dm_3rd_2022 - 0572-0149 Supporting Statement 5-12-22

September 2022

SUPPORTING STATEMENT

OMB Control No. 0572-0149

Equipment Contract, RUS 395, for Telecommunications and Broadband Borrowers

A. Justification

1. Explain the circumstances that make the collection of information necessary.

The Rural Electrification Act of 1936, 7 U.S.C. 901 et seq., as amended (RE Act), in

Title I, sec. 2, The Administrator is authorized and empowered to make loans in the States and Territories of the United States for rural electrification and the furnishing of electric energy to persons in rural areas who are not receiving central station service, and for the purpose of furnishing and improving telephone service in rural areas, as hereinafter provided; to make or cause to be made, studies, investigations, and reports concerning the condition and progress of the electrification of and the furnishing of adequate telephone service in rural areas in the several States and Territories; and to publish and disseminate information with respect thereto.

The RE Act was amended by Title IV, Rural Broadband Access, by Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171) (“2002 Farm Bill”). It authorizes and empowers the Administrator of the Rural Utilities Service (Agency), an agency that administers rural utilities programs for USDA Rural Development, to provide loan and loan guarantees to fund the cost of construction, improvement, or acquisition of facilities and equipment for the provision of broadband service in eligible rural communities in the States and Territories of the United States.

The term of the loan can be as high as 25 years or even longer, based on both the expected composite economic life and on the depreciation rates of the facilities financed. These loans are secured by a first mortgage on the borrower’s telecommunications/broadband system. In the interest of protecting loan security and accomplishing the statutory objective of a sound program of rural telecommunications/broadband service access, Title VI of the RE Act further requires that the Agency make or guarantee a loan only if there is reasonable assurance that the loan, together with all outstanding loans and obligations of the borrower, will be repaid in full within the time agreed.

In the interest of protecting loan security and accomplishing the statutory objective of a sound program of telecommunication, Title II, sec. 201 further states that loans shall not be made unless the Administrator finds and certifies that in his judgment the security therefore is reasonably adequate and such loan will be repaid within the time agreed.

In order to facilitate the programmatic interests of the RE Act and in order to assure that loans made or guaranteed by the Agency are adequately secured, the Agency, as a secured lender, has established certain standard contracts and contracting procedures for procuring materials, equipment, and the construction of telecommunications systems.

These procedures apply to procurement and construction for all projects which will or may be financed, in whole or in part, with loans made or guaranteed by the Agency. These requirements are set forth in the standard form of the Agency mortgage.

In an effort to improve customer service provided to RUS rural Awardees, the Agency has revised, consolidated, and streamlined contracts and contracting procedures. The RUS worked with industry groups to obtain their input as to what types of changes they and Awardees wanted to see. Comments on the changes are addressed in Question 8.

2. Indicate how, by whom, and for what purpose the information is to be used. Except for a new collection, indicate the actual use the Agency has made of the information received from the current collection.

This contract form is used only by RUS Awardees and their engineers and suppliers. Contract terms and obligations in the RUS’ Equipment Contract, RUS Form 395, reflect present business and RUS practices, and changes in technology, services and equipment.

This information is used to implement provisions of the Agency standard form of loan documents regarding the Awardee’s purchase of materials and equipment and the construction of its telecommunications and/or broadband system by contract. This collection of information will be used by Agency Awardees and their contractors. In the Telecommunications industry, when a cooperative or company enters into contracts for services, some type of contract form is used. The Agency has developed the specific forms cleared with this package to be used by its Awardees when entering into contracts for goods or services. Standardization of forms by the Agency results in substantial savings to:

a. Awardees: If standard forms were not used, Awardees would need to prepare their own documents at a significant expense; and

b. Government: If standard forms were not used, each document submitted by an Awardee would require more extensive and more costly review by both the Agency and the Office of the General Counsel.

Subpart A of §1753 includes some pre-construction review paperwork burdens for which there are no forms. These burdens include:

1. §1753.3 requires an Awardee to send a letter to the Agency requesting approval for any construction which is not in conformance with Agency standards and specifications or detailed on the Loan Design that the Agency has approved. This provides the Agency with the means to review proposed construction to be certain that the design will provide for effective and proficient facilities and preserve loan security.

2. §1753.6 requires Awardees to send a letter to obtain Agency approval to incorporate used materials and equipment or materials and equipment that do not comply with Agency standards and specifications. This provides the Agency with the means to review proposed construction materials to be certain that the quality and design will provide for effective and proficient facilities and preserve loan security.

The Agency requires the submission of a form contract only when the contract is subject to Agency approval. The Agency also requires that the Awardee maintain the contract as part of its record retention and accounting system as required by 7 CFR Part 1770 (0572-0003).

The specific purposes and uses of each component of this information collection are addressed as follows:

FORMS APPROVED WITH THIS COLLECTION

Written - Letter for pre-construction review of nonconforming standards and specifications.

The letter for pre-construction review of nonconforming standards and specifications described in §1753.3 and §1753.6 requires an Awardee to write a letter to the Agency requesting approval to incorporate used materials and equipment or for any construction and materials/equipment which are not in conformance with Agency standards and specifications or detailed on the Loan Design that the Agency has approved. This provides the Agency with the means to review proposed construction to be certain that the quality and design will provide for effective and proficient facilities and preserve loan security.

The Agency requires the submission of a form contract only when the contract is subject to Agency approval. The Agency also requires that the borrower follow generally accepted accounting practices as part of its contract record retention system.

Written – Lobbying Certification (Telephone Version 3, 8/11).

§1753 Subparts E and H requires the completion of this lobbying certification.

RUS Form 395, Equipment Contract.

The RUS Form 395 is used for equipment purchases.

Forms Associated with RUS Form 395 are as follows:

RUS Form 395a, Certificate of Completion (Equipment Contract Including Installation).

The RUS Form 395a is used for the closeout of RUS Form 395 when the contract includes installation.

RUS Form 395b, Certificate of Completion (Equipment Contract Not Including Installation.

The RUS Form 395b is used for the closeout of RUS Form 395 when the equipment contract does not include installation.

RUS Form 395c, Certificate of Contractor and Indemnity Agreement.

The RUS Form 395c issued in the closeout of RUS Form 395 when installation is included.

RUS Form 395d, Results of Acceptance Tests.

The RUS Form 395d is a suggested form to be used to report results of acceptance testing of equipment for purposes of closing out the contract.

Form AD-1048, “Certification Regarding Debarment, Suspension, and Other Responsibility Matters –Lower Tier Covered Transactions.” (Form approved under OMB Control No. 0505-0027 – Burden counted under this collection).

The Form AD-1048 is signed by the Awardee’s suppliers, auditors, contractors, etc., and retained by the Awardee in its files.

The following information/forms are collected and accounted for under other collection packages:

SF-LLL, “Disclosure of Lobbying Activities” (Common Form approved under OMB Control No.4040-0013).

Applicant will complete all items on the form that apply for both the initial filing and any material change report. Use of this form is mandated in the Rural Alaskan Village Grant Program.

RUS Form 213, Certificate (“Buy American”) (Approved under OMB Control No. 0572-0107).

This form is used to document compliance with the RUS "Buy American" requirement.

RUS Form 238, Construction for Equipment-Contract Amendment (Approved under OMB Control No. 0572-0107).

This form allows Awardees to alter contract scope, terms and conditions; provides legal validation for alterations; legal adjustments to the contractor’s bond; and provides the Agency with evidence of the adjusted amount so funds can be advanced properly. This form provides the Agency loan security by tracking changes affecting project scope and costs. Except for the inclusion of terms and conditions related to Public Laws and Executive Orders, etc., this type of contract form would be used by respondents under normal business practice.

3. Describe whether, and to what extent, the collection of information involves the use of automated, electronic, mechanical, or other technological collection techniques or other forms of information technology, e.g., permitting electronic submission and responses, and the basis for the decision for adopting this means of collection.

The RUS continually reviews its short- and long-range plans and needs for electronic document submission. Most of the documents and forms in this package have been converted to an electronically fillable format accessible on the RD web-site. The other forms are in pdf format on the website and may be printed and then scanned for electronic submission.

In the presence of the Covid-19 pandemic, the Telecommunications Program has encouraged the submission of documents by e-mail. Forms with electronic entries can be filled in electronically and submitted directly via email. A policy of accepting electronically signed documents has been instituted for the fillable forms in this collection package.

All Forms in this collection are available at the following website: https://www.rd.usda.gov/publications/regulations-guidelines/forms-publications and are in a pdf format. A few of the forms are “printable only”. RUS encourages Awardees to use the most advanced technology to prepare the required information.

4. Describe efforts to identify duplication.

This collection is specific to a particular procurement of equipment or materials related to a RUS funded project. There are no other collections which would provide the same information pertaining to that procurement.

5. If the collection of information impacts small businesses or other small entities, describe the methods used to minimize burden.

Information to be collected is in a format designed to minimize the paperwork burden on small businesses and other small entities if applicable. The new RUS 395 forms streamline the contractual process for the RUS Awardees and all other parties, including small businesses and other small entities. The information collected is the minimum needed by the Agency to approve loans and monitor Awardee performance. There are no significant impacts on small businesses or entities.

6. Describe the consequence to Federal program or policy activities if the collection is not conducted or is conducted less frequently, as well as any technical or legal obstacles to reducing burden.

The information collected under these programs is the minimum necessary to conform to the requirements of the program regulations established by law. Information is collected when needed and cannot be collected less frequently to meet the requirements of the programs. Failure to collect proper information could result in the improper use of project funds.

7. Explain any special circumstances that would require an information collection to be conducted in a manner:

1. Requiring written responses in less than 30 days. There are no information requirements for written responses in less than 30 days.

2. Requiring more than an original and two copies. There are no specific requirements. With electronic submission, one copy is generally sufficient.

3. Requiring respondents to retain records for more than 3 years. There are no such requirements.

4. Not utilizing statistical sampling. There are no such requirements.

5. Requiring use of statistical sampling which has not been reviewed and approved by OMB. There are no such requirements.

6. Requiring a pledge of confidentiality. There are no such requirements.

7. Requiring submission of proprietary trade secrets. There are no such requirements.

8. Describe efforts to consult with persons outside the Agency to obtain their views on availability of data, frequency of collection, the clarity of instructions and recordkeeping, disclosure, or reporting format (if any), and on the data elements to be recorded, disclosed, or reported.

In accordance with 5 CFR 1320.8(d), the Agency published a Notice and Request for Comments in the Federal Register on July 27, 2022 [87 FR 45082]. No comments were received.

In addition to the published notice in the Federal Register, RUS routinely asks Awardees and Grantees for comments and feedback regarding our program processes and procedures. Additionally, RUS contacted multiple users of the Form 395 contract for this Supporting Statement. Comments specifically concerning the contract form were received from:

FARR Technologies

Sioux Falls, SD 57105-4750

Yates Engineering Services

Bloomington, Indiana 47404

Palmetto Engineering and Consulting

North Little Rock, AR 72116

Overall, the feedback about the Form 395 and its associated 395a, 395b, 395c, and 395d was quite positive. The general opinion is that the form is thorough and includes elements that better protect the Awardees and engineering consultants. The forms are considered a significant improvement over the previous versions offered by the RUS. All of the respondents had used the Form 395 and at least one of the associated forms. A limited number of suggested adjustments to the forms were offered. The adjustments had to do with the formatting of the contract documents. These suggestions will be kept on file for inclusion in future form revisions.

9. Explain any decision to provide any payment or gift to respondents, other than remuneration of contractors of grantees.

RUS has not made any such decisions or payments.

10. Describe any assurance of confidentiality provided to respondents, and the basis for the assurance in statute, regulation, or agency policy.

The Agency does support maintenance of confidentiality, when appropriate.  The Agency published a Privacy Act of 1974; System of Records in the Federal Register on May 14, 2019 (84 FR 21315).  A copy of that document can be found at >https://www.govinfo.gov/content/pkg/FR-2019-05-14/pdf/2019-09874.pdf<. 

 

11. Provide additional justification for any questions of a sensitive nature, such as sexual behavior and attitudes, religious beliefs, and other matters that are commonly considered private.

The information collected does not contain any questions of a sensitive nature such as sexual behavior, religious beliefs, or other matters commonly considered private.

12. Provide estimates of the hour burden of the collection of information.

The collection is summarized as follows:

Estimate of the Hours Burden of the Collection of Information
Number of Respondents	Total Annual Responses	Number Hours / Resp.	Total Burden Hours	Cost Per Response	Total Annual Cost
28	161	0.71	114	$29.68	$4,779.11

RUS estimates a cost of $4,779.11 for respondents to comply with this regulation. The cost is based on an annual average of 28 respondents totaling 114 hours. Respondents use Engineering and Clerical personnel to complete these forms. The wage rates for the wage categories were selected from published Department of Labor, Bureau of Labor Statistics at http://www.bls.gov/oes/current/oes_nat.htm\. Benefit costs were added to DOL wages (29.5% and 29.5% of Total Hourly Compensation for professional and clerical workers, respectively) for private trade, transportation, and utilities industry workers per https://www.bls.gov/news.release/ecec.htm#ect_table1.f.1. These Department of Labor, Bureau of Labor Statistics, Standard Occupational Classification wage rates were considered in the cost estimates as:

Hourly Wage / (1 – Benefits as % of Total Compensation) = Total Hourly Compensation

Task Total Time Engineer Clerical_

Forms 395 114 hours 25% 75%

DOL Classification Role Title Hourly Wage Benefits as Total Hourly

% of Total Compensation

Compensation________________

17-2070 Engineering $48.92 29.5% $69.39

43-5061 Clerical $23.10 29.5% $32.77

Effective Hourly Cost to Awardees: ( 0.25 * $69.39 + 0.75 * $32.77 ) = $ 41.93.

13. Provide an estimate of the total annual cost burden to respondents or recordkeepers resulting from the collection of information.

There are no capital and start-up costs or purchase of services components involved with this collection.

14. Provide estimates of annualized cost to the Federal Government.

The cost to the Federal Government is estimated using an hourly rate of $58.01 for professional time (grade 13, step 5), and $33.64 for clerical time (grade 9, step 5), per the OPM wage scale at https://www.opm.gov/policy-data-oversight/pay-leave/salaries-wages/2022/general-schedule/. Benefits amounting to 36.25% of Total Hourly Compensation contribute to the Total Cost.

Contract review phase (Professional)

1.5 hours per response × 217 responses ×[$58.01 + $26.06 (Benefits)] = $ 27364.79.

Processing phase (Clerical)

0.5 hour per response × 217 responses × [$33.64 + $15.11 (Benefits)] = $5,289.65

Total estimated cost to the Federal Government is: $32,655.36

15. Explain the reasons for any program change or adjustments reported in items 13 or 14 of the OMB Form 83-I.

There has been a slight increase in wages since the last burden package was submitted. A significant decrease in the number of respondents offset this wage increase. The decrease may be attributed to the impact of the Covid-19 pandemic reducing awardees’ ability to pursue the purchase and installation of new equipment. Accordingly, there were significant decreases in funding requests for new equipment.

16. For collection of information whose results will be published, outline plans for tabulation and publication.

RUS has no plans to publish the information collected under the provisions of this program.

17. If seeking approval to not display the expiration date for OMB approval of the information collected, explain the reasons that display would be inappropriate.

No such approval is requested.

18. Explain each exception to the certification statement identified in item 19 on

OMB 83-I.

There are no exceptions requested.