[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Rules and Regulations]
[Pages 16602-16612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8380]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR Part 1753
RIN 0572-AB34
Telecommunications System Construction Policies and Procedures
AGENCY: Rural Utilities Service, USDA.
ACTION: Final rule.
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SUMMARY: The Rural Utilities Service (RUS) hereby amends its
regulations on telecommunications system construction policies and
procedures. This revision includes empowering the telecommunications
borrowers by reducing oversight by RUS with respect to preparation of
plans and specifications, bid approvals, and final document approvals.
In addition to reducing the requirements for facilities construction,
RUS will also make technical corrections and clarifications, and minor
technical changes.
EFFECTIVE DATE: This regulation is effective on May 6, 1999.
FOR FURTHER INFORMATION CONTACT:
Orren E. Cameron III, Director, Telecommunications Standards Division,
Rural Utilities Service, U.S. Department of Agriculture, 1400
Independence Avenue, SW, STOP 1598, Washington, DC 20250-1598.
Telephone: (202) 720-8660; e-mail: [email protected].
SUPPLEMENTARY INFORMATION:
Executive Order 12866
This final rule has been determined to be not significant for
purposes of Executive Order 12866 and therefore has not been reviewed
by the Office of Management and Budget.
Executive Order 12988
This final rule has been reviewed under Executive Order 12988,
Civil
[[Page 16603]]
Justice Reform. RUS has determined that this final rule meets the
applicable standards provided in Section 3. of the Executive Order. In
addition, all State and local laws and regulations that are in conflict
with this rule will be preempted, no retroactive effect will be given
to this rule, and, in accordance with Sec. 212(e) of the Department of
Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(e)),
administrative appeal procedures, if any, must be exhausted before an
action against the Department or its agencies may be initiated.
Regulatory Flexibility Act Certification
The Administrator of RUS has determined that this final rule will
not have a significant economic impact on a substantial number of small
entities, as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.). The RUS telecommunications program provides loans to borrowers
at interest rates and terms that are more favorable than those
generally available from the private sector. RUS borrowers, as a result
of obtaining federal financing, receive economic benefits which exceed
any direct economic costs associated with complying with RUS
regulations and requirements. Moreover, this action liberalizes certain
contract requirements by changing contract limits thereby reducing RUS
oversight requirements and further offsetting economic costs. Therefore
an analysis under the Regulatory Flexibility act is not required.
Information Collection and Recordkeeping Requirements
The Office of Management and Budget (OMB) approval of the
information collection requirements of this rule under the Paperwork
Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended), OMB control
number 0572-0059, has expired. In the preamble of its Notice of
Proposed Rulemaking on Telecommunications System Construction Policies
and Procedures, published July 17, 1998, (63 FR 38503), RUS included a
statement regarding the collection of information in this rule and
provided an opportunity for public comment. RUS will publish a Notice
in the Federal Register upon receipt of OMB approval of the collection
of information. No person is required to respond to the collection of
information required by this rule until such Notice is published.
National Environmental Policy Act Certification
The Administrator of RUS has determined that this final rule will
not significantly affect the quality of the human environment as
defined by the National Environmental Policy Act of 1969 (42 U.S.C.
4321 et seq.). Therefore, this action does not require an environmental
impact statement of assessment.
Catalog of Federal Domestic Assistance
The program described by this final rule is listed in the Catalog
of Federal Domestic Assistance Programs under No. 10.851, Rural
Telephone Loans and Loan Guarantees, and No. 10.852, Rural Telephone
Bank Loans. This catalog is available on a subscription basis from the
Superintendent of Documents, United States Government Printing Office,
Washington, DC 20402-9325.
Executive Order 12372
This final rule is excluded from the scope of Executive Order
12372, Intergovernmental Consultation, which may require consultation
with State and local officials. See notice related to a final rule
entitled ``Department Programs and Activities Excluded from Executive
Order 12372,'' (50 FR 47034) which published re-determined that RUS
loans, loan guarantees, and RTB bank loans were exempted from coverage
under this order.
Unfunded Mandates
This rule contains no Federal Mandates (under the regulatory
provision of Title II of the Unfunded Mandates Reform Act of 1995) for
State, local, and tribal governments or the private sector. Thus, this
rule is not subject to the requirements of section 202 and 205 of the
Unfunded Mandates Reform Act.
Background
RUS has undertaken a strategic review of all policies and
procedures covering its preloan and postloan requirements of borrowers.
This review was part of RUS efforts in governmental streamlining and
empowering the recipients of the loans provided under the Rural
Electrification Act (RE Act) of 1936, (7 U.S.C. 901 et seq.). As a
result of this review, several procedures and policies were deemed no
longer necessary. Other policies and procedures have been streamlined
and RUS will place more responsibility with the borrowers to insure a
more cost effective review process while maintaining the required loan
security. In view of this increased reliance upon borrowers and their
consultants, certain provisions have been added to reduce the
government's vulnerability to conflicts of interest. Provisions have
also been added for construction of headquarters facilities pursuant to
the Rural Electrification Loan Restructuring Act of 1993 (107 Stat.
1356).
RUS is also making technical corrections to final regulations which
were reorganized and redesignated on September 27, 1990, at 55 FR
39393. In particular, certain regulations contained cross references
which inadvertently had not been updated. This action is simply a
correction to these regulations with no change to substance. Changes to
regulatory text are merely to update cross references. As currently
published, the final regulations may prove to be misleading.
Comments
Public comments were received from Hicks and Ragland Engineering
Company, Harry Hutson, and Century Telephone Enterprises. The comments,
recommendations, and responses are summarized as follows:
Comment: In regard to Sec. 1753.7(e) one commenter questioned
whether new bids had to be taken on a project or changes with the
awarded bidder could be negotiated when a substantial change in the
plans and specifications (P&S) is required after executed contacts have
been obtained.
Response: Changes in the plans and specifications do not require
new bids but can be handled by contract amendments as described in
Sec. 1753.11.
Comment: One commenter stated that Sec. 1753.2 defines major
construction as projects estimated to cost more than $250,000, and
minor construction as projects estimated to cost $250,000 or less.
Section 1753.46(2) states that contracts under $250,000, may, at the
borrower's option, be negotiated. Section 1753.5(2) states that RUS
approval is required for negotiated major construction contracts. By
definition there is no major construction below $250,000. Therefore, we
cannot have a negotiated major construction contract.
Response: Certain RUS contracts such as RUS Forms 525 and 545 for
central office equipment may be used for negotiated major construction
with RUS approval.
Comment: One commenter stated that Sec. 1753.46 discusses minor
construction. Since the limit for minor construction is now $250,000,
this information should be in the minor construction section not the
major construction section.
Response: RUS believes that a discussion of the use of the RUS
Forms 515 and 773 is appropriate in this section. RUS added a sentence
to Sec. 1753.77 in this final rule indicating that the rules for using
these forms are contained in subpart F.
[[Page 16604]]
Comment: One commenter stated that minor construction can be
accomplished via work order, RUS Forms 773 or 515. A Form 515 contract
under $250,000 can be negotiated except if equal to $250,000, which is
almost impossible. To make this more sensible, the borrower should be
able to negotiate, at their option, Form 515 contracts costing $250,000
or less.
Response: RUS agrees with this comment and made the change in the
appropriate paragraphs.
Comment: One commenter stated that Sec. 1753.7(e) contains the
statement ``estimated to cost over $500,000 or 25% of the total loan,
whichever is less.'' This statement appears in numerous paragraphs
throughout this part 1753 but in these statements ``whichever is less''
does not appear. For clarity, it should be stated each time the
statement appears whether you mean it to be less than or more than.
Response: RUS agrees with this comment. The phrase ``whichever is
less'' is added in the appropriate paragraphs.
Comment: One commenter stated Sec. 1753.48(b) should be eliminated
since you can not negotiate above $250,000.
Response: RUS agrees in part with this comment. The first sentence
in Sec. 1753.48(b) raises the negotiation limit to $250,000 and is
useful. The second sentence is deleted in this final rule.
Comment: One commenter said there should be no reference in the
major construction section to negotiated RUS Form 515 or 773 contracts.
Response: Negotiated RUS Form 515 contracts operate under the same
rules as any other Form 515 contract so it is covered in subpart F. RUS
Form 773 is only mentioned in subpart F for the reader's convenience.
For rules regarding the use of RUS Form 773, the reader is referred by
subpart F to subpart I.
Comment: One commenter stated that Sec. 1653.47(c) requires
checklist Form 553 be completed and signed by the borrower's engineer
and submitted to RUS for review with the plans and specifications. RUS
Form 553 is so out of date that the Washington, D.C., staff does not
use it or require it. Rus Form 553 should be updated or eliminated.
Response: RUS agrees with this comment and references to Form 553
are deleted in this final rule.
Comment: One commenter stated that there is confusing language in
Sec. 1753.48(b) regarding negotiated procurement for RUS Form 515
contract. The first part of the paragraph says bids are not required
for outside plant construction which is estimated to cost less than
$250,000, but the last part says plans and specifications for proposed
contracts exceeding $500,000 must be approved by RUS before
negotiations with a contractor may begin.
Response: RUS agrees with this comment. The second sentence in
Sec. 1753.48(b) is deleted in this final rule.
List of Subjects in 7 CFR Part 1753
Communications equipment, Loan programs--communications, Reporting
and recordkeeping requirements, Rural areas, Telecommunication,
Telephone.
For reasons set forth in the preamble, 7 CFR chapter XVII is
amended as follows:
PART 1753--TELECOMMUNICATION SYSTEM CONSTRUCTION POLICIES AND
PROCEDURES
1. The authority citation for part 1753 is revised to read as
follows:
Authority: 5 U.S.C. 501, 7 U.S.C. 901 et seq.
2. Revised Sec. 1753.1, paragraph (a) to read as follows:
Sec. 1753.1 General.
(a) The standard RUS Telecommunications Loan Documents contain
provisions regarding procurement of materials and equipment and
construction of telecommunications facilities by telecommunications
borrowers. This part implements certain of the provisions by setting
forth requirements and procedures. Borrowers shall follow these
requirements and procedures whenever using loan funds to purchase
materials and equipment or perform construction, unless they have
received the Administrator's written approval to do otherwise.
* * * * *
3. Amend Sec. 1753.2 to add a new definitions for ``loan
purposes,'' ``RUS,'' and ``RTB,'' and revise the definitions of ``major
construction'', ``minor construction'' and ``modernization plan'' to
read as follows:
Sec. 1753.2 Definitions.
* * * * *
Loan purposes--The high level objectives of the loan are to fund
the construction. These purposes are first stated in the
characteristics letter described in 7 CFR 1737.80, which is sent to the
applicant to offer a loan after RUS has completed its preloan studies.
Major construction--A telecommunications plant project estimated to
cost more than $250,000, including all labor and materials.
Minor construction--A telecommunications plant project estimated to
cost $250,000 or less, including all labor and materials.
* * * * *
Modernization plan--A State plan, which has been approved by RUS,
for improving the telecommunications network of those
Telecommunications Providers covered by the plan. A Modernization Plan
must conform to the provisions of 7 CFR part 1751, subpart B.
* * * * *
RTB--the Rural Telephone Bank, established as a body corporate and
an instrumentality of the United States, to obtain supplemental funds
from non-Federal sources and utilize them in making loans, for the
purposes of financing, or refinancing, the construction, improvement,
expansion, acquisition, and operation of telephone lines, facilities,
or systems, for RUS borrowers financed under sections 201 and 408 of
the Act.
RUS--the Rural Utilities Service, an agency of the United States
Department of Agriculture established pursuant to Section 232 of the
Federal Crop Insurance and Reform and Department of Agriculture
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor
to Rural Electrification Administration with respect to administering
certain electric and telecommunications program. See 7 CFR 1700.1.
* * * * *
4. Revise the first word of Sec. 1753.3(a) from ``Prior'' to
``Advance.''
5. Amend Sec. 1753.5, to revise paragraph (b)(1), redesignate
paragraph (b)(2) to (b)(3), and add a new paragraph (b)(2) to read as
follows:
Sec. 1753.5 Methods of major construction.
* * * * *
(b) Contract construction. (1) RUS approval of the borrower's award
of the contract is not required if the contractor is selected through
sealed competitive bidding, the bid amount is $500,000 or less and the
contractor is not a company or organization affiliated with the
borrower. This does not relieve the borrower of the requirements of
bidding or bid evaluation set contained in this part.
(2) RUS approval of the borrower's award of the contract is
required for all other competitively-bid and for negotiated major
construction contracts.
* * * * *
6. Amend Sec. 1753.6, to revise paragraph (a) and add paragraph (e)
to read as follows:
[[Page 16605]]
Sec. 1753.6 Standards, specifications, and general requirements.
(a) Materials, equipment, and construction financed with loan funds
must meet the standards and specifications established by RUS. 7 CFR
part 1755 lists the RUS Bulletins containing the standards and
specifications for telephone facilities. Materials and equipment
meeting these standards are included on the List of Material Acceptable
for Use on Telecommunications Systems of RUS Borrowers, I.P. 300-4.
This bulletin may be obtained by subscription from the Superintendent
of Documents, Government Printing Office, Washington, DC 20402.
* * * * *
(e) All software, software systems, and firmware financed with loan
funds must be year 2000 compliant, as defined in 7 CFR 1732.22(e).
7. Amend Sec. 1753.7, to revise paragraphs (c) and (e) to read as
follows:
Sec. 1753.7 Plans and specifications (P&S).
* * * * *
(c) The appropriate standards and specifications listed in 7 CFR
part 1755 shall be included in the P&S. When RUS has not prepared
standards and specifications, the borrower shall use general
engineering requirements and specifications prepared by the borrower's
engineer. The specifications prepared by the borrower's engineer and
based on general engineering requirements shall be subject to review
and approval by RUS for all major construction, including major
projects which would be exempted from RUS approval under paragraph (e)
of this section.
* * * * *
(e) RUS approval of P&S is required for construction that is
estimated to cost over $500,000 or 25% of the total loan, whichever is
less, and for all building construction. P&S for all other construction
are exempt from RUS review and approval except that, at the time of
contract approval, RUS will examine the plans and specifications for
conformity with the loan purposes and to determine that they comply
with other requirements of this part.
* * * * *
8. Amend Sec. 1753.8, to revise paragraphs (a)(1), (a)(11)(i),
(a)(11)(ii) introductory text, (a)(11)(iii) introductory text, and
(a)(12)(i), and add a new paragraph (a)(11)(iv) is added to read as
follows:
Sec. 1753.8 Contract construction procedures.
(a) Sealed, competitive bidding--(1) Bid opening date: The borrower
is responsible for scheduling the bid opening date. If RUS review of
P&S is required by Sec. 1753.7, the borrower shall wait until approval
has been received before setting the date. In setting the date,
sufficient time should be allowed for the bidders to examine the
project site and prepare their bids. The borrower shall notify GFR of
the bid date and invite GFR to attend.
* * * * *
(11) Award of contract: (i) The borrower shall obtain from the
engineer the determination of the lowest responsive bid, a tabulation
of all bids and the engineer's recommendation for award of the
contract. Contract award is subject to RUS approval if either the cost
of the project is over $500,000 or the contract is with an organization
affiliated with the borrower. Contract award of all other projects is
not subject to RUS approval.
(ii) If an award is made, the borrower shall award the contract to
the lowest responsive bidder. The borrower may award the contract
immediately upon determination of the lowest responsive bidder if the
following conditions are met:
* * * * *
(iii) If RUS approval of the award of contract is required under
this paragraph (a)(11), the borrower shall send to RUS for
consideration of approval of the award:
* * * * *
(iv) If RUS approval of the award of contract is not required under
this paragraph (a)(11), the borrower shall keep a file available for
inspection by RUS. The file shall be kept for at least two years and
shall include:
(A) One copy of all received bids.
(B) The engineer's recommendation and tabulation of all bids
including ``Buy American'' evaluations, if any, and all other
evaluations required by law.
(C) Evidence of acceptance of the low bid by the borrower, such as
a copy of the board resolution certified by the Secretary of the board.
(12) Execution of contract: (i) The borrower shall submit to RUS
three original counterparts of the contract executed by the contractor
and borrower.
* * * * *
9. Revise Sec. 1753.11, paragraphs (a)(3), (b) and (d) to read as
follows:
Sec. 1753.11 Contract amendments.
(a) * * *
(3) The amendment causes an unbonded contract to require a
contractor's performance bond. This would occur when a contract that is
executed in an amount below that requiring a performance bond by 7 CFR
part 1788, subpart C, is amended to an amount above that amount.
(b) Advance RUS approval to execute other contract amendments is
not required. These amendments may be submitted to RUS at any time
prior to closeout. If a borrower wishes to receive an advance of funds
based on an amended contract amount (i.e., amendments that increase a
contract by less than 20%), the borrower may initiate an increase in
the amount approved for advance by submitting three copies of the
amendment to RUS for approval.
* * * * *
(d) Upon execution of any amendment that causes the amended
contract amount to exceed the original contract amount by 20% or more,
three copies of the amendment shall be submitted to RUS for approval.
10. Amend Sec. 1753.15, to redesignate paragraphs (a)(2) through
(a)(5) as (a)(3) through (a)(6), add a new paragraph (a)(2), and revise
paragraphs (a)(1) and newly designated paragraphs (a)(5)(i) and (ii) to
read as follows:
Sec. 1753.15 General.
(a)(1) The standard RUS loan documents contain provisions regarding
engineering and architectural services performed by or for RUS
telecommunications borrowers. This part implements certain of the
provisions by setting forth the requirements and procedures to be
followed by borrowers in selecting architects and engineers and
obtaining architectural and engineering services by contract or by
force account.
(2) Borrowers shall obtain architectural and engineering services
only from persons or firms which are not affiliated with, and have not
represented, a contractor, vendor or manufacturer who may provide
labor, materials, or equipment to the borrower under any current loan.
* * * * *
(5)(i) For major construction, services provided by architects and
engineers not on the borrower's staff must be provided under Form 220,
Architectural Service Contract, or Form 217, Postloan Engineering
Service Contract--Telecommunications. These contracts require RUS
approval.
(ii) For minor construction, borrowers may use the contracts in
paragraph (a)(5)(i) of this section for postloan architectural or
engineering services or any other form of contract, such as Form 245,
Engineering Service Contract, Special Services--Telephone. RUS
[[Page 16606]]
approval of contracts for postloan architectural or engineering
services associated with minor construction, except for buildings
covered in paragraph (a)(6) of this section, is not required.
* * * * *
11. Amend Sec. 1753.16, to revise paragraphs (b)(1) through (b)(4)
to read as follows:
Sec. 1753.16 Architectural services.
* * * * *
(b)(1) The borrower shall use Form 220 when contracting for
architectural services for major construction, except that the borrower
may use either Form 220 or Form 217 if the building is an unattended
central office building.
(2) The borrower and the architect negotiate the fees for services
under Form 220.
(3) Reasonable modifications or additions to the terms and
provisions in Form 220 may be made, subject to RUS approval, to obtain
the specific services needed for a building.
(4)(i) Three copies of Form 220, executed by the borrower and the
architect, shall be sent to GFR to be forwarded to RUS for approval.
RUS will review the contract terms and conditions. RUS will not approve
the contract if, in RUS's judgment:
(A) Unacceptable modifications have been made to the contract form.
(B) The contract will not accomplish loan purposes.
(C) The architectural service fees are unreasonable.
(D) The contract presents unacceptable loan security risk to RUS.
(ii) If RUS approves the contract, RUS will send one copy to the
architect and one copy to the borrower.
* * * * *
12. Amend Sec. 1753.17(b)(1)(ii)(D) to remove ``(See 7 CFR part
1758)'', add paragraph (b)(1)(ii)(E), and revise paragraphs
(c)(1)(i)(C) and (c)(2)(i)(A) to read as follows:
Sec. 1753.17 Engineering services.
* * * * *
(b) * * *
(1) * * *
(ii) * * *
(E) The consulting engineering firm is affiliated with or has
represented a contractor, vendor, or manufacturer who may provide
labor, materials, or equipment to the borrower under any current loan.
* * * * *
(c) * * *
(1) * * *
(i) * * *
(C) The names, qualifications, and responsibilities of other
principal employees who will be associated with providing the
engineering services.
* * * * *
(2) * * *
(i) * * *
(A) A copy of the employee's qualifications and experience record,
unless previously submitted. RUS requires a minimum of four years of
construction and inspection experience. The employee cannot be engaged
in the actual construction.
* * * * *
13. Add Sec. 1753.18 to read as follows:
Sec. 1753.18 Engineer and architect contract closeout certifications.
A certification of completion and inspection of construction signed
by the borrower and countersigned in accordance with accepted
professional engineering and architectural practice, by the engineer or
architect, shall be prepared as evidence of completion of a major
construction project. This certification shall make reference to the
contract number and contract amount, and shall include the following:
(a) A statement that the construction is complete and was done in
accordance with the RUS approved system design or layout or subsequent
RUS approved changes.
(b) A statement that the construction was for loan purposes.
(c) A statement that construction used RUS-accepted materials and
was in accordance with specifications published by RUS covering the
construction which were in effect when the contract was executed, or in
the absence of such specifications, that it meets other applicable
specifications and standards (specify), and that it meets all
applicable national and local code requirements as to strength and
safety.
(d) A statement that the construction complies with the ``Buy
American'' provision (7 U.S.C. 903 note) of the Rural Electrification
Act of 1936 (7 U.S.C. 901 et seq.).
(e) A statement that all necessary approvals have been obtained
from regulatory bodies and other entities with jurisdiction over the
project.
(f) A statement that all closeout documents required by this part
have been examined and found complete such that the Contractor has
fulfilled all obligations under the contract except for warranty
coverage.
(g) A statement that the engineer or architect is not affiliated
with and does not represent the contractor, vendor, or manufacturer who
is a participant in the contract.
14. Revise Sec. 1753.25, paragraphs (a), (c), and (d) as follows:
Sec. 1753.25 General.
(a) This subpart implements and explains the provisions of the Loan
Documents setting forth the requirements and the procedures to be
followed by borrowers in constructing headquarters, commercial office,
central office, warehouse, and garage buildings with loan funds.
* * * * *
(c) All plans and specifications for buildings to be constructed
with loan funds are subject to the approval of RUS. In addition,
preliminary plans and specifications for headquarters and commercial
office buildings to be constructed with loan funds are subject to RUS
approval.
(d) RUS Form 257, Contract to Construct Buildings, shall be used
for the construction of all headquarters, commercial office, central
office, warehouse, and garage buildings with loan funds. Refer to
Sec. 1753.26 for further instructions.
* * * * *
15. Amend Sec. 1753.26, to redesignate paragraphs (a) through (d)
and (b) through (e) respectively, revise redesignated paragraph (b)(1)
and add a new paragraph (a) to read as follows:
Sec. 1753.26 Plans and specifications (P&S).
(a) For headquarters and commercial office buildings only, the
borrower shall prepare preliminary P&S showing the floor plan and
general architectural details of the building to be constructed using
loan funds. In particular, the preliminary P&S shall address the
requirements of Sec. 1753.25(f) and the Uniform Relocation Assistance
and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et
seq.). The P&S shall be submitted to the GFR and are subject to RUS
approval.
(b) * * *
(1) RUS Contract Form 257, Contract to Construct Buildings,
completed to the extent explained in (c) of this section.
* * * * *
16. Revise Sec. 1753.30, paragraphs (b), (c)(2), and (c)(3) to read
as follows:
Sec. 1753.30 Closeout procedures.
* * * * *
(b) RUS Form 257 Contract. (1) Whenever changes were made in the
plans and specifications which did not require immediate submission to
RUS of an amendment under Sec. 1753.11, a final contract amendment
showing the changes shall be prepared.
(2) Upon completion of the project, the borrower shall obtain
certifications from the architect or engineer that the project and all
required documentation are satisfactory and complete. The
[[Page 16607]]
requirements for this certification are contained in Sec. 1753.18.
(3) The engineer's or architect's contract closeout certification
and the final amendment shall be submitted to RUS as a basis for the
final advance of funds for the contract.
(4) After all required RUS approvals are obtained, final payment is
made in accordance with article III of RUS Form 257 once the borrower
has received the architect's or engineer's certifications regarding
satisfactory completion of the project.
(c) * * *
(2) Complete, with the assistance of its architect or engineer, the
documents listed in the following table that are required for the
closeout of force account construction.
Documents Required To Closeout Construction of Buildings
--------------------------------------------------------------------------------------------------------------------------------------------------------
Use with No. of copies prepared by Distribution
-----------------------------------------------------------------------------------------------
RUS Form No. Description Architect/
Contract Force account Contractor engineer Borrower Contractor
--------------------------------------------------------------------------------------------------------------------------------------------------------
238............................... Construction or X .............. .............. (3) (to RUS) (to RUS)
Equipment Contract
Amendment (if not
previously
submitted, send to
RUS for approval).
181............................... Certificate of X .............. .............. 2 1 1
Completion
(contract
construction) \1\.
231............................... Certificate of X .............. 1 .............. 1 ..............
Contractor.
224............................... Waiver and Release X .............. 1 .............. 1 ..............
of Lien From Each
Supplier.
213............................... Certificate (buy X .............. 1 .............. 1 ..............
American).
None \2\.......................... ``As Built'' Plans X X .............. 1 1 ..............
and Specifications.
None.............................. Guarantees, X .............. 1 .............. 1 ..............
Warranties, Bonds,
Operating or
Maintenance
Instructions, etc.
None.............................. Architect/Engineer X X .............. 2 1 1
seismic safety
certification.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Cost of materials and services furnished by borrower are not to be included in Total Cost on RUS Form 181.
\2\ When only minor changes were made during construction, two copies of a statement to that effect from the Architect will be accepted instead of the
``as built'' Plans and Specifications.
(3) Make distribution of the completed documents as indicated in
the table in this section.
* * * * *
17. Revise Sec. 1753.36, paragraph (g) to read as follows:
Sec. 1753.36 General.
* * * * *
(g) Materials and equipment must meet the standards and general
specifications approved by RUS. Materials and equipment included in
I.P. 300-4, ``List of Materials Acceptable for Use on
Telecommunications Systems of RUS Borrowers'', have been accepted as
meeting these requirements. If the equipment is not included in the
``List of Materials'' but has been approved for field trial
installation, the borrower must in each instance obtain field trial
approval from RUS prior to entering into any agreement with a supplier.
* * * * *
18. Revise Sec. 1753.37, paragraph (c) to read as follows:
Sec. 1753.37 Plans and specifications (P&S).
* * * * *
(C) RUS review of P&S is required for construction estimated to
cost over $500,000 total or estimated to cost more than 25% of the
total loan, whichever is less.
(1) If RUS review is required, the borrower shall submit one copy
of the P&S to the GFR for RUS review.
(2) RUS will review the P&S and notify the borrower in writing of
approval or disapproval.
19. Revise Sec. 1753.38, paragraphs (a)(1)(i), (a)(1)(v),
(a)(2)(i), (a)(2)(v), (b)(1), (b)(3), (b)(5), (e)(2), and (e)(3) to
read as follows:
Sec. 1753.38 Procurement procedures.
(a) * * *
(1) Solicitation of bids. (i) After RUS approval of the
specifications and equipment requirements (required only for projects
expected to exceed $500,000 or 25% of the loan, whichever is less), the
borrower shall send ``Notice and Instructions to Bidders'' to suppliers
with central office equipment included in the current Informational
Publication (I.P.) 300-4, ``List of Materials Acceptable for Use on
Telecommunications Systems of RUS Borrowers.'' I.P. 300-4 is a
subscription item available from the Superintendent of Documents, U.S.
Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954.
This ``Notice'' may also be sent to suppliers of non-domestic equipment
currently accepted by RUS as meeting RUS technical standards. The
``Notice'' may also be sent to suppliers of central office equipment
accepted for field trial.
* * * * *
(v) At the request of an invited supplier, the borrower shall
provide two copies of the P&S.
(2) Technical sessions. (i) The borrower shall schedule individual
technical sessions by the suppliers, notify each supplier of its
scheduled date and time, notify the GFR of all scheduled dates and
times, and request the following be available at the technical session:
* * * * *
(v) After evaluation of the technical proposals and RUS approval of
the changes to P&S (required only for projects that are expected to
exceed $500,000 or 25% of the loan, whichever is less), sealed bids
shall be solicited from only those bidders whose technical proposals
meet P&S requirements. When fewer than three bidders are adjudged
qualified by the borrower to bid, RUS approval must be obtained to
proceed. Generally, RUS will grant such approval only if the borrower
can demonstrate to the satisfaction of RUS that a good faith effort was
made to obtain at least three competitive bids. This would be
demonstrated if all suppliers currently listed in I.P. 300-4
[[Page 16608]]
were invited to submit technical proposals.
* * * * *
(b) * * *
(1) After RUS approval of the P&S and equipment requirements
(required only for contracts expected to exceed $500,000 or 25% of the
loan, whichever is less), the borrower shall send two complete copies
of the approved P&S to the supplier an request that a proposal be
submitted.
* * * * *
(3) If the contract is expected to exceed $500,000 or 25% of the
loan, whichever is less, changes in the P&S resulting from the
technical session shall be subject to RUS review and approval.
* * * * *
(5) The borrower shall obtain an award recommendation from its
engineer.
* * * * *
(e) * * *
(2) The borrower shall prepare a plan containing an outline of the
proposed use of the equipment, the proposal from the supplier and an
estimate of the installation cost. If the total cost exceeds $500,000,
RUS approval of the award of contract is required. The borrower shall
in this case submit its plan and the supplier's proposal to GFR. If the
cost does not exceed $500,000, the borrower's award of contract is not
subject to RUS approval.
(3) If RUS approval was required by paragraph (e)(2) of this
section, upon RUS approval the purchase may be made using RUS Contract
Form 525, or 545, or when applicable, the procedures contained in
subpart I of this part.
* * * * *
(20) Amend Sec. 1753.39 to revise paragraphs (a), (e)(1), (3)(2),
(f) introductory text, (f)(1)(ii)(A), (f)(1)(iii), (f)(1)(iv) and (g),
delete paragraph (e)(3), and add paragraph (h) to read as follows:
Sec. 1753.39 Closeout documents.
* * * * *
(a) Contract amendments. Amendments that must be submitted to RUS
for approval, as required by Sec. 1753.11, shall be submitted promptly.
All other amendments may be submitted to RUS with the engineer's
contract closeout certification.
* * * * *
(e) * * *
(1) Obtain from the engineer a certification of partial closeout.
(2) Submit one copy of the summary to RUS with an FRS.
(f) Final contract closeout procedure. The documents required for
the final closeout of the central office equipment contract, RUS
Contract Forms 525 and 545, are listed in the following table, which
also indicates the number of copies and their distribution. The
procedure to be followed is as follows:
Documents Required To Closeout Central Office Equipment Contract
----------------------------------------------------------------------------------------------------------------
Use with Prepared by Distribution
-----------------------------------------------------------------------------
RUS Form No. Description RUS Form RUS Form
525 545 Contractor Engineer Borrower Contractor
----------------------------------------------------------------------------------------------------------------
238............ Construction or X X ........... (3) (to RUS) (to RUS)
Equipment
Contract
Amendment (if
not previously
submitted, send
to RUS for
approval).
754............ Certificate of X ........... 3 3 2 1
Completion and
Certificate of
Contractor and
Indemnity
Agreement (if
submitted, Form
744 is not
required).
517............ Results of X ........... ........... 2 1 1
Acceptance Tests
(prepare and
distribute
copies
immediately upon
completion of
the acceptance
tests of each
central office).
752a........... Certificate of ........... X ........... 2 1 1
Completion--Not
Including
Installation.
224............ Waiver and X ........... 1 ........... 1 ...........
Release of Lien
(from each
supplier).
231............ Certificate of X ........... 1 ........... 1 ...........
Contractor.
213............ Certificate (Buy X X 1 ........... 1 ...........
American).
None........... Switching X X 2 ........... 2 ...........
Diagram, as
installed.
None........... Set of Drawings X X 2 ........... 2 ...........
(each set to
include all the
drawings
required under
the
Specification,
RUS Form 522).
----------------------------------------------------------------------------------------------------------------
(1) * * *
(ii) * * *
(A) Prepare and assemble the documents listed in the table in this
section, Documents Required to Close Out Central Office Equipment
Contracts.
* * * * *
(iii) Make the documents listed in the table available for GFR
review on the date of final inspection.
(iv) Distribute the documents as indicated in the table. The
documents listed for RUS shall be retained by the borrower for
inspection by RUS for at least two years from the date of the
engineer's contract closeout certificate.
* * * * *
(g) Once RUS approval has been obtained for any required
amendments, the borrower shall obtain certifications from the engineer
that the project and all required documentation are satisfactory and
complete. The requirements for the final contract certification are
contained in Sec. 1753.18.
(h) Once these certifications have been received, final payment
shall be made according to the payment terms of the contract. Copies of
the certifications shall be submitted with the FRS, requesting the
remaining funds on the contract.
21. Revise Sec. 1753.46, pararaphs (c)(2) and (c)(3) to read as
follows:
Sec. 1753.46 General.
* * * * *
(c) * * *
(2) Contract Form 515, which is for $250,000 or less, may, at the
borrower's option, be negotiated. See Sec. 1753.48(b).
(3) RUS Form 773 may be used for minor outside plant projects which
are not competitively bid because they cannot be designed and staked at
the
[[Page 16609]]
time of contract execution. Projects of this nature include routine
line extensions and placement of subscriber drops. See subpart I of
this part.
22. Revise Sec. 1753.47, paragraph (c) to read as follows:
Sec. 1753.47 Plans and specifications (P&S).
* * * * *
(c) Submission of plans and specifications to RUS. (1) If the
project does not exceed $500,000 or 25% of the loan, whichever is less,
the borrower shall furnish GFR one set of P&S. The borrower may then
proceed with procurement in accordance with Sec. 1753.48.
(2) If the project exceeds $500,000 or 25% of the loan, whichever
is less, RUS approval of P&S is required. Two sets of P&S shall be
furnished to GFR. RUS will return one set to the borrower upon notice
of approval. The borrower may then proceed with procurement in
accordance with Sec. 1753.48.
23. Revise Sec. 1753.48, paragraphs (a)(4) and (b)(1) to read as
follows:
Sec. 1753.48 Procurement procedures.
(a) * * *
(4) Bid openings. (i) Bid openings and award of the contract shall
be conducted in accordance with Secs. 1753.5(b)(1) and 1753.8(a).
(ii) If Sec. 1753.8 requires RUS approval of award of the bid, the
borrower shall submit to RUS two copies of the assembly unit sections
of the apparent lowest responsive bid accepted by the borrower.
(b) Negotiated procurement. (1) Competitive bids are not required
for outside plant construction that is estimated to cost $250,000, or
less, inclusive of labor and materials.
* * * * *
24. Revise Sec. 1753.49, paragraphs (b), (c)(2) and (c)(3) to read
as follows:
Sec. 1753.49 Closeout documents.
* * * * *
(b) Documents required. The following table lists the documents
required to closeout the RUS contract Form 515.
Documents Required To Closeout Construction Contract
[RUS Form 515]
----------------------------------------------------------------------------------------------------------------
No. of copies prepared Distribution
by -------------------------
RUS Form No. Description --------------------------
Contractor Engineer Borrower Contractor
----------------------------------------------------------------------------------------------------------------
724......................... Final Inventory--Certificate ........... 2 1 1
of Completion.
724a........................ Final Inventory--Assembly ........... 2 1 1
Units.
None........................ Contractor's Bond Extension (3) ........... (to RUS) (to RUS)
(send to RUS when required).
281......................... Tabulation of Materials 2 ........... 1 1
Furnished by Borrower.
213......................... Certificate--``Buy American''. 1 ........... 1 ...........
None........................ Listing of Construction Change ........... 1 1 ...........
Orders.
224......................... Waiver and Release of Lien 1 ........... 1 ...........
(from each supplier).
231......................... Certificate of Contractor..... 1 ........... 1 ...........
527......................... Final Statement of ........... 2 1 1
Construction.
None........................ Reports on Results of ........... 1 1 1
Acceptance Tests.
None........................ Set of Final Staking Sheets... ........... 1 1 ...........
None........................ Tabulation of Staking Sheets.. ........... 1 1 ...........
None........................ Correction Summary (legible ........... 1 1 ...........
copy).
None........................ Treated Forest Products ........... ........... 1 ...........
Inspection Reports or
Certificates of Compliance
(prepared by inspection
company or supplier).
None........................ Final Key Map (when ........... 1 1 ...........
applicable).
None........................ Final Central Office Area and ........... 1 1 ...........
Town Maps.
----------------------------------------------------------------------------------------------------------------
(c) * * *
(2) Final inventory documents. (i) The borrower shall obtain
certifications from the engineer that the project and all required
documentation are satisfactory and complete. Requirements for these
contract closeout certifications are contained in Sec. 1753.18.
(ii) The borrower shall prepare and distribute the final inventory
documents in accordance with the tables contained in this section. The
documents listed for RUS shall be retained by the borrower for
inspection by RUS for at least two years from the date of the
engineer's contract closeout certification.
Step-by-Step Procedure for Closeout of Construction Contract
[RUS Form 515]
----------------------------------------------------------------------------------------------------------------
Sequence
---------------------------------------------------- By Procedure
Step No. When
----------------------------------------------------------------------------------------------------------------
1 Upon Completion of Borrower's Engineer.. Prepares the following: a set of
Construction. Detail Maps and a set (when
applicable) of Key Maps which show
in red the work done under the 515
contract; a Tabulation of Staking
Sheet; and a tentative Final
Inventory, RUS Forms 724 and 724a.
2 After acceptance tests Borrower's Engineer.. Forwards letter to the borrower with
made. copies to the GFR stating that the
project is ready for final
inspection. Schedules inspection
date.
3 Upon receipt of letter GFR.................. Advises borrower whether attending
from Borrower's Engineer. the final inspection will be
possible.
[[Page 16610]]
4 By inspection date........ Borrower's Engineer.. Obtains and makes available the
following documents: a set of ``as
constructed'' detail maps and (when
applicable) ``as built'' key maps;
a list of construction change
orders; the final staking sheets;
the tabulation staking sheets; the
treated forest products inspection
reports or certificates of
compliance; the tentative final
inventory, RUS Forms 724 and 724a;
the tentative tabulation, RUS Form
231 (if borrower furnished part of
material); and, a report of results
of acceptance tests.
5 During inspection......... Borrower's Engineer.. Issues instructions to contractor
covering corrections to be made in
construction as a result of
inspection.
6 During inspection......... Contractor........... Corrects construction on basis of
instructions from the borrower's
engineer. The corrections should
proceed closely behind the
inspection in order that the
borrower's engineer can check the
corrections before leaving the
system.
7 During inspection......... Borrower's Engineer.. Inspects and approves corrected
construction. Marks inspected areas
on the key map, if available,
otherwise on the detail maps.
8 Upon completion of Borrower's Engineer.. Prepares or obtains all the closeout
inspection. documents listed in Table 3.
9 After signing final Borrower............. Prepares and submits to RUS the
inventory. engineer's certifications of
completion and a Financial
Requirement Statement, RUS Form
481, requesting amount necessary to
make final payment due under
contract.
10 On receipt of final Borrower............. Promptly forwards check for final
advance. payment to contractor.
11 During subsequent loan RUS Field Accountant. Examines borrower's construction
fund audit review records for compliance with the
following final payment. construction contract and Subpart
F, and examines RUS Form 281
(Tabulation of Materials Furnished
by Borrower) if any, for
appropriate costs.
----------------------------------------------------------------------------------------------------------------
(iii) When the total inventory price exceeds the maximum contract
by more than 20 percent, an extension to the contractor's bond is
required.
(iv) The borrower shall submit the engineer's contract closeout
certification with FRS for the final advance of funds.
(3) Final payment shall be made according to the payment provisions
of article III of RUS Form 515, except that certificates and other
documents required to be submitted to or approved by the Administrator
shall be submitted to and approved by the Owner.
Sec. 1753.50 [Removed and Reserved]
25. Section 1753.50 is removed and reserved.
26. Revise Sec. 1753.58, paragraphs (b), (c)(2) and (c)(5) to read
as follows:
Sec. 1753.58 Closeout documents.
* * * * *
(b) Documents. The documents required to close the FAP are listed
in the following table. The following is a brief description of the
closeout documents:
Documents Required To Close Out Force Account Outside Plant Construction
------------------------------------------------------------------------
RUS Form No. Description
------------------------------------------------------------------------
817, 817a, 817b.............. Final Inventory Force Account
Construction and Certificate of
Engineer. Submit one copy to RUS, if
required \1\
213.......................... Certificate--``Buy American'' (as
applicable from each supplier).
None......................... Detail Maps.
None......................... Key map, if applicable.
None......................... Staking Sheets.
None......................... Tabulation of staking sheets.
None......................... Treated Forest Products Inspection
Reports or Certificates of Compliance
(prepared by inspection company or
supplier).
------------------------------------------------------------------------
\1\ RUS Forms 817, 817a, and 817b are to be submitted to GFR only if
required in paragraph (c)(5) of this section. Otherwise, the final
inventory documents are to be assembed and retained by the borrower
for at least two years.
(c) * * *
(2) The GFR shall be invited to make the final inspection
accompanied by the engineer and the borrower.
* * * * *
(5) After inspection, the final inventory documents shall be
assembled as indicated in the table in this section. RUS Forms 817,
817a, and 817b are to be submitted to GFR only if the amount of the
closeout exceeds the original force account proposal by 20% or more.
Otherwise, the final inventory documents are to be assembed and
retained by the borrower for at least two years.
* * * * *
[[Page 16611]]
27. Revise Sec. 1753.68, paragraphs (b)(2)(i), (b)(2)(ii),
(b)(2)(iii), (b)(2)(iv), (b)(2)(v), (b)(4)(i), (b)(4)(ii), (c)(2), and
(d)(3) to read as follows:
Sec. 1753.68 Purchasing special equipment.
* * * * *
(b) * * *
(2) Initial equipment purchase. (i) The borrower prepares P&S and,
for projects estimated to exceed $500,000 or 25% of the loan, whichever
is less, sends two copies to GFR for approval.
(ii) For projects estimated to exceed $500,000 or 25% of the loan,
whichever is less, RUS will either approve P&S in writing or notify the
borrower of the reasons for withholding approval.
(iii) For projects estimated to cost less than $500,000 or 25% of
the loan, whichever is less, the borrower may proceed with procurement
upon completion of the P&S.
(iv) If the borrower has employed full competitive bidding in the
selection, a contract may be executed with the successful bidder and
the borrower may proceed to paragraph (b)(2)(vi) of this section.
(v) If the borrower did not follow a fully competitive bidding
process as described in Sec. 1753.8, the selection, along with a
summary of all proposals and an engineer's recommendation, shall be
sent to RUS. RUS shall approve the proposal selection in writing or
notify the borrower of any reason for withholding approval.
* * * * *
(4) New system additions. (i) The borrower prepares the P&S and, if
the project is estimated to exceed $500,000 or 25% of the loan,
whichever is less, sends two copies to the GFR for approval. The
borrower may request RUS approval to negotiate for the purpose of
standardization on a system basis prior to preparing the P&S.
(ii) RUS notifies the borrower in writing as to whether the
borrower may negotiate for specific equipment. If P&S were required to
be submitted to RUS under paragraph (b)(4)(i) of this section, RUS
notifies the borrower in writing of P&S approval (or notifies the
borrower of the reasons for withholding approval).
* * * * *
(c) * * *
(2) The borrower shall prepare any required amendments to the
special equipment contract, arrange for the execution by all parties,
and submit these amendments to RUS in accordance with Sec. 1753.11(d).
RUS Form 238, Construction or Equipment Contract Amendment, shall be
used for this purpose.
* * * * *
(d) * * *
(3) Closeout documents. When the acceptance tests have been
completed and all deficiencies have been corrected, the borrower:
(i) Assembles and distributes the documents listed in the following
table that are required for the closeout of the special equipment
contract. The documents listed for RUS shall be retained by the
borrower for inspection by RUS for at least two years from the date of
the engineer's contract closeout certification.
Documents Required To Close Out Special Equipment Contracts
[RUS Forms 397 and 398]
----------------------------------------------------------------------------------------------------------------
No. of copies prepared by Distribution
RUS Form No. Description --------------------------------------- Engineer -------------------------
Form 397 Form 398 Contractor Borrower Contractor
----------------------------------------------------------------------------------------------------------------
238 Construction or ........... (3) ........... (3) (to RUS) (to RUS)
Equipment
Contract
Amendment (if
not previously
submitted, send
to RUS for
approval).
396 Certificate of ........... 2 ........... ........... 1 1
Completion--Spec
ial Equipment
Contract
(Including
Installation).
396a Certificate of ........... ........... ........... 2 1 1
Completion--Spec
ial Equipment
Contract (Not
Including
Installation).
744 Certificate of 1 ........... ........... ........... 1 ...........
Contractor and
Indemnity
Agreement.
213 Certificate (Buy 1 ........... 1 ........... 1 ...........
American).
None Report in 1 ........... ........... 1 1 ...........
writing,
including all
measurements and
other
information
required under
Part II of the
applicable
specifications.
None Set of 1 ........... 1 ........... 1 ...........
maintenance
recommendations
for all
equipment
furnished under
the contract.
----------------------------------------------------------------------------------------------------------------
(ii) Obtains certifications from the engineer that the project and
all required documentation are satisfactory and complete. Requirements
for this contract closeout certification are contained in Sec. 1753.18.
(iii) Submits copies of the engineer's certifications to RUS with
the FRS requesting the remaining funds on the contract.
(iv) Makes final payment in accordance with the payment terms of
the contract.
28. Revise Sec. 1753.76, paragraph (a) is revised to read as
follows:
Sec. 1753.76 General.
(a) This subpart implements and explains the provisions of the Loan
Documents containing the requirements and procedures to be followed by
borrowers for minor construction of telecommunications facilities using
RUS
[[Page 16612]]
loan funds. Terms used in this subpart are defined in Sec. 1753.2.
* * * * *
29. Revise Sec. 1753.77 to read as follows:
Sec. 1753.77 Methods of minor construction.
Minor construction may be performed by contract using RUS Contract
Form 773, ``Miscellaneous Construction Work and Maintenance Services'',
by RUS Contract Form 515, or by work order construction. The rules for
using Form 515 for minor construction are contained in subpart F of
this part.
30. Revise Sec. 1753.80, paragraph (b) to read as follows:
Sec. 1753.80 Minor construction procedure.
* * * * *
(b) RUS financing under Form 773 contracts dated in the same
calendar year is limited to the following amounts for the following
discrete categories of minor construction. The date of the Form 773
contract is the date the Form 773 contract is executed.
(1) For outside plant construction, the limit is $500,000 or ten
per cent (10%) of the borrower's previous calendar year's outside plant
total construction, whichever is greater.
(2) For central office equipment, the limit is $500,000.
(3) For special equipment and buildings, the limit is $250,000 in
each category.
* * * * *
Appendices A-F Removed
31. Remove Appendices A through F to part 1753.
Dated: March 31, 1999.
Inga Smulkstys,
Deputy Under Secretary, Rural Development.
[FR Doc. 99-8380 Filed 4-5-99; 8:45 am]
BILLING CODE 3410-15-M