1040

§ 1788.50 7 CFR Ch. XVII (1–1–00 Edition)

§ 1788.50 Acceptable sureties.

Surety companies providing contractors’ bonds shall be listed as acceptable

sureties in the U.S. Department of

Treasury Circular No. 570. The circular

is maintained through periodic publication in the FEDERAL REGISTER and is

available on the Internet under ftp://

ftp.fedworld.gov/pub/tel/sureties.txt,

and on the Department of the Treasury’s computer bulletin board at 202–

874–6817.

§§ 1788.51–1788.53 [Reserved]

§ 1788.54 Compliance with contracts.

It is the responsibility of the borrower to determine, before the commencement of work, that the engineer,

architect, and the contractor have insurance that complies with their contract requirements.

§ 1788.55 Providing RUS evidence.

When RUS shall specifically so direct, the borrower shall also require

the engineer, the architect, and the

contractor, to forward to RUS evidence

of compliance with their contract representative of the insurance company

and include a provision that no change

in or cancellation of any policy listed

in the certificate will be made without

the prior written notice to the borrower and to RUS.

PART 1789—USE OF CONSULTANTS

FUNDED BY BORROWERS

Subpart A—Policy and Procedures With

Respect to Consultant Services Funded

by Borrowers—General

Sec.

1789.150 Purpose.

1789.151 Definitions.

1789.152 Policy.

1789.153 Borrower funding.

1789.154 Eligible borrowers.

1789.155 Approval criteria.

1789.156 Proposal procedure.

1789.157 Consultant contract.

1789.158 Implementation.

1789.159 Contract administration.

1789.160 Access to information.

1789.161 Conflicts of interest.

1789.162 Indemnification agreement.

1789.163 Waiver.

1789.164—1789.165 [Reserved]

Subpart B—Escrow Account Funding and

Payments

1789.166 Terms and conditions of funding

agreement.

1789.167 Terms and conditions of escrow

agreement.

1789.168—1789.175 [Reserved]

AUTHORITY: 7 U.S.C. 901–950b; Pub. L. 103–

354, 108 Stat. 3178 (7 U.S.C. 6941 et seq.).

SOURCE: 61 FR 48606, Sept. 16, 1996, unless

otherwise noted.

Subpart A—Policy and Procedures

With Respect to Consultant

Services Funded by Borrowers—General

§ 1789.150 Purpose.

This part sets forth policies and the

procedures for implementing subsection (c) of section 18 of the Rural

Electrification Act of 1936, as amended

(7 U.S.C. 901 et seq.)(RE Act) which authorizes the Rural Utilities Service

(RUS) to use the services of Consultants funded by the Borrowers to facilitate timely action on Applications by

Borrowers for financial assistance and

other approvals.

§ 1789.151 Definitions.

As used in this part:

Administrator means the Administrator of the Rural Utilities Service

(RUS).

Application means a request for financial assistance under the RE Act or

such other approvals as may be required of the RUS pursuant to the

terms of outstanding loan or security

instruments or otherwise.

Borrower means any organization

which has an outstanding loan(s) made

or guaranteed by RUS or its predecessor agency, the Rural Electrification Administration (REA) under the

RE Act or any organization which has

submitted or submits an Application

before RUS.

Consultant means a person or firm

which has been retained pursuant to

this subpart under a contract to provide financial, legal, engineering, environmental, or other technical advice

and services.

Consultant Contract means a contract

for the performance of consulting services for RUS, to be paid using funds

1041

Rural Utilities Service, USDA § 1789.153

provided by a Borrower, which may be

in the form of a Retainer Contract,

purchase order, or other form as may

be appropriate.

Escrow Account means an account established pursuant to §1789.158.

Escrow Agreement means an agreement, between a Borrower, a Consultant and a Third-party Commercial Institution, meeting the requirements of

§1789.167.

Final Invoice means the closing Invoice prepared for a given Task Order.

Financial Consultant means a Consultant retained pursuant to this part

to provide financial advisory services.

Funding Agreement means an agreement, between a Borrower and a Consultant, providing for the Borrower to

fund the costs of a Task Order and otherwise meeting the requirements of

§1789.166.

Indemnification Agreement means an

agreement by a Borrower meeting the

requirements of §1789.162.

Invoice means an invoice prepared by

a Consultant pursuant to the terms of

a Consultant Contract.

Legal Consultant means any Consultant retained pursuant to this part to

provide legal services to RUS.

Notice of Proposal to Fund means a notice meeting the requirements of

§1789.156 provided to RUS by the Borrower.

Organizational conflict of interest

means that because of other activities

or relationships with other persons, a

person is unable or potentially unable

to render impartial assistance or advice to the Government, or the person’s

objectivity in performing the contract

work is or might be otherwise impaired, or a person has an unfair competitive advantage.

Retainer Contract means a Consultant

Contract providing for a minimum required payment to a Consultant irrespective of whether services are utilized by RUS thereunder.

Task Order means a written request

for consultant services pursuant to the

terms of a Consultant Contract.

Third-party Commercial Institution

means a commercial financial institution mutually acceptable to the Borrower and the Consultant.

§ 1789.152 Policy.

(a) As provided in this subpart, RUS

may, at its discretion, use the services

of Consultants funded by a Borrower

where such services will facilitate

timely action on an Application by

such Borrower for financial assistance

or other approvals. Such Consultants

may provide financial, legal, engineering, environmental or other technical

advice and services in connection with

the review of an Application.

(b) With the approval of RUS, a Borrower may fund the cost of consulting

services in connection with the review

by RUS of an Application by such Borrower. Such funding shall be provided

pursuant to the terms of a Funding

Agreement between the Borrower and

the Consultant designated by RUS.

(c) RUS may not, without the consent of the Borrower, require, as a condition of processing any Application

for approval, that the Borrower agree

to pay the costs of a Consultant hired

to provide services to RUS.

(d) The government shall retain sole

discretion in the selection of Consultants to provide services to RUS and the

form of contract utilized. RUS may either use the services of one or more

Consultants retained under Retainer

Contracts or the government may elect

to retain a Consultant not otherwise on

retainer. The government shall have

sole discretion to prescribe terms and

conditions of Consultant Contracts.

The Borrower may bring considerations to the attention of the government which the Borrower deems pertinent to the selection process.

(e) RUS shall retain sole discretion

as to whether to further pursue use of

an outside consultant for the relevant

application in the event the Borrower

does not enter into the agreements referenced in §1789.158(c)(3)(iii) within 60

days of the government providing to

the Borrower the information set forth

in §1789.158(c)(3).

§ 1789.153 Borrower funding.

Borrowers shall use their general

funds for the purposes of funding consultant services hereunder. Borrowers

may not use the proceeds of loans made

or guaranteed under the RE Act for

costs incurred by Borrowers pursuant

1042

§ 1789.154 7 CFR Ch. XVII (1–1–00 Edition)

to the funding of consultant services

for RUS.

§ 1789.154 Eligible borrowers.

All Borrowers are eligible to fund

consultant services under this part.

§ 1789.155 Approval criteria.

RUS will consider approving the use

of consultant services funded by a Borrower on a case by case basis taking

into account, among other matters, the

following:

(a) Whether such services are required to facilitate timely action on a

Borrower’s Application. RUS shall determine what represents timely action

with respect to each Application considering, among other matters, the review period normally required for such

projects by RUS and other lenders and

the consequences to the Borrower of

adjusting the review period.

(b) The availability of staff resources, the priorities of other projects

then before RUS, and the efficiencies

to be realized from the use of consultant services.

(c) Whether it is in the best interest

of RUS to use Borrower-funded Consultants. Certain types of projects,

such as those involving issues of program-wide significance, may not be

well suited for the use of Borrower

funded Consultants.

§ 1789.156 Proposal procedure.

(a) In the event RUS determines that

consideration should be given to the

use of a Borrower-funded consultant in

connection with the review of an Application, the RUS Regional Director or

the Director of the Power Supply Division, as appropriate, will discuss with

the Borrower the nature of the Application and the projected review period

required of RUS. If RUS concludes that

the projected review period will not result in timely action on the Application, and after being so notified in

writing by RUS the Borrower wishes to

fund consultant services to facilitate

RUS review, the Borrower shall submit

to the same Director a funding proposal. The proposal shall set forth the

following:

(1) Identification in the heading or

caption as a Notice of Proposal to Fund

Consulting Services;

(2) Borrower’s REA/RUS designation;

(3) Borrower’s legal name and address;

(4) A description of the Application,

critical issues and concerns relating to

the Application, time deadlines, and

the consequences of any delays in RUS

review;

(5) A description of the consulting

service(s) that would facilitate timely

RUS review of the Application; and

(6) Such additional documents and

information as RUS may request.

(b) RUS will review the Notice of

Proposal to Fund and any additional

information RUS deems relevant in determining whether to proceed with procuring Borrower funded Consultants. If

RUS proposes to utilize Legal Consultants, RUS must obtain the concurrence

of the Office of General Counsel (OGC)

of the Department of Agriculture. RUS

will notify the Borrower in writing of

its determination.

§ 1789.157 Consultant contract.

(a) The Federal Acquisition Regulation (FAR), 48 CFR Ch. 1, and the Agriculture Acquisition Regulation

(AGAR), 48 CFR Ch. 4, shall apply to all

Consultant Contracts entered into pursuant to this part except as provided in

this section.

(1) Contracts for Legal Consultants

shall provide for a technical representative from OGC.

(2) All Consultant Contracts shall

provide for an escrow account funding

mechanism pursuant to this part and

for the government’s sole discretion in

determining whether payments are to

be made from the Escrow Account to

the Consultant.

(3) All Consultant Contracts shall

provide that payment of all obligations

for work performed thereunder must be

satisfied by amounts available in the

Escrow Account; with the exception of

the annual retainer fee, if any, Consultants shall not be entitled to any

payments from the government.

(b) The provisions of paragraph (a) of

this section shall be given prominent

emphasis in requests for proposals

issued under this part.

§ 1789.158 Implementation.

(a) Upon making a determination to

go forward with Borrower funding for

1043

Rural Utilities Service, USDA § 1789.161

consulting services, RUS shall initiate

a procurement request for a Consultant

to provide the services. The government may either contract with a Consultant on a case by case basis or elect

to use a Consultant pursuant to an outstanding Retainer Contract. The Borrower will not be informed of the Consultant selected until such time as the

government provides the information

set forth in paragraph (c)(3) of this section.

(b) If the government determines to

contract with a Consultant on a case

by case basis, the government shall notify the Borrower of the applicable procedures.

(c) If the government determines to

contract with a Consultant under an

outstanding Retainer Contract, the following procedures will normally apply:

(1) Pursuant to the terms of the contract, the government will prepare a

draft Task Order requesting consultant

services in connection with the review

of the Borrower’s Application. The

draft Task Order shall set forth for the

Consultant’s review and acceptance, a

description of the services to be provided and applicable time frames for

the provision of such services.

(2) The government will request that

the Consultant:

(i) Notify the government as to the

acceptability of the form and substance

of the draft Task Order;

(ii) Notify the government as to its

ability to provide a satisfactory conflict of interest certification consistent

with the requirements of the FAR (48

CFR ch. 1); and

(iii) Provide a cost estimate for the

draft Task Order.

(3) When the government is satisfied

with the response(s) received pursuant

to paragraph (c)(2) of this section, the

government shall promptly provide to

the Borrower:

(i) A copy of the draft Task Order

identifying the Consultant;

(ii) The Consultant’s cost estimate

for the draft Task Order; and

(iii) Contract information required to

enable the Borrower to develop a Funding Agreement, an Escrow Agreement

and an Indemnification Agreement (the

‘‘agreements’’).

(4) The Borrower shall develop and

submit to the government for approval

executed originals of:

(i) The agreements; and

(ii) A certified copy of a resolution of

the board of directors authorizing the

Borrower to enter into the agreements

and to take such other action as is necessary to effect the purposes of the

agreements.

(5) Upon receiving written RUS approval of the agreements and the form

and substance of the board resolution,

the Borrower shall:

(i) Establish and fund the Escrow Account; and

(ii) Provide written notice to the government of the Escrow Account number, the funding thereof, and such

other information as required pursuant

to the agreements.

(6) After the Borrower has funded the

Escrow Account, the government shall

issue Task Order(s) for consultant services in accordance with the terms and

conditions of the applicable Retainer

Contract.

§ 1789.159 Contract administration.

The government shall be solely responsible for the administration of a

Consulting Contract and shall have

complete control over the scope of the

Consultant’s work, the timetable for

performance, the standards to be applied in determining the acceptability

of deliverables and the approval of payment of Invoices.

§ 1789.160 Access to information.

The Borrower shall not have rights in

nor right of access to the work product

of the Consultant. All analyses, studies, opinions, memoranda, and other

documents and information provided

by the Consultant pursuant to a Consulting Contract may be released and

made available to the Borrower only

with the approval of RUS. This section

does not restrict release of information

by RUS pursuant to the Freedom of Information Act (5 U.S.C. 552(a)(2)) or

other legal process.

§ 1789.161 Conflicts of interest.

The standard for determining organizational conflicts of interest shall be as

set forth in the FAR subpart 9.5 (48

CFR part 9, subpart 9.5); however, the

1044

§ 1789.162 7 CFR Ch. XVII (1–1–00 Edition)

identification of the existence of an organizational conflict of interest may

be made by either the Administrator or

the cognizant Contracting Officer. In

the event an organizational conflict of

interest is determined to exist, the cognizant Contracting Officer shall take

the actions prescribed at FAR 9.504 (48

CFR 9.504) to attempt to avoid, neutralize or mitigate the conflict. Should

these actions be deemed by the Administrator and the Contracting Officer to

adequately resolve the conflict, the

contracting action with the offeror/

contractor may proceed. Should the

Administrator or the Contracting Officer determine that an organizational

conflict of interest still exists such

that contract award or other contracting action cannot be taken (award

of task/delivery order, etc.) the offeror/

contractor shall be so informed by the

Contracting Officer and be provided a

reasonable opportunity to respond in

accordance with FAR 9.504(e) (48 CFR

9.504(e)). After considering the contractor’s response, if it is found by both the

Administrator and Contracting Officer

to remedy the conflict of interest, the

contracting action may proceed. If the

Administrator and Contracting Officer

determine that the contractor’s response does not resolve the conflict of

interest, yet continuing with the contracting action with the offeror/contractor in question is considered in the

best interest of the United States, a

waiver in accordance with FAR 9.503

(48 CFR 9.503) may be executed. This

waiver shall be submitted under the

Contracting Officer’s signature and approved by the Administrator. The Administrator has been delegated Head of

Contracting Activity authority by the

USDA Senior Procurement Executive

solely for the purpose of waiver approval.

§ 1789.162 Indemnification agreement.

As a condition of approving Borrower

funding, the government will require

the Borrower to enter into an Indemnification Agreement, in form and substance satisfactory to RUS, providing

that the Borrower will indemnify and

hold harmless the government and any

officers, agents or employees of the

government from any and all liability,

including costs, fees, and settlements

arising out of, or in any way connected

with the payment of the Consultant’s

fee pursuant to the Consultant Contract. The Indemnification Agreement

may recognize, as a condition of liability thereunder, the rights of the borrower to prompt notice, to use of counsel of its own choosing, and to participation in any settlement of a claim

against which indemnification is

sought.

§ 1789.163 Waiver.

RUS may waive any requirement or

procedure of this subpart by determining that its application in a particular situation would not be in the

government’s interest, except that certain provision that the subject contracts are subject to the provisions of

the FAR (48 CFR ch. 1) and AGAR (48

CFR ch. 4).

§§ 1789.164—1789.165 [Reserved]

Subpart B—Escrow Account

Funding and Payments

§ 1789.166 Terms and conditions of

funding agreement.

Funding Agreements between the

Borrower and a Consultant shall be in

form and substance satisfactory to

RUS and provide for, among other matters, the following:

(a) Specific reference by number to

the applicable Consulting Contract entered into between the government and

the Consultant;

(b) Specific reference by number to

the applicable Task Order (where applicable);

(c) A brief description of the Application;

(d) A requirement that Invoices make

specific reference to:

(1) The applicable contract and Task

Order(s); and

(2) The Escrow Account from which

payment is to be made;

(e) A requirement that the Final Invoice for a Task Order be clearly identified as such;

(f) A description of the services to be

provided by the Consultant to RUS and

the applicable time frames for the provision of such services;

(g) Agreement that the Borrower

shall pay for the Consultant services

1045

Rural Utilities Service, USDA § 1792.101

provided to RUS under the applicable

contract through an Escrow Account

established pursuant to an Escrow

Agreement, the Consultant shall not

provide services to RUS under the applicable contract unless there are sufficient funds in the Escrow Account to

pay for such services, the Consultant

shall seek compensation for services

provided under the applicable contract

from, and only from, funds made available through the Escrow Account, and

the Consultant must submit all Invoices to the government for approval.

(h) A form of Escrow Agreement satisfactory to the Borrower, Consultant

and the designated Third-party Commercial Institution;

(i) A schedule setting forth when and

in what amounts the Borrower shall

fund the Escrow Account;

(j) Acknowledgment by the Consultant of the Indemnification Agreement

provided by the Borrower to the government; and

(k) The Funding Agreement shall not

be effective unless and until approved

in writing by RUS.

§ 1789.167 Terms and conditions of escrow agreement.

Escrow Agreements between and

among the Borrower, Consultant and

Third-party Commercial Institution

shall be in form and substance satisfactory to RUS and provide for, among

other matters, the following:

(a) Specific reference by number to

the applicable contract for services;

(b) Specific reference by number to

the applicable Task Order;

(c) Specific reference by number to

the Escrow Account into which funds

are to be deposited;

(d) Invoices to specifically identify

the applicable contract and Task

Order(s);

(e) Funds to be held in the Escrow

Account by the escrow agent until paid

to the Consultant pursuant to the government’s authorization;

(f) The Escrow Account to be closed

and all remaining funds remitted to

the Borrower after payment of the

Final Invoice, unless otherwise directed by the government;

(g) The government, the Consultant

and the Borrower to have the right to

be informed, in a timely manner and in

such form as they may reasonably request, as to the status of and activity

in the Escrow Account; and

(h) The Escrow Agreement shall not

be effective unless and until approved

in writing by RUS.

§§ 1789.168—1789.175 [Reserved]

PART 1792—COMPLIANCE WITH

OTHER FEDERAL STATUTES, REGULATIONS, AND EXECUTIVE ORDERS

Subparts A and B—[Reserved]

Subpart C—Seismic Safety of Federally

Assisted New Building Construction

Sec.

1792.101 General.

1792.102 Definitions.

1792.103 Design and construction standards

for seismic safety.

1792.104 Seismic safety certifications.

AUTHORITY: 7 U.S.C. 901 et seq.; 42 U.S.C.

7701 et seq.; Pub. L. 103–354, 108 Stat. 3178 (7

U.S.C. 6941 et seq.); E.O. 12699 (3 CFR, 1990

Comp., p. 269).

SOURCE: 58 FR 32437, June 10, 1993, unless

otherwise noted.

Subparts A and B—[Reserved]

Subpart C—Seismic Safety of Federally Assisted New Building

Construction

§ 1792.101 General.

(a) The Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.)

was enacted to reduce risks to life and

property through the establishment

and maintenance of an effective earthquake hazards reduction program (the

National Earthquake Hazards Reduction Program or NEHRP). The Federal

Emergency Management Agency

(FEMA) is designated as the agency

with the primary responsibilities to

plan and coordinate the NEHRP. This

program includes the development and

implementation of feasible design and

construction methods to make structures earthquake resistant. Executive

Order 12699 of January 5, 1990, Seismic

Safety of Federal and Federally Assisted or Regulated New Building Construction (3 CFR, 1990 Comp., p. 269),