a variance from the

25-year termof contract policy.

In a memorandum dated May 19, 1993, subject, “Policy for Terms ofContracts,” the policy

limiting new orrenewed long-term contracts to 25-year terms was established. Then on

September 11, 1997, a memorandum also subject “Policy forTerms ofContract,” was provided

to all regions. This memorandum established the opportunity to request a variance from the

25-year termof contract policy.

In summary, the September 1997 memorandum provides that fornon-water related contracts,

payment capacity will lay the foundation to determine the length ofthe repayment period.

Therefore, ifit is determined that according to a contractor’s payment capacity that the obligation

camiot be repaid unless the term ofcontract is more than 25 years, and no other funds are

available, then a contract for more than 25 years is justified. For water related contracts,

contractors have the opportunity to contract for more than 25 years ifthey are willing to

implement measures that will improve project efficiency and/or operational flexibility. If

Reclamation accepts these measures, the contractor must then commit to them in their contract.

In the attached memorandum dated Febmary 24, 1998, the Commissioner delegated the authority

to approve variances forterms ofcontracts greater than 25 years to this office. The following is

to clarify the procedure to request a variance and what information will be necessary to

accompany such a request.

First, authority shall be requested to enter negotiations for a term longer than 25 years. This

request is made to the Commissioner and may be accomplished either at the time the original

basis ofnegotiation (BON) is submitted, or as an amendment to a BON. Ifyou are certain of

conditions that will be committed to in the contract, these may be addressed in the BON for
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approval and the following step may be omitted. However, deviation from the approval will

require that the next step be followed.

During orfollowing negotiations, the second step is to submit a -equest for approval ofthe

negotiated terms that would justify a longer termofcontract. This request will delineate all the

quantifiable measures the contractor is willing to commit to in the contract, explain how project

efficiency and/oroperational flexibility will be benefitted from such measures being

implemented, and how the United States will benefit by allowing a longer term ofcontract.

To conclude, Reclamation’s policy remains that the maximum termof contract is 25 years.

However, to request a variance from the 25-year termofcontract policy, a two-step process shall

be followed. The first step is to request the authority to negotiate a longer termofcontract, and

the second step is to request approval for the quantifiable measure negotiated with the contractor.

Attachments

cc: Manager, Portland QR,~ Attention: LCA-lOOO

Manager, Yakima ~VA9Attention: UCA-1000

Manager, Boise [D,Atte i : SRA-1000

Manager, Grand Coulee(W~jAttention: GCP-lOOO

Manager, Folsom CA, Attention: CC-lOO

Manager, Fresno CA, Attention: SCC-lOO

Manager, Shasta Lake CA, Attention: NC-lOO

Manager, Kiamath Fall R~ Attention: KO-100

Manager, Carson Ci~~Attention: LO-lOG

Manager, Sacramento A Attention: CVO-100

Manager, Phoenix AZ, Attention: PxAO-1000

Manager, Yuma AZ, A ion: YAO-1000

Manager, Boulder City Attention: LCDFO-1000

Manager, Boulder City(NV9 Attention: BCOO-1000

Manager, Temecula CA’~ttention: SCAO-1000

Manager, Albuquerque NM, Attention: ALB-lOO

Manager, Grand Junction CO, Attention: WCN-CDeAngelis

Manager, Provo UT, Attention: PRO-lOO

Manager, Famiington NM, Attention: FCO-lOO

Manager, Salt LakeCity UT, Attention: UC-600

Manager, Billings MT, Attention: MT-lOO

Manager, Grand Island NE, Attention: NK-AM

Manager, Lovel,~d\CO, Attention: EC-lOO 1

Manager, Mills~ Attention: WY-100

Manager, Austin TX, Attention: TX- 100

Manager, Bismarck ND, Attention: DK-lOO

LI

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bc: W-1000, W-1500, W-6000, W-5000, D-5200

WBR:SKersteins/SSimons:dh: 5/22/98:(303)445-2894

P :\Current\5200\Contract\Policy\25Yr598