250

§§ 1724.75–1724.99 7 CFR Ch. XVII (1–1–00 Edition)

for engineering services for consultation service on a retainer basis.

(9) RUS Form 459, Rev. 9–58, Engineering Service Contract—Power

Study. This form is used for engineering services for power studies.

[63 FR 58285, Oct. 30, 1998]

§§ 1724.75–1724.99 [Reserved]

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 Prior approved contract modifications related to RUS approval of contracts and amendments and modified bidding requirements.

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.

1726.404 Non-site specific construction contract closeout.

251

Rural Utilities Service, USDA § 1726.14

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

§§ 1726.1—1726.9 [Reserved]

§ 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.

§ 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.

§ 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.

§ 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.

§ 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.

‘‘Buy American’’ certificate means a

certification that the contractor has

252

§ 1726.14 7 CFR Ch. XVII (1–1–00 Edition)

complied with the ‘‘Buy American’’ requirement (see §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

§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 §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

§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 §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 §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.

Responsive bid means a bid with no

exceptions or non-minor errors or

253

Rural Utilities Service, USDA § 1726.22

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.

§ 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.

§ 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.

§ 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.

§ 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.

§ 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.

§ 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, Electric Standards and Specifications for Materials and Construction,

of this chapter, which is applicable regardless of the source of funding.) The

materials and equipment must be year

2000 compliant, as defined in 7 CFR

1710.112 (c).

[60 FR 10155, Feb. 23, 1995, as amended at 63

FR 51793, Sept. 29, 1998]

§ 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.

§ 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.

254

§ 1726.23 7 CFR Ch. XVII (1–1–00 Edition)

§ 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 §1726.16 and

§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.

§ 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 180, Construction Contract

Amendment, for any change or addition in a distribution line construction

contract. The borrower must use RUS

Form 238, Construction or Equipment

Contract Amendment, for any change

or addition in any other contract for

construction, or for materials 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]

255

Rural Utilities Service, USDA § 1726.35

§ 1726.25 Subcontracts.

The contractor or supplier may use

RUS Form 282, Subcontract, for subcontracts on construction, material or

equipment contracts. Subcontracts are

not subject to RUS approval and need

not be submitted to RUS unless specifically requested by RUS on a case by

case basis.

§ 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]

§ 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, 201,

203, 257, 764, 786, 790, 792, 830, or 831 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 Form 200, 201,

203, 257, 764, 786, 790, 792, 830, or 831 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]

§§ 1726.28—1726.34 [Reserved]

§ 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 §§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.

256

§ 1726.35 7 CFR Ch. XVII (1–1–00 Edition)

(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.

(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

§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

257

Rural Utilities Service, USDA § 1726.51

(3) No restriction has been placed on

the borrower’s right to assign the contract to RUS or its successors.

§ 1726.36 Documents subject to RUS

approval.

Unless otherwise indicated, the borrower shall make all contracts and

amendments that are subject to RUS

approval effective only upon RUS approval.

§ 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.

§§ 1726.38—1726.49 [Reserved]

Subpart B—Distribution Facilities

§ 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 173, Materials Contract, 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.

§ 1726.51 Distribution line construction.

(a) Contract forms. The borrower must

use RUS Form 201, 790, 792, 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, Distribution Line Extension Construction Contract (Labor and Materials), or RUS Form 792, Distribution

Line Extension Construction Contract

(Labor only) 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 or

792 for contracts, up to a cumulative

total of $250,000 or one percent of 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 (Labor and Materials), for all

other distribution line construction.

Where distribution lines are being constructed incidental to transmission

line construction, the borrower must

use RUS Form 831, Electric Transmission Construction Contract.

(3) The borrower must use RUS Form

201, Right-of-Way Clearing Contract,

for new distribution line construction

right-of-way clearing when done separately from work performed under RUS

Form 830.

(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.

258

§§ 1726.52—1726.74 7 CFR Ch. XVII (1–1–00 Edition)

(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.

(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.

§§ 1726.52—1726.74 [Reserved]

Subpart C—Substation and

Transmission Facilities

§ 1726.75 General.

As used in this part, ‘‘substations’’

includes substations, switching stations, metering points, and similar facilities.

§ 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 173, Materials Contract, 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.

§ 1726.77 Substation and transmission

line construction.

(a) Contract forms. (1) The borrower

must use RUS Form 764, Substation

Erection Contract, for construction of

substations, except for minor modifications or improvements. The borrower

must use RUS Form 831, Electric

Transmission Construction Contract

for projects where substations are incidental to transmission line construction and are to be constructed under

the same contract.

(2) The borrower must use RUS Form

831, Electric Transmission Construction Contract, for construction of

transmission lines (except for minor

modifications or improvements).

(3) The borrower must use RUS Form

203, Transmission System Right-ofWay Clearing Contract, for new transmission line construction right-of-way

clearing when right-of-way clearing is

performed separately from work performed under RUS Form 831.

(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

259

Rural Utilities Service, USDA § 1726.125

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

equipment, are subject to RUS approval.

§§ 1726.78—1726.124 [Reserved]

Subpart D—Generation Facilities

§ 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) Plans and specifications. The borrower shall obtain RUS approval of the

plans and specifications for generating

plant equipment prior to issuing invitations to bid for any contract subject

to RUS approval as determined under

this subpart and for any contract for

generating plant equipment or construction which will cost $1,500,000 or

more. Plans and specifications for

other equipment and construction contracts do not require RUS approval and

need not be submitted to RUS unless

specifically requested by RUS on a case

by case basis.

(c) 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.

(d) 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

260

§§ 1726.126—1726.149 7 CFR Ch. XVII (1–1–00 Edition)

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.

§§ 1726.126—1726.149 [Reserved]

Subpart E—Buildings

§ 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

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.

§§ 1726.151—1726.174 [Reserved]

Subpart F—General Plant

§ 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 173,

Material Contract, 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.

§ 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 §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.

261

Rural Utilities Service, USDA § 1726.201

(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

equipment, are subject to RUS approval.

§§ 1726.177—1726.199 [Reserved]

Subpart G—Procurement

Procedures

§ 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.

§ 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 §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

262

§ 1726.201 7 CFR Ch. XVII (1–1–00 Edition)

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,

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

263

Rural Utilities Service, USDA § 1726.202

in writing where required by subpart A

of this part.

§ 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 §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

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

264

§ 1726.203 7 CFR Ch. XVII (1–1–00 Edition)

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

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.

§ 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 §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

265

Rural Utilities Service, USDA § 1726.250

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) 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.

§ 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.

§ 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.

§§ 1726.206—1726.249 [Reserved]

Subpart H—Modifications to RUS

Standard Contract Forms

§ 1726.250 General.

RUS provides standard contract

forms for procurement of materials,

equipment, and construction, for contract amendments and subcontracts,

and various related forms for use by

266

§ 1726.251 7 CFR Ch. XVII (1–1–00 Edition)

RUS borrowers. See §1726.300 for a listing of these forms and how to obtain

them. The standard contract forms

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.

§ 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’

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 ll 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

Ratell [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

ll 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 ll [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 $llll

Nonfirm Price $llll’’

(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 ll 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

267

Rural Utilities Service, USDA § 1726.252

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 ll 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 ll [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 ll 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, ll [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 ll percent [the borrower will enter the appropriate percentage

amount] of the contract price shall be

deemed to represent field labor costs and

shall be adjusted based on changes in the Bureau of Labor Statistics, Average Hourly

Earnings Rate ll [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 $llll

Nonfirm Price $llll’’

§ 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 Clauses 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 Seller’s willful delay or refusal to perform the contract in accordance

with its terms, the Seller’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 ll

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)llll

Price $(Based on Liability Clause 2)llll’’

(c) Insert the following in the acceptance section of the standard contract

form:

‘‘This contract is based on Liability Clause

Numberllll.’’

(d) In RUS Form 200, the word ‘‘Bidder’’ would replace the word ‘‘Seller’’

in the Liability Clause in paragraph (a)

of this section.

268

§ 1726.253 7 CFR Ch. XVII (1–1–00 Edition)

§ 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.

§ 1726.254 Prior approved contract

modifications related to RUS approval of contracts and amendments and modified bidding requirements.

It will be necessary for borrowers to

make certain modifications to various

RUS contract forms to implement the

provisions of this part. If a RUS approved form of contract is required to

be used by this part and private bid

opening is permitted by this part, the

‘‘Notice and Instructions to Bidders’’ of

the contract form may be modified accordingly. Other modifications are

needed to indicate that certain provisions related to RUS approval are not

applicable under specified circumstances. These modifications are as

follows:

(a) RUS Form 173 Materials Contract.

No modifications.

(b) RUS Form 180 Construction Contract Amendment. No modifications.

(c) RUS Form 198 Equipment Contract.

For contracts NOT requiring approval

of the Administrator (in accordance

with subparts B through F of this part)

the applicable modifications are as follows:

(1) Change Section 5(e) of the ‘‘Equipment Contract’’ to read as follows:

‘‘(e) Each and all of the covenants and

agreements herein contained shall extend to

and be binding upon the successors and assigns of the parties hereto provided, however, the Seller shall not assign this contract

or any part hereof without approval in writing of the Purchaser, and further the Seller

shall not enter into any contract with any

person, firm or corporation for the performance of the Seller’s obligations hereunder, or

any part thereof, without the approval in

writing of the Purchaser.’’

(2) Delete Section 5(f) of the ‘‘Equipment Contract.’’

(d) RUS Form 200 Construction Contract—Generating. For contracts Not requiring approval of the Administrator

(in accordance with subparts B through

F of this part) the applicable modifications are as follows:

(1) Contractor’s Proposal, Article II,

Section 3(a), Sentence 2. Delete the

words ‘‘and the Administrator.’’

(2) Contractor’s Proposal, Article II,

Section 3(d), Sentence 2. Delete the

words ‘‘and approved by the Administrator 1’’ and the associated footnote.

(3) Contractor’s Proposal, Article VI,

Section 7. Change to read as follows:

‘‘Nonassignment of Contract. Except as

provided in Section 8 of this Article, the Bidder will not assign this Contract, or any interest in any funds that may become due

hereunder, or enter into any contract with

any person, firm or corporation, for the performance of the Bidder’s obligations hereunder, or any part hereof without the approval in writing of the Owner and the Surety or Sureties, if any.’’

(4) Contractor’s Proposal, Article VI.

Delete Section 10.

(5) Acceptance. Delete the words

‘‘Subject to the approval of the Administrator.’’

(e) RUS Form 201 Right-of-Way Clearing Contract. No modifications.

(f) RUS Form 203 Transmission System

Right-of-Way Clearing Contract. For

contracts Not requiring approval of the

Administrator (in accordance with subparts B through F of this part) the applicable modifications are as follows.

(1) Notice and Instructions to Bidders,

Section 8. Delete the words ‘‘and such

acceptance has been approved by the

Administrator.’’

(2) Contractor’s Proposal, Article II,

Section 1(a). Replace the word ‘‘Administrator’’ with the word ‘‘Owner’’ in

two places in the referenced section.

(3) Contractor’s Proposal, Article II,

Section 3(d), Sentence 1. Delete the

words ‘‘and with the approval of the

Administrator1’’ and the associated

footnote.

269

Rural Utilities Service, USDA § 1726.254

(4) Contractor’s Proposal, Article II,

Section 3(d), Sentence 3. Delete the

words ‘‘and approved by the Administrator2’’ and the associated footnote.

(5) Contractor’s Proposal, Article III,

Section 1. Delete the words ‘‘and the

Administrator’’ in five places in the

referenced section.

(6) Contractor’s Proposal, Article III,

Section 1(b). Replace the word ‘‘Administrator’’ with the word ‘‘Owner.’’

(7) Contractor’s Proposal, Article III,

Section 1(e). Replace the word ‘‘Administrator’’ with the word ‘‘Owner.’’

(8) Contractor’s Proposal, Article VI,

Section 1(d). Delete the words ‘‘and the

Administrator.’’

(9) Contractor’s Proposal, Article VI.

Delete Section 10.

(10) Acceptance. Delete the words

‘‘Subject to the approval of the Administrator.’’

(g) RUS Form 238 Construction or

Equipment Contract Amendment. If the

contract amendment does not require

RUS approval, in accordance with

§1726.24(b), the borrower may delete

from RUS Form 238 the following sentence:

‘‘(The Administrator of RUS is hereby authorized to approve this amendment either

in whole or in part and to delete such items

as do not meet his approval.)’’

(h) RUS Form 257 Contract to Construct

Buildings. No modifications.

(i) RUS Form 282 Subcontracts. The applicable modifications are as follows:

(1) Section 6, line 3. Delete the words

‘‘and the Administrator of the Rural

Utilities Service (hereinafter called the

Administrator).’’

(2) Section 7, line 2. Change Section 7,

line 2 to read as follows:

‘‘approved in writing by the Owner and the

Surety, if any; provided, * * *’’

(3) Section 7, line 3. Delete the words

‘‘and the Administrator.’’

(j) RUS Form 764 Substation and

Switching Station Erection Contract. For

contracts NOT requiring approval of

the Administrator (in accordance with

subparts B through F of this part) the

applicable modifications are as follows:

(1) Notice and Instructions to Bidders,

Section 10. Delete the words ‘‘and such

acceptance has been approved by the

Administrator.’’

(2) Contractor’s Proposal, Article II,

Section 1.a. Replace the word ‘‘Administrator’’ with the word ‘‘Owner’’ in two

places in the referenced section.

(3) Contractor’s Proposal, Article II,

Section 1.d, Sentence 1. Delete the words

‘‘and with the approval of the Administrator 1’’ and the associated footnote.

(4) Contractor’s Proposal, Article II,

Section 1.d, Sentence 2. Delete the words

‘‘and approved by the Administrator 2’’

and the associated footnote.

(5) Contractor’s Proposal, Article III,

Section 1. Delete the words ‘‘and the

Administrator’’ in five places in the

referenced section.

(6) Contractor’s Proposal, Article III,

Section 1.b. Replace the word ‘‘Administrator’’ with the word ‘‘Owner.’’

(7) Contractor’s Proposal, Article III,

Section 1.e. Replace the word ‘‘Administrator’’ with the word ‘‘Owner.’’

(8) Contractor’s Proposal, Article VI,

Section 1.e. Delete the words ‘‘and the

Administrator.’’

(9) Contractor’s Proposal, Article VI.

Delete Section 10.

(10) Acceptance. Delete the words

‘‘Subject to the approval of the Administrator.’’

(k) RUS Form 786 Electric System Communications and Control Equipment Contract (including installation). For contracts NOT requiring approval of the

Administrator (in accordance with subparts B through F of this part) the applicable modifications are as follows:

(1) Article I, Section 2. Delete the

words ‘‘subject to the approval of the

Administrator 1’’ and ‘‘and approved by

the Administrator 2’’ and the associated footnotes.

(2) Article II, Section 1, Sentence 2. Replace the word ‘‘Administrator’’ with

‘‘Purchaser.’’

(3) Article II, Section 5. Delete the

words ‘‘subject to the approval of the

Administrator 3’’ and ‘‘subject to the

approval of the Administrator 4’’ and

the associated footnotes.

(4) Article III, Section 2, Sentence 3. Replace the words ‘‘if the Administrator

shall so approve’’ with the words ‘‘if

the Purchaser shall so approve.’’

(5) Article VI. Delete Section 7.

(6) Acceptance. Delete the words

‘‘Subject to the approval of the Administrator.’’

270

§ 1726.255 7 CFR Ch. XVII (1–1–00 Edition)

(l) RUS Form 790 Distribution Line Extension Construction Contract (Labor and

Materials). No modifications.

(m) RUS Form 792 Distribution Line Extension Construction Contract (Labor

Only). No modifications.

(n) RUS Form 830 Electric System Construction Contract. No modifications.

(o) RUS Form 831 Electric Transmission

Construction Contract. For contracts

NOT requiring approval of the Administrator (in accordance with subparts B

through F of this part) the applicable

modifications are as follows:

(1) Notice and Instructions to Bidders,

Section 10. Delete the words ‘‘and such

acceptance has been approved by the

Administrator.’’

(2) Contractor’s Proposal, Article II,

Section 1.d. Delete the words ‘‘with the

approval of the Administrator 1’’ and

‘‘and approved by the Administrator 2’’

and the associated footnotes.

(3) Contractor’s Proposal, Article II,

Section 4.a. Delete the words ‘‘and approved by the Administrator 3’’ and the

associated footnote.

(4) Contractor’s Proposal, Article III,

Section 1.a. Sentence 4. Delete the words

‘‘and the Administrator.’’

(5) Contractor’s Proposal, Article III,

Section 1.b. Replace the word ‘‘Administrator’’ with the word ‘‘Owner.’’

(6) Contractor’s Proposal, Article III,

Section 1.c. Delete the words ‘‘and the

Administrator’’ in four places in the

referenced section.

(7) Contractor’s Proposal, Article III,

Section 1.e. Replace the word ‘‘Administrator’’ with the word ‘‘Owner.’’

(8) Contractor’s Proposal, Article VI,

Section 1.e. Delete the words ‘‘and the

Administrator.’’

(9) Contractor’s Proposal, Article VI.

Delete Section 11.

(10) Acceptance. Delete the words

‘‘Subject to the approval of the Administrator.’’

§ 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

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

271

Rural Utilities Service, USDA § 1726.301

language of paragraph (a) or (b) of this

section would be inserted in lieu of subsection (i) of the section indicated in

the RUS standard construction contract forms as follows:

RUS form No. Title Desiganted section

200 ............................ Construction Contract—Generating ............................................... Article IV, Section 1(c).

201 ............................ Right-of-Way Clearing Contract ..................................................... Article IV, Section 1(e).

203 ............................ Transmission System Right-of-Way Clearing Contract ................. Article IV, Section 1(f).

257 ............................ Contract to Construct Buildings ..................................................... Article IV, Section 1(b).

764 ............................ Substation and Switching Station Erection Contract ..................... Article IV, Section 1(f).

786 ............................ Electric System Communications and Control Equipment Line .... Article IV, Section 1(c).

790 ............................ Distribution Line Extension Construction Contract (labor & materials).Article IV, Section 1(f).

792 ............................ Distribution Line Extension Construction Contract (labor only) .... Article IV, Section 1(f).

830 ............................ Electric System Construction Contract (labor & material) ............. Article IV, Section 1(f).

831 ............................ Electric Transmission Construction Contract (labor & material) ... Article IV, Section 1(f).

(d) In RUS Forms 201, 790, and 792,

the word ‘‘Contractor’’ would replace

the word ‘‘Bidder’’ in the alternative

indemnification clause in paragraph (a)

or (b) of this section.

(e) In RUS Form 786, the word ‘‘Seller’’ would replace the word ‘‘Bidder’’

and the word ‘‘Purchaser’’ would replace the word ‘‘Owner’’ in the alternative indemnification clause in paragraph (a) or (b) of this section.

§§ 1726.256—1726.299 [Reserved]

Subpart I—RUS Standard Forms

§ 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,

§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 §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

use these guidance contract forms in

the absence of an agreement to do so.

[63 FR 58286, Oct. 30, 1998]

§ 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, §1724.304(c).

(b) Compliance. If a borrower is required by this part or by the loan

agreement to use a listed contract

form, the borrower shall use the listed

contracts in the format available from

RUS or GPO. The forms shall not be

retyped, changed, modified, or altered

in any manner not specifically authorized in this part or approved by RUS in

writing. Any modifications approved

by RUS must be clearly shown so as to

indicate the difference from the listed

contract form. Electronic reproduction

is not acceptable except where indicated in §1726.304(c).

272

§ 1726.302 7 CFR Ch. XVII (1–1–00 Edition)

(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]

§ 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 contract forms

are available from either RUS or the

Government Printing Office (GPO), as

indicated in §1726.304. Interested parties may obtain the forms 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, or the Superintendent of

Documents, P.O. Box 371954, Pittsburgh, Pennsylvania 15250–7954, telephone number (202) 512–1800. The listed

contract forms can be found in

§1724.304(c), List of Required Contract

Forms.

[63 FR 58287, Oct. 30, 1998]

§ 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

§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

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]

§ 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 §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

273

Rural Utilities Service, USDA § 1726.304

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. 2–95, Contractor’s

Bond. This form is used to obtain a surety bond and is included in RUS Forms

200, 201, 203, 257, 764, 786, 790, 792, 830,

and 831.

(2) RUS Form 168c, Rev. 2–95, 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.

This form is available from RUS.

(3) RUS Form 180, Rev. 2–95, Construction Contract Amendment. This

form is used to amend distribution line

construction contracts. This form is

available from RUS.

(4) RUS Form 181, Rev. 2–95, Certificate of Completion, Contract Construction for Buildings. This form is used for

the closeout of RUS Form 257. This

form is available from RUS.

(5) RUS Form 187, Rev. 2–95, Certificate of Completion, Contract Construction. This form is used for the closeout

of and is included in RUS Forms 200,

203, 764, 786, 830, and 831.

(6) RUS Form 198, Rev. 2–95, Equipment Contract. This form is used for

equipment purchases. This form is

available from RUS.

(7) RUS Form 200, Rev. 2–95, Construction Contract—Generating. This

form is used for generating plant construction or for the furnishing and installation of major items of equipment.

This form is available from RUS.

(8) RUS Form 201, Rev. 2–95, Right-ofWay Clearing Contract. This form is

used for distribution line right-of-way

clearing work which is to be performed

separate from line construction. This

form is available from RUS.

(9) RUS Form 203, Rev. 2–95, Transmission System Right-of-Way Clearing

Contract. This form is used for transmission right-of-way clearing work

which is to be performed separate from

line construction. This form is available from RUS.

(10) RUS Form 213, Rev. 2–95, Certificate (‘‘Buy American’’). This form is

used to document compliance with the

‘‘Buy American’’ requirement. This

form is available from RUS.

(11) RUS Form 224, Rev. 2–95, Waiver

and Release of Lien. This form is used

for the closeout of and is included in

RUS Forms 200, 203, 764, 786, 830, and

831.

(12) RUS Form 231, Rev. 2–95, Certificate of Contractor. This form is used

for the closeout of and is included in

RUS Forms 200, 203, 764, 786, 830, and

831.

(13) RUS Form 238, Rev. 2–95, Construction or Equipment Contract

Amendment. This form is used to

amend contracts except distribution

line construction contracts. This form

is available from RUS.

(14) RUS Form 251, Rev. 2–95, Material Receipt. This form is used to document receipt of owner furnished materials and is included in RUS Forms 764,

830, and 831. Electronic reproduction is

acceptable for RUS Form 251.

(15) RUS Form 254, Rev. 2–95, Construction Inventory. This form is used

for the closeout of RUS Forms 203, 764,

830, and 831. This form is available from

RUS. Electronic reproduction is acceptable for RUS Form 254.

(16) RUS Form 257, Rev. 2–95, Contract to Construct Buildings. This form

is used to construct headquarters

buildings and other structure construction. This form is available from GPO.

(17) RUS Form 307, Rev. 2–95, Bid

Bond. This form is used to obtain a bid

bond and is included in RUS Forms 200,

203, 257, 764, 830, and 831.

(18) RUS Form 764, Rev. 2–95, Substation and Switching Station Erection

Contract. This form is used to construct substations and switching stations. This form is available from RUS.

(19) RUS Form 786, Rev. 2–95, Electric

System Communications and Control

Equipment Contract. This form is used

for delivery and installation of equipment for system communications. This

form is available from RUS.

(20) RUS Form 790, Rev. 2–95, Distribution Line Extension Construction

Contract (Labor and Materials). This

form is used for limited distribution

construction accounted for under work

order procedure. This form is available

from GPO.

(21) RUS Form 792, Rev. 2–95, Distribution Line Extension Construction

274

§§ 1726.305–1726.399 7 CFR Ch. XVII (1–1–00 Edition)

Contract (Labor Only). This form is

used for limited distribution construction accounted for under work order

procedure. This form is available from

GPO.

(22) RUS Form 792b, Rev. 2–95, Certificate of Construction and Indemnity

Agreement. This form is used for the

closeout of and is included in RUS

Forms 201, 790, 792.

(23) RUS Form 792c, Rev. 2–95, Supplemental Contract for Additional

Project. This form is used to amend

other contracts and is included in RUS

Forms 201, 790, 792.

(24) RUS Form 830, Rev. 2–95, Electric

System Construction Contract (Labor

and Materials). This form is used for

distribution and transmission line

project construction. This form is

available from GPO.

(25) RUS Form 831, Rev. 2–95, Electric

Transmission Construction Contract

(Labor and Materials). This form is

used for transmission line project construction. This form is available from

GPO.

(d) List of guidance contract forms. (1)

RUS Form 172, Rev. 9–58, Certificate of

Inspection, Contract Construction.

This form is used to notify RUS that

construction is ready for inspection.

This form is available from RUS.

(2) RUS Form 173, Rev. 3–55, Materials Contract. This form is used for

distribution, transmission, and general

plant material purchases. This form is

available from RUS.

(3) RUS Form 274, Rev. 6–81, Bidder’s

Qualifications. This form is used to

document bidder’s qualifications. This

form is available from RUS.

(4) RUS Form 282, Rev. 11–53, Subcontract. This form is used for subcontracting. This form is available from

RUS.

(5) RUS Form 458, Rev. 3–55, Materials Contract. This form is used to obtain generation plant material and

equipment purchases not requiring acceptance tests at the project site. This

form is available from RUS.

[63 FR 58287, Oct. 30, 1998]

§§ 1726.305–1726.399 [Reserved]

Subpart J—Contract Closeout

§ 1726.400 Final contract amendment.

As needed, a final contract amendment will be prepared and processed in

accordance with §1726.24(b) prior to or

in conjunction with the closeout of the

contract.

§ 1726.401 Material contract closeout.

This section is applicable to contracts executed on RUS Form 173.

(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.

§ 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

275

Rural Utilities Service, USDA § 1726.403

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.

§ 1726.403 Project construction contract closeout.

This section is applicable to contracts executed on RUS Forms 200, 203,

257, 764, 786, 830, and 831.

(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

(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

276

§ 1726.404 7 CFR Ch. XVII (1–1–00 Edition)

through its architect or engineer, if applicable) will obtain executed copies of

the following documents:

(i) RUS Form 181, Certificate of Completion, Contract Construction for

Buildings (for contracts executed on

RUS Form 257), or RUS Form 187, Certificate of Completion, Contract Construction (for contracts executed on all

other forms under this section).

(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

Forms 203, 764, 830 or 831.

(vi) Certification by the project architect or engineer in accordance with

§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 181, Certificate of

Completion, Contract Construction for

Buildings (for contracts executed on

RUS Form 257), or RUS Form 187, Certificate of Completion, Contract Construction (for contracts executed on all

other forms under this section).

(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 Forms 203, 764,

or 831.

(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 181 or RUS

Form 187 (as applicable) 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.

(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 $ll as satisfaction in full of all claims of the undersigned under the construction contract between the undersigned and ll (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.

§ 1726.404 Non-site specific construction contract closeout.

This section is applicable to contracts executed on RUS Forms 201, 790,

and 792.

(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.

277

Rural Utilities Service, USDA § 1728.10

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

RUS approval and the closeout documents need not be sent to RUS unless

specifically requested by RUS.

§ 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.

PART 1728—ELECTRIC STANDARDS

AND SPECIFICATIONS FOR MATERIALS AND CONSTRUCTION

Sec.

1728.10 General purpose and scope.

1728.20 Establishment of standards and

specifications.

1728.30 Inclusion of an item for listing or

technical acceptance.

1728.40 Procedure for submission of a proposal.

1728.50 Removal of an item from listing or

technical acceptance.

1728.60 List of materials and equipment.

1728.70 Procurement of materials.

1728.97 Incorporation by reference of electric standards and specifications.

1728.201 RUS Bulletin 1728H-701, RUS Specification for Wood Crossarms (Solid and

Laminated), Transmission Timbers and

Pole Keys.

1728.202 RUS Bulletin 1728H-702, RUS Specification for Quality Control and Inspection of Timber Products.

AUTHORITY: 7 U.S.C. 901 et seq., 1921 et seq.,

6941 et seq.

EDITORIAL NOTE: Nomenclature changes to

part 1728 appear at 55 FR 39397, Sept. 27, 1990.

§ 1728.10 General purpose and scope.

(a) The requirements of this part are

based on contractual provisions between RUS and the organizations