7 Cfr 1789

CFR-2011-title7-vol12-part1789.pdf

Use of Consultants Funded by Borrowers, 7 CFR Part 1789

7 CFR 1789

OMB: 0572-0115

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§ 1788.49

7 CFR Ch. XVII (1–1–11 Edition)

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and employee coverage to the same extent as though the employer or employee were subject to the workers’
compensation laws.
(b) Public liability insurance covering all operations under the contract
shall have limits for bodily injury or
death of not less than $1 million each
occurrence, limits for property damage
of not less than $1 million each occurrence, and $1 million aggregate for accidents during the policy period. A single limit of $1 million of bodily injury
and property damage is acceptable.
This required insurance may be in a
policy or policies of insurance, primary
and excess including the umbrella or
catastrophe form.
(c) Automobile liability insurance on
all motor vehicles used in connection
with the contract, whether owned, nonowned, or hired, shall have limits for
bodily injury or death of not less than
$1 million per person and $1 million per
occurrence, and property damage limits of $1 million for each occurrence.
This required insurance may be in a
policy or policies of insurance, primary
and excess including the umbrella or
catastrophe form.
(d) When a borrower contracts for the
installation of major equipment by
other than the supplier or for the moving of major equipment from one location to another, the contractor shall
furnish the borrower with an installation floater policy. The policy shall
cover all risks of damage to the equipment until completion of the installation contract.
§ 1788.49 Contractors’ bond requirements.
Construction contracts in amounts in
excess of $250,000 for facilities shall require contractors to secure a contractors’ bond, on a form approved by RUS,
attached to the contract in a penal
sum of not less than the contract price,
which is the sum of all labor and materials including owner-furnished materials installed in the project. RUS
Form 168b is for use when the contract
exceeds $250,000. RUS Form 168c is for
use when the contractor’s surety has
accepted a Small Business Administration guarantee and the contract is for
$1,000,000 or less. For minor construction contracts under which work will

be done in sections and no section will
exceed a total cost of $250,000, the borrower may waive the requirement for a
contractors’ bond.
§ 1788.50 Acceptable sureties.
Surety companies providing contractors’ bonds shall be listed as acceptable
sureties in the U.S. Department of
Treasury Circular No. 570. The circular
is maintained through periodic publication in the FEDERAL REGISTER and is
available on the Internet under ftp://
ftp.fedworld.gov/pub/tel/sureties.txt,
and on the Department of the Treasury’s computer bulletin board at 202–
874–6817.
§§ 1788.51–1788.53

[Reserved]

§ 1788.54 Compliance with contracts.
It is the responsibility of the borrower to determine, before the commencement of work, that the engineer,
architect, and the contractor have insurance that complies with their contract requirements.
§ 1788.55 Providing RUS evidence.
When RUS shall specifically so direct, the borrower shall also require
the engineer, the architect, and the
contractor, to forward to RUS evidence
of compliance with their contract representative of the insurance company
and include a provision that no change
in or cancellation of any policy listed
in the certificate will be made without
the prior written notice to the borrower and to RUS.

PART 1789—USE OF CONSULTANTS
FUNDED BY BORROWERS
Subpart A—Policy and Procedures With
Respect to Consultant Services Funded
by Borrowers—General
Sec.
1789.150 Purpose.
1789.151 Definitions.
1789.152 Policy.
1789.153 Borrower funding.
1789.154 Eligible borrowers.
1789.155 Approval criteria.
1789.156 Proposal procedure.
1789.157 Consultant contract.
1789.158 Implementation.
1789.159 Contract administration.
1789.160 Access to information.
1789.161 Conflicts of interest.

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Rural Utilities Service, USDA

§ 1789.151

1789.162 Indemnification agreement.
1789.163 Waiver.
1789.164–1789.165 [Reserved]

Subpart B—Escrow Account Funding and
Payments
1789.166 Terms and conditions of funding
agreement.
1789.167 Terms and conditions of escrow
agreement.
1789.168–1789.175 [Reserved]
AUTHORITY: 7 U.S.C. 901–950b; Pub. L. 103–
354, 108 Stat. 3178 (7 U.S.C. 6941 et seq.).
SOURCE: 61 FR 48606, Sept. 16, 1996, unless
otherwise noted.

Subpart A—Policy and Procedures
With Respect to Consultant
Services Funded by Borrowers—General

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§ 1789.150 Purpose.
This part sets forth policies and the
procedures for implementing subsection (c) of section 18 of the Rural
Electrification Act of 1936, as amended
(7 U.S.C. 901 et seq.)(RE Act) which authorizes the Rural Utilities Service
(RUS) to use the services of Consultants funded by the Borrowers to facilitate timely action on Applications by
Borrowers for financial assistance and
other approvals.
§ 1789.151 Definitions.
As used in this part:
Administrator means the Administrator of the Rural Utilities Service
(RUS).
Application means a request for financial assistance under the RE Act or
such other approvals as may be required of the RUS pursuant to the
terms of outstanding loan or security
instruments or otherwise.
Borrower means any organization
which has an outstanding loan(s) made
or guaranteed by RUS or its predecessor agency, the Rural Electrification Administration (REA) under the
RE Act or any organization which has
submitted or submits an Application
before RUS.
Consultant means a person or firm
which has been retained pursuant to
this subpart under a contract to provide financial, legal, engineering, environmental, or other technical advice
and services.

Consultant Contract means a contract
for the performance of consulting services for RUS, to be paid using funds
provided by a Borrower, which may be
in the form of a Retainer Contract,
purchase order, or other form as may
be appropriate.
Escrow Account means an account established pursuant to § 1789.158.
Escrow Agreement means an agreement, between a Borrower, a Consultant and a Third-party Commercial Institution, meeting the requirements of
§ 1789.167.
Final Invoice means the closing Invoice prepared for a given Task Order.
Financial Consultant means a Consultant retained pursuant to this part
to provide financial advisory services.
Funding Agreement means an agreement, between a Borrower and a Consultant, providing for the Borrower to
fund the costs of a Task Order and otherwise meeting the requirements of
§ 1789.166.
Indemnification Agreement means an
agreement by a Borrower meeting the
requirements of § 1789.162.
Invoice means an invoice prepared by
a Consultant pursuant to the terms of
a Consultant Contract.
Legal Consultant means any Consultant retained pursuant to this part to
provide legal services to RUS.
Notice of Proposal to Fund means a notice meeting the requirements of
§ 1789.156 provided to RUS by the Borrower.
Organizational conflict of interest
means that because of other activities
or relationships with other persons, a
person is unable or potentially unable
to render impartial assistance or advice to the Government, or the person’s
objectivity in performing the contract
work is or might be otherwise impaired, or a person has an unfair competitive advantage.
Retainer Contract means a Consultant
Contract providing for a minimum required payment to a Consultant irrespective of whether services are utilized by RUS thereunder.
Task Order means a written request
for consultant services pursuant to the
terms of a Consultant Contract.

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§ 1789.152

7 CFR Ch. XVII (1–1–11 Edition)

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Third-party
Commercial
Institution
means a commercial financial institution mutually acceptable to the Borrower and the Consultant.
§ 1789.152 Policy.
(a) As provided in this subpart, RUS
may, at its discretion, use the services
of Consultants funded by a Borrower
where such services will facilitate
timely action on an Application by
such Borrower for financial assistance
or other approvals. Such Consultants
may provide financial, legal, engineering, environmental or other technical
advice and services in connection with
the review of an Application.
(b) With the approval of RUS, a Borrower may fund the cost of consulting
services in connection with the review
by RUS of an Application by such Borrower. Such funding shall be provided
pursuant to the terms of a Funding
Agreement between the Borrower and
the Consultant designated by RUS.
(c) RUS may not, without the consent of the Borrower, require, as a condition of processing any Application
for approval, that the Borrower agree
to pay the costs of a Consultant hired
to provide services to RUS.
(d) The government shall retain sole
discretion in the selection of Consultants to provide services to RUS and the
form of contract utilized. RUS may either use the services of one or more
Consultants retained under Retainer
Contracts or the government may elect
to retain a Consultant not otherwise on
retainer. The government shall have
sole discretion to prescribe terms and
conditions of Consultant Contracts.
The Borrower may bring considerations to the attention of the government which the Borrower deems pertinent to the selection process.
(e) RUS shall retain sole discretion
as to whether to further pursue use of
an outside consultant for the relevant
application in the event the Borrower
does not enter into the agreements referenced in § 1789.158(c)(3)(iii) within 60
days of the government providing to
the Borrower the information set forth
in § 1789.158(c)(3).
§ 1789.153 Borrower funding.
Borrowers shall use their general
funds for the purposes of funding con-

sultant services hereunder. Borrowers
may not use the proceeds of loans made
or guaranteed under the RE Act for
costs incurred by Borrowers pursuant
to the funding of consultant services
for RUS.
§ 1789.154

Eligible borrowers.

All Borrowers are eligible to fund
consultant services under this part.
§ 1789.155

Approval criteria.

RUS will consider approving the use
of consultant services funded by a Borrower on a case by case basis taking
into account, among other matters, the
following:
(a) Whether such services are required to facilitate timely action on a
Borrower’s Application. RUS shall determine what represents timely action
with respect to each Application considering, among other matters, the review period normally required for such
projects by RUS and other lenders and
the consequences to the Borrower of
adjusting the review period.
(b) The availability of staff resources, the priorities of other projects
then before RUS, and the efficiencies
to be realized from the use of consultant services.
(c) Whether it is in the best interest
of RUS to use Borrower-funded Consultants. Certain types of projects,
such as those involving issues of program-wide significance, may not be
well suited for the use of Borrower
funded Consultants.
§ 1789.156

Proposal procedure.

(a) In the event RUS determines that
consideration should be given to the
use of a Borrower-funded consultant in
connection with the review of an Application, the RUS Regional Director or
the Director of the Power Supply Division, as appropriate, will discuss with
the Borrower the nature of the Application and the projected review period
required of RUS. If RUS concludes that
the projected review period will not result in timely action on the Application, and after being so notified in
writing by RUS the Borrower wishes to
fund consultant services to facilitate
RUS review, the Borrower shall submit

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Rural Utilities Service, USDA

§ 1789.158

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to the same Director a funding proposal. The proposal shall set forth the
following:
(1) Identification in the heading or
caption as a Notice of Proposal to Fund
Consulting Services;
(2) Borrower’s REA/RUS designation;
(3) Borrower’s legal name and address;
(4) A description of the Application,
critical issues and concerns relating to
the Application, time deadlines, and
the consequences of any delays in RUS
review;
(5) A description of the consulting
service(s) that would facilitate timely
RUS review of the Application; and
(6) Such additional documents and
information as RUS may request.
(b) RUS will review the Notice of
Proposal to Fund and any additional
information RUS deems relevant in determining whether to proceed with procuring Borrower funded Consultants. If
RUS proposes to utilize Legal Consultants, RUS must obtain the concurrence
of the Office of General Counsel (OGC)
of the Department of Agriculture. RUS
will notify the Borrower in writing of
its determination.
§ 1789.157 Consultant contract.
(a) The Federal Acquisition Regulation (FAR), 48 CFR Ch. 1, and the Agriculture
Acquisition
Regulation
(AGAR), 48 CFR Ch. 4, shall apply to all
Consultant Contracts entered into pursuant to this part except as provided in
this section.
(1) Contracts for Legal Consultants
shall provide for a technical representative from OGC.
(2) All Consultant Contracts shall
provide for an escrow account funding
mechanism pursuant to this part and
for the government’s sole discretion in
determining whether payments are to
be made from the Escrow Account to
the Consultant.
(3) All Consultant Contracts shall
provide that payment of all obligations
for work performed thereunder must be
satisfied by amounts available in the
Escrow Account; with the exception of
the annual retainer fee, if any, Consultants shall not be entitled to any
payments from the government.
(b) The provisions of paragraph (a) of
this section shall be given prominent

emphasis in requests
issued under this part.
§ 1789.158

for

proposals

Implementation.

(a) Upon making a determination to
go forward with Borrower funding for
consulting services, RUS shall initiate
a procurement request for a Consultant
to provide the services. The government may either contract with a Consultant on a case by case basis or elect
to use a Consultant pursuant to an outstanding Retainer Contract. The Borrower will not be informed of the Consultant selected until such time as the
government provides the information
set forth in paragraph (c)(3) of this section.
(b) If the government determines to
contract with a Consultant on a case
by case basis, the government shall notify the Borrower of the applicable procedures.
(c) If the government determines to
contract with a Consultant under an
outstanding Retainer Contract, the following procedures will normally apply:
(1) Pursuant to the terms of the contract, the government will prepare a
draft Task Order requesting consultant
services in connection with the review
of the Borrower’s Application. The
draft Task Order shall set forth for the
Consultant’s review and acceptance, a
description of the services to be provided and applicable time frames for
the provision of such services.
(2) The government will request that
the Consultant:
(i) Notify the government as to the
acceptability of the form and substance
of the draft Task Order;
(ii) Notify the government as to its
ability to provide a satisfactory conflict of interest certification consistent
with the requirements of the FAR (48
CFR ch. 1); and
(iii) Provide a cost estimate for the
draft Task Order.
(3) When the government is satisfied
with the response(s) received pursuant
to paragraph (c)(2) of this section, the
government shall promptly provide to
the Borrower:
(i) A copy of the draft Task Order
identifying the Consultant;
(ii) The Consultant’s cost estimate
for the draft Task Order; and

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§ 1789.159

7 CFR Ch. XVII (1–1–11 Edition)

(iii) Contract information required to
enable the Borrower to develop a Funding Agreement, an Escrow Agreement
and an Indemnification Agreement (the
‘‘agreements’’).
(4) The Borrower shall develop and
submit to the government for approval
executed originals of:
(i) The agreements; and
(ii) A certified copy of a resolution of
the board of directors authorizing the
Borrower to enter into the agreements
and to take such other action as is necessary to effect the purposes of the
agreements.
(5) Upon receiving written RUS approval of the agreements and the form
and substance of the board resolution,
the Borrower shall:
(i) Establish and fund the Escrow Account; and
(ii) Provide written notice to the government of the Escrow Account number, the funding thereof, and such
other information as required pursuant
to the agreements.
(6) After the Borrower has funded the
Escrow Account, the government shall
issue Task Order(s) for consultant services in accordance with the terms and
conditions of the applicable Retainer
Contract.
§ 1789.159

Contract administration.

The government shall be solely responsible for the administration of a
Consulting Contract and shall have
complete control over the scope of the
Consultant’s work, the timetable for
performance, the standards to be applied in determining the acceptability
of deliverables and the approval of payment of Invoices.

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§ 1789.160

Access to information.

The Borrower shall not have rights in
nor right of access to the work product
of the Consultant. All analyses, studies, opinions, memoranda, and other
documents and information provided
by the Consultant pursuant to a Consulting Contract may be released and
made available to the Borrower only
with the approval of RUS. This section
does not restrict release of information
by RUS pursuant to the Freedom of Information Act (5 U.S.C. 552(a)(2)) or
other legal process.

§ 1789.161 Conflicts of interest.
The standard for determining organizational conflicts of interest shall be as
set forth in the FAR subpart 9.5 (48
CFR part 9, subpart 9.5); however, the
identification of the existence of an organizational conflict of interest may
be made by either the Administrator or
the cognizant Contracting Officer. In
the event an organizational conflict of
interest is determined to exist, the cognizant Contracting Officer shall take
the actions prescribed at FAR 9.504 (48
CFR 9.504) to attempt to avoid, neutralize or mitigate the conflict. Should
these actions be deemed by the Administrator and the Contracting Officer to
adequately resolve the conflict, the
contracting action with the offeror/
contractor may proceed. Should the
Administrator or the Contracting Officer determine that an organizational
conflict of interest still exists such
that contract award or other contracting action cannot be taken (award
of task/delivery order, etc.) the offeror/
contractor shall be so informed by the
Contracting Officer and be provided a
reasonable opportunity to respond in
accordance with FAR 9.504(e) (48 CFR
9.504(e)). After considering the contractor’s response, if it is found by both the
Administrator and Contracting Officer
to remedy the conflict of interest, the
contracting action may proceed. If the
Administrator and Contracting Officer
determine that the contractor’s response does not resolve the conflict of
interest, yet continuing with the contracting action with the offeror/contractor in question is considered in the
best interest of the United States, a
waiver in accordance with FAR 9.503
(48 CFR 9.503) may be executed. This
waiver shall be submitted under the
Contracting Officer’s signature and approved by the Administrator. The Administrator has been delegated Head of
Contracting Activity authority by the
USDA Senior Procurement Executive
solely for the purpose of waiver approval.
§ 1789.162 Indemnification agreement.
As a condition of approving Borrower
funding, the government will require
the Borrower to enter into an Indemnification Agreement, in form and substance satisfactory to RUS, providing

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Rural Utilities Service, USDA

§ 1789.167

that the Borrower will indemnify and
hold harmless the government and any
officers, agents or employees of the
government from any and all liability,
including costs, fees, and settlements
arising out of, or in any way connected
with the payment of the Consultant’s
fee pursuant to the Consultant Contract. The Indemnification Agreement
may recognize, as a condition of liability thereunder, the rights of the borrower to prompt notice, to use of counsel of its own choosing, and to participation in any settlement of a claim
against
which
indemnification
is
sought.

of

(f) A description of the services to be
provided by the Consultant to RUS and
the applicable time frames for the provision of such services;
(g) Agreement that the Borrower
shall pay for the Consultant services
provided to RUS under the applicable
contract through an Escrow Account
established pursuant to an Escrow
Agreement, the Consultant shall not
provide services to RUS under the applicable contract unless there are sufficient funds in the Escrow Account to
pay for such services, the Consultant
shall seek compensation for services
provided under the applicable contract
from, and only from, funds made available through the Escrow Account, and
the Consultant must submit all Invoices to the government for approval.
(h) A form of Escrow Agreement satisfactory to the Borrower, Consultant
and the designated Third-party Commercial Institution;
(i) A schedule setting forth when and
in what amounts the Borrower shall
fund the Escrow Account;
(j) Acknowledgment by the Consultant of the Indemnification Agreement
provided by the Borrower to the government; and
(k) The Funding Agreement shall not
be effective unless and until approved
in writing by RUS.

Funding Agreements between the
Borrower and a Consultant shall be in
form and substance satisfactory to
RUS and provide for, among other matters, the following:
(a) Specific reference by number to
the applicable Consulting Contract entered into between the government and
the Consultant;
(b) Specific reference by number to
the applicable Task Order (where applicable);
(c) A brief description of the Application;
(d) A requirement that Invoices make
specific reference to:
(1) The applicable contract and Task
Order(s); and
(2) The Escrow Account from which
payment is to be made;
(e) A requirement that the Final Invoice for a Task Order be clearly identified as such;

§ 1789.167 Terms and conditions of escrow agreement.
Escrow Agreements between and
among the Borrower, Consultant and
Third-party Commercial Institution
shall be in form and substance satisfactory to RUS and provide for, among
other matters, the following:
(a) Specific reference by number to
the applicable contract for services;
(b) Specific reference by number to
the applicable Task Order;
(c) Specific reference by number to
the Escrow Account into which funds
are to be deposited;
(d) Invoices to specifically identify
the applicable contract and Task
Order(s);
(e) Funds to be held in the Escrow
Account by the escrow agent until paid
to the Consultant pursuant to the government’s authorization;
(f) The Escrow Account to be closed
and all remaining funds remitted to

§ 1789.163

Waiver.

RUS may waive any requirement or
procedure of this subpart by determining that its application in a particular situation would not be in the
government’s interest, except that certain provision that the subject contracts are subject to the provisions of
the FAR (48 CFR ch. 1) and AGAR (48
CFR ch. 4).
§§ 1789.164–1789.165

[Reserved]

Subpart B—Escrow Account
Funding and Payments

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§ 1789.166 Terms and
funding agreement.

conditions

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§§ 1789.168–1789.175

7 CFR Ch. XVII (1–1–11 Edition)

the Borrower after payment of the
Final Invoice, unless otherwise directed by the government;
(g) The government, the Consultant
and the Borrower to have the right to
be informed, in a timely manner and in
such form as they may reasonably request, as to the status of and activity
in the Escrow Account; and
(h) The Escrow Agreement shall not
be effective unless and until approved
in writing by RUS.
§§ 1789.168–1789.175

[Reserved]

PART 1792—COMPLIANCE WITH
OTHER FEDERAL STATUTES, REGULATIONS, AND EXECUTIVE ORDERS
Subparts A–B [Reserved]

[58 FR 32437, June 10, 1993, as amended at 65
FR 76916, Dec. 8, 2000]

§ 1792.102

Subpart C—Seismic Safety of Federally
Assisted New Building Construction
Sec.
1792.101 General.
1792.102 Definitions.
1792.103 Seismic design and construction
standards for new buildings.
1792.104 Seismic acknowledgments.
AUTHORITY: 7 U.S.C. 901 et seq., 1921 et seq.,
6941 et seq.; 42 U.S.C. 7701 et seq.; E.O. 12699
(3 CFR, 1990 Comp., p. 269).
SOURCE: 58 FR 32437, June 10, 1993, unless
otherwise noted.

Subparts A–B [Reserved]
Subpart C—Seismic Safety of Federally Assisted New Building
Construction

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tures earthquake resistant. Executive
Order 12699 of January 5, 1990, Seismic
Safety of Federal and Federally Assisted or Regulated New Building Construction (3 CFR, 1990 Comp., p. 269),
requires that measures to assure seismic safety be imposed on federally assisted new building construction.
(b) This subpart identifies acceptable
seismic standards which must be employed in new building construction
funded by loans, grants, or guarantees
made by the Rural Utilities Service
(RUS) or the Rural Telephone Bank
(RTB) (or through lien accommodations or subordinations approved by
RUS or RTB).

§ 1792.101 General.
(a) The Earthquake Hazards Reduction Act of 1977 (42 U.S.C. 7701 et seq.)
was enacted to reduce risks to life and
property through the establishment
and maintenance of an effective earthquake hazards reduction program (the
National Earthquake Hazards Reduction Program or NEHRP). The Federal
Emergency
Management
Agency
(FEMA) is designated as the agency
with the primary responsibilities to
plan and coordinate the NEHRP. This
program includes the development and
implementation of feasible design and
construction methods to make struc-

Definitions.

As used in this subpart, the following
terms have the following meaning:
Administrator—Administrator of RUS
or the Governor of the Rural Telephone
Bank or his or her designee.
Borrower—An entity which borrows
or seeks to borrow money from, or arranges financing with the assistance of
RUS through guarantees, lien accommodations or lien subordinations.
Building—Any structure, fully or partially enclosed, used or intended for
sheltering persons or property.
Federally assisted—The provision of financing assistance by RUS through
loans, loan guarantees, grants, and lien
accommodations and subordinations.
Grant recipient—Any entity which receives a grant from RUS.
Lien accommodation—The consensual
sharing of the government’s (RUS’s)
lien on property or the release of government’s lien on property.
Lien subordination—Agreement that
the government’s (RUS) lien on property will rank below the lien of another
entity.
Model Code—A building code developed for the adoption of local or state
authorities or to be used as the basis of
a local or state building code.
NEHRP—National Earthquake Hazards Reduction Program.
Registered—A person licensed by the
State(s) or Authority(ies) to perform
architectural or engineering services in
the State(s) where construction occurs.

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