[Federal Register Volume 59, Number 43 (Friday, March 4, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-4858]


[[Page Unknown]]

[Federal Register: March 4, 1994]


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DEPARTMENT OF AGRICULTURE
Rural Electrification Administration

7 CFR Parts 1744, 1753

 

Post-Loan Policies and Procedures Common to Guaranteed and 
Insured Telephone Loans; Telecommunications System Construction 
Policies and Procedures

AGENCY: Rural Electrification Administration, USDA.

ACTION: Proposed rule.

-----------------------------------------------------------------------

SUMMARY: The Rural Electrification Administration (REA) proposes to 
amend its post-loan regulations for telephone borrowers to ease 
borrower reporting requirements and further clarify existing REA 
policy. In addition, REA proposes to amend the telecommunications 
system construction regulations to reflect minor technical changes such 
as moving the definitions section from one subpart to another.

DATES: Comments concerning this proposed rule must be received by REA 
or bear a postmark or its equivalent no later than May 3, 1994.

ADDRESSES: Submit written comments to Matthew P. Link, Director, Rural 
Telephone Bank Management Staff, U.S. Department of Agriculture, Rural 
Electrification Administration, 14th & Independence Avenue, SW., room 
2832-S, Washington, DC 20250-1500. REA requests an original and three 
copies of all comments (7 CFR part 1700). All comments received will be 
made available for public inspection at room 2238-S, at the address 
listed above, between 8:30 a.m. and 5 p.m. (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Orren E. Cameron, III, Chief, 
Northeast Engineering Branch, Eastern Regional Division, at the address 
listed above, telephone number (202) 720-3299.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This proposed rule has been determined to be not significant for 
purposes of Executive Order 12866 and therefore has not been reviewed 
by OMB.

Executive Order 12778

    This proposed rule has been reviewed under Executive Order 12778, 
Civil Justice Reform. If adopted, this proposed rule will not:
    (1) Preempt any State or local laws, regulations, or policies, 
unless they present an irreconcilable conflict with this rule;
    (2) Have any retroactive effect; and
    (3) Require administrative proceedings before parties may file suit 
challenging the provisions of this rule.

Regulatory Flexibility Act Certification

    REA has determined that this proposed 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 REA telephone program provides loans to REA borrowers at interest 
rates and terms that are more favorable than those generally available 
from the private sector. REA borrowers, as a result of obtaining 
federal financing, receive economic benefits which exceed any direct 
economic costs associated with complying with REA regulations and 
requirements. Moreover, this action liberalizes certain contract 
requirements by changing contract limits and allowing negotiation of 
fee schedules which further offsets economic costs.

Information Collection and Recordkeeping Requirements

    In compliance with the Office of Management and Budget (OMB) 
regulations (5 CFR part 1320) which implement the Paperwork Reduction 
Act of 1980 (Pub. L. 96-511) and section 3504 of that Act, the 
information collection and recordkeeping requirements contained in this 
proposed rule have been submitted to OMB for approval. Comments 
concerning these requirements should be directed to the Office of 
Information and Regulatory Affairs of OMB, Attention: Desk Officer for 
USDA, room 3201, New Executive Office Building, Washington, DC 20503.

National Environmental Policy Act Certification

    REA has determined that this proposed 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 or 
assessment.

Catalog of Federal Domestic Assistance

    The program described by this proposed rule is listed in the 
Catalog of Federal Domestic Assistance Programs under 10.851, Rural 
Telephone Loans and Loan Guarantees, and 10.852, Rural Telephone Bank 
Loans. This catalog is available on a subscription basis from the 
Superintendent of Documents, the United States Government Printing 
Office, Washington, DC 20402-9325.

Executive Order 12372

    This proposed rule is excluded from the scope of Executive Order 
12372, Intergovernmental Consultation. A notice of Final Rule entitled 
Department Programs and Activities Excluded from Executive Order 12372 
(50 FR 47034) exempts REA and RTB loans and loan guarantees to 
governmental and nongovernmental entities from coverage under this 
Order.

Background

    The proposed rules are primarily aimed at further clarifying and 
relaxing existing REA regulations concerning post-loan and system 
construction policies and procedures. Further clarification of REA 
policy would ease borrower reporting requirements by clearly defining 
certain post-loan construction procedures, such as contract 
construction and closeout procedures.
    In part 1744, subpart B is revised to explain what REA means by 
``in the interests of the Government''. Also, definitions sections of 
subpart B and subpart C are combined into a single list of definitions, 
located in subpart B.
    In part 1753, subpart B is revised to delete definitions which 
merely repeat those in subpart A. Also, a monthly construction progress 
reporting requirement is deleted because it contains information 
reported elsewhere.
    Subparts F and I are revised to increase the maximum allowable 
dollar amount of the Form 773 contract. This requires miscellaneous 
revisions throughout part 1753.
    Minor and technical corrections are made throughout part 1753.
    Appendices A through F are revised to change the requirement to 
distribute certain documents to REA.
    Specifically, Appendix A is amended by adding to the table the 
distribution of Seismic Safety Certifications, required by 7 CFR part 
1792, to the contractor and REA.
    Appendix B is amended by removing from the table the distribution 
of the Switching Diagram and Set of Drawings to REA, and to delete 
reference to REA Form 744 which has been replaced by REA Form 754.
    Appendix C is amended by removing from the table the distribution 
of Final Key Maps and Final Central Office Area and Town Detail Maps to 
REA, and to reduce to one copy the number of other final documents 
required for REA.
    Appendix D is amended to comply with the revisions proposed to 
Appendix C.
    Appendix E is amended by removing from the table the distribution 
of Detail Maps and Key Maps to REA.
    Appendix F is amended by adding to the table the distribution of 
REA Form 213, Buy American Certificate to REA.

List of Subjects

7 CFR Part 1744

    Accounting, Loan programs-communications, Reporting and 
recordkeeping requirements, Rural areas, Telephone.

7 CFR Part 1753

    Loan programs-communications, Telecommunications, Telephone.

    For reasons set forth in the preamble, 7 CFR chapter XVII is 
proposed to be amended as follows:

PART 1744--POST-LOAN POLICIES AND PROCEDURES COMMON TO GUARANTEED 
AND INSURED TELEPHONE LOANS

    1. The authority citation for part 1744 continues to read as 
follows:

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

    2. In Sec. 1744.40, paragraph (a)(3) is revised to read as follows:


Sec. 1744.40  Non-act purposes.

    (a) * * *
    (3) Approval of the request is in the interests of the Government. 
Generally, it would not be in the Government's interest if the 
accommodation or subordination is being requested to enable the 
borrower to avoid complying with such REA policies or procedures, as 
competitive bid procedures or purchasing equipment acceptable to REA, 
under 7 CFR part 1753.
* * * * *


Sec. 1744.21  [Amended]


Sec. 1744.61  [Removed and reversed]

    3. The paragraph designations in Secs. 1744.21 and 1744.61 are 
removed, the definition in Sec. 1744.21 are put in alphabetical order, 
the definitions in Sec. 1744.61 are transferred to Sec. 1744.21 in 
alphabetical order, and Sec. 1744.61 is removed and reserved.

PART 1753--TELECOMMUNICATIONS SYSTEM CONSTRUCTION POLICIES AND 
PROCEDURES

    1. The authority citation for part 1753 continues to read as 
follows:


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

    2. In Sec. 1753.5, paragraph (b)(1) is revised to read as follows:


Sec. 1753.5  Methods of major construction.

* * * * *
    (b) Contract construction. (1) Whether the contractor is selected 
through sealed competitive bidding or negotiation, as approved by REA, 
award of the contract is subject to REA approval.
* * * * *
    3. In Sec. 1753.6, paragraph (b) is revised to read as follows:


Sec. 1753.6  Standards, specifications, and general requirements.

* * * * *
    (b) The borrower may use REA loan funds to finance nonstandard 
construction materials or equipment only if approved by REA in writing 
prior to purchase or commencement of construction.
* * * * *
    4. In Sec. 1753.8, paragraphs (a)(11)(ii), (a)(12)(i), (b)(2), 
(b)(3), and (b)(4) are revised, and paragraph (b)(5) is removed to read 
as follows:


Sec. 1753.8  Contract construction procedures.

    (a) * * *
    (11) * * *
    (ii) If an award is made, the borrower shall award the contract to 
the lowest responsive bidder, subject to REA approval. The borrower may 
award the contract immediately upon determination of the lowest 
responsive bidder if the following conditions are met:
    (A) The project is included in an approved loan and adequate funds 
were budgeted in the loan and are available.
    (B) All applicable REA procedures were followed, including those in 
the Notice and Instructions to Bid in the standard forms of contract.
* * * * *
    (12) Execution of contract: (i) Upon approval by REA of the award 
of contract by the borrower, the borrower shall submit to REA three 
original counterparts of the contract executed by the contractor and 
borrower.
* * * * *
    (b) * * *
    (2) For negotiated purchases, borrowers shall use REA contract 
forms, standards, and specifications.
    (3) For all contract forms except REA Form 773:
    (i) After a satisfactory negotiated proposal has been obtained, the 
borrower shall submit it to REA for approval, along with the engineer's 
recommendation, and evidence of acceptance by the borrower.
    (ii) If REA approves the negotiated proposal, the borrower shall 
submit three copies of the contract, executed by the contractor and 
borrower, to REA for approval.
    (iii) If REA approves the contract, REA shall return one copy of 
the contract to the borrower and one copy to the contractor.
    (4) For REA Form 773, the borrower is responsible for negotiating a 
satisfactory proposal, executing contracts, and closing the contract. 
See 7 CFR 1753, subparts F and I, for requirements for major and minor 
construction, respectively, on Form 773.
    5. In Sec. 1753.9, paragraphs (a) and (c) are revised to read as 
follows:


Sec. 1753.9  Subcontracts.

    (a) REA construction contract Forms 257, 397, 515, and 525 contain 
provisions for subcontracting. Reference should be made to the 
individual contracts for the amounts and conditions under which a 
contractor may subcontract work under the contract.
* * * * *
    (c) As stated in contract Forms 257, 397, 515, and 525, the 
contractor shall bear full responsibility for the acts and omissions of 
the subcontractor and is not relieved of any obligations to the 
borrower and to the Government under the contract.
* * * * *
    6. In Sec. 1753.16, paragraphs (b)(3), (b)(4) and (b)(5) are 
redesignated as paragraphs (b)(4), (b)(5) and (b)(6), respectively, and 
a new paragraph (b)(3) is added to read as follows:


Sec. 1753.16  Architectural services.

* * * * * 
    (b) * * *
    (3) If the fee schedule has to be modified in order for the 
borrower to obtain adequate architectural services, the borrower shall 
obtain written REA approval of the revised fee schedule prior to 
executing contracts.
* * * * * 
    7. In Sec. 1753.17, paragraph (e) is revised to read as follows: 
Sec. 1753.17  Engineering services.

* * * * * 
    (e) The borrower shall obtain status of contract and force account 
proposal reports from the engineer once each month. The report shall 
show for each contract or FAP the approved contract or FAP amount, the 
date of approval, the scheduled date construction was to begin and the 
actual date construction began, the scheduled completion date, the 
estimated or actual completion date, the estimated or actual date of 
submission of closeout documents, and an explanation of delays or other 
pertinent data relative to progress of the project. One copy of this 
report shall be submitted to the GFR.
* * * * * 
    8. In Sec. 1753.25, a new paragraph (f)(4) is added to read as 
follows: 
Sec. 1753.25  General.

* * * * * 
    (f) * * *
    (4) 7 CFR 1792, subpart C, which requires that the building design 
comply with applicable seismic design criteria. Prior to the design of 
buildings, borrowers shall submit to REA a written acknowledgement from 
the architect or engineer that the design will comply.
* * * * * 
    9. In Sec. 1753.26, paragraph (b) introductory text is revised, 
paragraph (c) is redesignated as paragraph (d), and new paragraph (c) 
is added to read as follows: 
Sec. 1753.26  Plans and specifications (P&S).

* * * * *
    (b) REA Contract Form 257 shall be completed as follows:
* * * * *
    (c) The plans and specifications shall show the identification and 
date of the model code used for seismic safety design considerations, 
and the seismic factor used. See 7 CFR 1792, subpart C.
* * * * *


Sec. 1753.29  [Amended]

    10. In Sec. 1753.29, paragraph (a) is removed, and paragraphs (b), 
(c), (d), and (e) are redesignated as paragraphs (a), (b), (c), and 
(d).
    11. In Sec. 1753.30, paragraphs (b)(2)(i) and (c)(2) are revised to 
read as follows:


Sec. 1753.30  Closeout procedures.

* * * * *
    (b) * * *
    (2) * * *
    (i) Arrange with its architect or engineer, contractor, and the GFR 
for final inspection of the project.
* * * * *
    (c) * * *
    (2) Complete, with the assistance of its architect or engineer, the 
documents listed in Appendix A that are required for the closeout of 
force account construction.
* * * * *
    12. In Sec. 1753.39, paragraph (g) is revised to read as follows:


Sec. 1753.39  Closeout documents.

* * * * *
    (g) Final payment shall be made according to the payment terms of 
the contract.
* * * * *
    13. In Sec. 1753.46, paragraph (c) is added to read as follows:


Sec. 1753.46  General.

* * * * *
    (c) The two contract forms which may be used for major outside 
plant construction are Form 515 and Form 773. Limitations on the 
applicability of these forms shall be as follows:
    (1) Form 515 shall be used for major outside plant construction 
projects which will be competitively bid. The contract contains plans 
and specifications and has no dollar limitation. See Secs. 1753.47, 
1753.48 and 1753.49.
    (2) A Form 515 contract which is for less than $200,000, may, at 
the borrower's option, be negotiated. See Sec. 1753.48(b).
    (3) Form 773 shall be used for major outside plant projects which 
may not be competitively bid, and which cannot be designed and staked 
at the time of contract execution. Projects of this nature include 
routine line extensions and placement of subscriber drops. The Form 773 
contract is limited to a maximum of $200,000. REA will not finance more 
than $400,000 in Form 773 contracts for a borrower in any twelve month 
period. This $400,000 limitation includes all major and minor 
construction performed under Form 773 contracts, and is determined by 
the date the Form 773 contract is executed. See Sec. 1753.50.
    14. In Sec. 1753.49, paragraph (c)(3) is revised to read as 
follows:


Sec. 1753.49  Closeout documents.

* * * * *
    (c) * * *
    (3) Final payment shall be made according to the payment provisions 
of Article III of Form 515.
    15. Sec. 1753.50 is added to read as follows: 
Sec. 1753.50  Construction by Form 773 contract. 
    (a) The borrower shall prepare the contract form and provide such 
details of construction as may be available. Compensation may be based 
upon unit prices, hourly rates, or another mutually agreeable basis.
    (b) Neither the selection of the contractor nor the contract 
requires REA approval.
    (c) Borrowers are urged to obtain quotations from several 
contractors before entering into a contract to be assured of obtaining 
the lowest cost.
    (d) The borrower must ensure that the contractor selected meets all 
Federal and State requirements, and that the contractor maintains the 
insurance coverage required by the contract for the duration of the 
work. See 7 CFR part 1788.
    (e) The borrower shall finance major construction under the Form 
773 contract with general funds and obtain reimbursement with loan 
funds when construction is completed and an executed Form 771 has been 
submitted to REA.
    (f) If the contract exceeds $100,000, a contractor's bond shall be 
required. See 7 CFR part 1788.
    (g) When the construction is completed to the borrower's 
satisfaction, the borrower shall obtain from the contractor a final 
invoice and an executed copy of REA Form 743, Certificate of Contractor 
and Indemnity Agreement.
    (h) The closeout document for the Form 773 contract is REA Form 
771. See Sec. 1753.81 for the requirements for completing Form 771.
    (i) An original and two copies of Form 771 shall be sent to the 
GFR. The GFR may inspect the construction, and will initial and return 
the original and one copy to the borrower.
    (j) The original Form 771 shall be submitted with an FRS to REA 
only in conjunction with a request for an advance of loan funds for the 
work.
    16. In Sec. 1753.68, paragraph (d)(3)(iii) is revised to read as 
follows: 
Sec. 1753.68  Purchasing special equipment.

* * * * *
    (d) * * *
    (3) * * *
    (iii) Final payment shall be made according to the payment terms of 
the contract.
    17. In Sec. 1753.78, paragraph (a) is revised to read as follows:


Sec. 1753.78  Construction by contract.

    (a) REA Form 773 shall be used for minor construction by contract. 
Compensation may be based upon unit prices, hourly rates, or another 
basis agreed to in advance by the borrower and the contractor. A single 
work project may require more than one contractor.
* * * * *
    18. In Sec. 1753.80, paragraph (a) is revised to read as follows:


Sec. 1753.80  Minor construction procedure.

    (a) If the borrower performs minor construction financed with loan 
funds, the borrower's regular work order procedure shall be used to 
administer construction activities that may be performed entirely by a 
contractor under Form 773 contract, by work order, or jointly by work 
order and one or more contractors under Form 773 contracts. REA will 
not finance more than $400,000 in Form 773 contracts for a borrower in 
any twelve month period. This $400,000 limitation includes all major 
and minor construction performed under Form 773 contracts, and is 
determined by the date the Form 773 contract is executed.
* * * * *
    19. Appendices A through F of part 1753 are revised to read as 
follows:

Appendices to Part 1753

                                          Appendix A.--Documents Required to Closeout Construction of Buildings                                         
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Use with                     Prepared by                                    Distribution              
 Form furnished                           ------------------------------------------------------------  Number -----------------------------------------
     by REA             Description                       Force                Architect/                 of                                            
                                            Contract     account   Contractor   engineer    Borrower    copies  Borrower    REA    Architect  Contractor
--------------------------------------------------------------------------------------------------------------------------------------------------------
238............  Construction or           x           ..........  ..........  x           ..........        3  ........        3  .........  ..........
                  Equipment Contract                                                                                                                    
                  Amendment (Submit to                                                                                                                  
                  REA for approval, as                                                                                                                  
                  required).                                                                                                                            
181............  Certificate of            x           ..........  ..........  x           ..........        3         1        1  .........          1 
                  Completion (Contract                                                                                                                  
                  Construction)\1\.                                                                                                                     
181a...........  Certificate of            ..........  x           ..........  x           ..........        2         1        1  .........  ..........
                  Completion (Force                                                                                                                     
                  Account Construction).                                                                                                                
231............  Certificate of            x           ..........  x           ..........  ..........        2         1        1  .........  ..........
                  Contractor.                                                                                                                           
224............  Waiver and Release of     x           ..........  x           ..........  ..........        2         1        1  .........  ..........
                  Lien (2 copies from                                                                                                                   
                  each supplier).                                                                                                                       
213............  Certificate (Buy          x           ..........  x           ..........  ..........        1         1  .......  .........  ..........
                  American).                                                                                                                            
284............  Statement of Architect's  x           x           ..........  x           ..........        3         1        1         1   ..........
                  Fee.                                                                                                                                  
                 Inventory--List           x           x           ..........  ..........  x                 3         1        1         1   ..........
                  Materials and Services                                                                                                                
                  Furnished by Borrower                                                                                                                 
                  Upon Which                                                                                                                            
                  Architectural Services                                                                                                                
                  Were Furnished. Show                                                                                                                  
                  Cost (See Form 284).                                                                                                                  
                 Inventory--List           x           x           ..........  ..........  x                 3         1        1         1   ..........
                  Materials and Services                                                                                                                
                  Furnished by Borrower                                                                                                                 
                  Upon Which                                                                                                                            
                  Architectural Services                                                                                                                
                  Were Not Performed Show                                                                                                               
                  Cost.                                                                                                                                 
(2)............  ``As Built'' Plans and    x           x           ..........  x           ..........        1         1  .......  .........  ..........
                  Specifications.                                                                                                                       
                 Guarantees, Warranties,   x           ..........  x           ..........  ..........        1         1  .......  .........  ..........
                  Bonds, Operating or                                                                                                                   
                  Maintenance                                                                                                                           
                  Instructions, et cetera.                                                                                                              
                 Architect/Engineer        x           x           ..........  x           ..........        3         1        1  .........         1  
                  Seismic Safety                                                                                                                        
                  Certification.                                                                                                                        
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\Cost of Materials and Services Furnished by Borrower not to be Included in total Cost on 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 in Lieu of the   
  ``As-Built Plans and Specifications.                                                                                                                  


                                      Appendix B.--Documents Required to Closeout Central Office Equipment Contract                                     
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Use with                  Prepared by                             Distribution         
 Form furnished                                        --------------------------------------------------------   Total  -------------------------------
    by REA                    Description               REA form 525  REA form 545                               No. of   Borrower  Contractor          
                                                                                     Contractor     Engineer     copies                            REA  
--------------------------------------------------------------------------------------------------------------------------------------------------------
238............  Construction or Equipment Contract     x             x             ............  x                    3  ........  ..........         3
                  Amendment (Submit to REA for                                                                                                          
                  approval, if required, before                                                                                                         
                  following documents).                                                                                                                 
754............  Certificate of Completion and          x             ............  x             x                    4         2          1          1
                  Certificate of Contractor and                                                                                                         
                  Indemnity Agreement (If submitted,                                                                                                    
                  Form 744 is not required).                                                                                                            
517............  Results of Acceptance Tests (Prepare   x             ............  ............  x                    2         1          1   ........
                  and distribute copies immediately                                                                                                     
                  upon completion of the acceptance                                                                                                     
                  tests of each central office).                                                                                                        
752a...........  Certificate of Completion--Not         ............  x             ............  x                    3         1          1          1
                  Including Installation.                                                                                                               
224............  Waiver and Release of Lien (Two        x             ............  x             ............         2         1  ..........         1
                  copies from each supplier).                                                                                                           
231............  Certificate of Contractor............  x             ............  x             ............         2         1  ..........         1
213............  Certificate (Buy American)...........  x             x             x             ............         1         2  ..........         1
                 Switching Diagram, as installed......  x             x             x             ............         2         2  ..........  ........
                 Set of Drawings (Each set to include   x             x             x             ............         2         2  ..........  ........
                  all the drawings required under the                                                                                                   
                  Specification REA Form 522).                                                                                                          
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                Appendix C.--Documents Required to Closeout Telephone Construction Contract REA Form 515                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                   Prepared by                    Distribution          
                                                                      No. of      Form     -------------------------------------------------------------
 REA Form No.                       Description                      Copies     available                                          Contractor           
                                                                                from REA      Engineer     Contractor   Borrower                  REA   
--------------------------------------------------------------------------------------------------------------------------------------------------------
724............  Final Inventory...................................        3  x             x             ............          1           1          1
724a...........  Final Inventory...................................        3  x             x             ............          1           1          1
                 Contractor's Board Extension (When required)......        3  ............  ............  x                     1           1          1
281............  Tabulation of Materials Furnished by Borrower.....        3  ............  x             ............          1           1          1
213............  Certificate (``Buy American'')....................        1  x             ............  x                     1  ..........  .........
                 Listing of Construction Change Orders.............        2  ............                ............  .........  ..........          1
224............  Waiver and Release of Lien (Two copies from each          2  x             x...........  x...........          1  ..........          1
                  supplier).                                                                                                                            
231............  Certificate of Contractor.........................        2  x             ............  x                     1  ..........          1
527............  Final Statement of Construction...................        3  x             x             ............          1           1          1
                 Reports on Results of Acceptance Tests............        2  ............  x             ............          1           1  .........
                 Set of Final Staking Sheets.......................        1  ............  x             ............          1  ..........  .........
                 Tabulation of Staking Sheets......................        1  ............  x             ............          1  ..........  .........
                 Treated Forest Products Inspection Reports or             1  ............  ............  ............          1  ..........  .........
                  Certificates of Compliance (Prepared by                                                                                               
                  inspection company or supplier).                                                                                                      
                 Final Key Map (when applicable)...................        1  ............  x             ............          1  ..........          1
                 Final Central Office Area and Town Detail Maps....        1  ............  x             ............          1  ..........          1
--------------------------------------------------------------------------------------------------------------------------------------------------------


      Appendix D.--Step-by-Step Procedure for Closing Out Telephone     
        Construction Contract--Labor and Materials, REA Form 515        
------------------------------------------------------------------------
       Sequence                                                         
------------------------                                                
 Step                          By                    Procedure          
 No.         When                                                       
------------------------------------------------------------------------
1.      Prior to         Borrower's       Receives instructions from the
         completion of    Engineer.        GFR concerning the closeout  
         construction.                     procedure.                   
2.      Upon completion  Borrower's       Prepares the following: 1 set 
         of               Engineer.        of Key Maps, when applicable,
         construction.                     which show work done under   
                                           the construction contract    
                                           marked with red pencil. 1 set
                                           of Detail Maps, which show   
                                           work done under the          
                                           construction contract marked 
                                           with red pencil. 1 copy of   
                                           Tabulation of Staking Sheets.
                                           1 copy of tentative Final    
                                           Inventory, REA Forms 724,    
                                           724a.                        
3.      After            Borrower's       Forwards letter to the        
         construction     Engineer.        borrower with copies to the  
         has been                          GFR stating that the project 
         completed and                     is ready for final           
         acceptance                        inspection.                  
         tests made.                                                    
4.      Upon receipt of  GFR............  Promptly arranges with        
         letter from                       borrower, borrower's         
         borrower's                        engineer, and contractor for 
         engineer.                         final inspection of          
                                           construction. It is          
                                           contemplated that final      
                                           inspections will be made on  
                                           sections of line as          
                                           construction is completed,   
                                           leaving a minimum amount to  
                                           be inspected at this time.   
5.      When requested   REA Field        Audits REA Form 281, if       
         by the GFR.      Accountant.      borrower supplied part of the
                                           materials.                   
6.      Inspection date  Borrower's       Shall have the following      
         scheduled.       Engineer.        documents available for the  
                                           GFR: 1 set of ``as           
                                           constructed'' Key Maps (when 
                                           applicable). 1 set of ``as   
                                           constructed'' Detail Maps. 1 
                                           copy of the List of          
                                           Construction Change Orders. 1
                                           set of Final Staking Sheets. 
                                           1 copy of Tabulation Staking 
                                           Sheets. 1 copy of Treated    
                                           Forest Products Inspection   
                                           Reports or Certificates of   
                                           Compliance. 1 copy of        
                                           tentative Final Inventory REA
                                           Form 724, 724a. 1 copy of    
                                           tentative Tabulation, REA    
                                           Form 231, if borrower        
                                           furnished part of material. 1
                                           copy of Report on Results of 
                                           Acceptance Tests.            
7.      During           Borrower's       Issues instructions to        
         inspection.      Engineer.        contractor covering          
                                           corrections in construction  
                                           found during inspection by   
                                           GFR in the company of the    
                                           borrower's engineer and the  
                                           contractor or his/her        
                                           representative.              
8.      During           Contractor.....  Corrects defects in           
         inspection.                       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.                  
9.      During           Borrower's       With GFR inspects and approves
         inspection.      Engineer.        corrected construction.      
10.     During           Borrower's       Marks inspected areas on the  
         inspection.      Engineer.        Key Map, if available,       
                                           otherwise on the Detail Maps.
11.     Upon completion  Borrower's       Prepares or obtains all the   
         of inspection.   Engineer.        closeout documents listed in 
                                           Appendix C. Makes            
                                           distribution of the copies of
                                           the documents as indicated in
                                           Appendix C. Forwards the     
                                           documents for REA to the GFR.
12.     After reviewing  REA GFR........  Reviews documents and         
         final                             distributes copies as        
         documents.                        indicated in Appendix C.     
13.     After signing    Borrower.......  Prepares and submits Financial
         final                             Requirement Statement, REA   
         inventory.                        Form 481, requesting amount  
                                           necessary to make final      
                                           payment due under contract.  
14.     On receipt of    Borrower.......  Promptly forwards check for   
         final advance.                    final payment to contractor. 
15.     During next      REA Field        Makes an examination of       
         loan fund        accountant.      borrowers construction       
         audit review                      records for (1) compliance   
         after final                       with the construction        
         payment to                        contract and Subpart F and   
         contractor.                       (2) REA Form 281, Tabulation 
                                           of Materials Furnished by    
                                           Borrowers, if any, for       
                                           appropriate costs.           
------------------------------------------------------------------------


Appendix E.--Documents Required to Close Out Force Account Outside Plant
                              Construction                              
------------------------------------------------------------------------
                                                 No. of copies required 
                                                  and distribution of   
 Item    REA form    Description on title of           documents        
  No.       No.              document         --------------------------
                                                Total                   
                                                 No.     Owner     REA  
------------------------------------------------------------------------
a.      817, 817a,  Final inventory force            2        1        1
         817b        account construciton and                           
                     certificate of engineer.                           
b.      213         Certificate, ``Buy               1        1        0
                     American'' (as                                     
                     applicable--one from                               
                     each supplier).                                    
c.                  Detail maps..............        1        1        0
d.                  Key map if applicable....        1        1        0
e.                  Staking sheets...........        1        1        0
f.                  Tabulation of staking            1        1        0
                     sheets.                                            
g.                  Treated forest porducts          1        1        0
                     inspection reports, if                             
                     applicable.                                        
------------------------------------------------------------------------


                                             Appendix F.--Documents Required to Closeout Equipment Contracts                                            
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            No. of                         Prepared by                              Distribution        
     Form                                                   copies    ----------------------------------------------------------------------------------
 furnished by                 Description               --------------         Form 397                  Form 398                                       
     REA                                                  Form   Form ---------------------------------------------------- Borrower  Contractor    REA  
                                                          397    398    Contractor    Engineer   Contractor     Engineer                                
--------------------------------------------------------------------------------------------------------------------------------------------------------
238            Construction or Equipment Contract            3      3  ...........  x            ...........  x            ........  ..........        3
                Amendment (If required, submit to REA                                                                                                   
                for approval before other closeout                                                                                                      
                documents.).                                                                                                                            
396            Certificate of Completion--Special            3  .....  ...........  x            ...........  x                   1          1         1
                Equipment Contract (Including                                                                                                           
                Installation).                                                                                                                          
396a           Certificate of Completion--Special        .....      3  ...........  x            ...........  x                   1          1         1
                Equipment Contract (Not Including                                                                                                       
                Installation).                                                                                                                          
744            Certificate of Contractor and Indemnity       2  .....  x            ...........  ...........  ...........         1  ..........        1
                Agreement.                                                                                                                              
213            Certificate (Buy American)..............      2      2  x            ...........  x            ...........         1  ..........        1
               Report in writing, including all              2      2  x            ...........  ...........  x                   1  ..........        1
                measurements and other information                                                                                                      
                required under Part II of the                                                                                                           
                applicable specifications.                                                                                                              
               Set of maintenance recommendations for        1      1  x            ...........  x            ...........         1  ..........  .......
                all equipment furnished under the                                                                                                       
                contract.                                                                                                                               
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Dated: February 25, 1994.
Bob J. Nash,
Under Secretary, Small Community and Rural Development.
[FR Doc. 94-4858 Filed 3-3-94; 8:45 am]
BILLING CODE 3410-15-P