[Federal Register Volume 61, Number 1 (Tuesday, January 2, 1996)]
[Proposed Rules]
[Pages 21-27]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-31452]
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DEPARTMENT OF AGRICULTURE
Rural Utilities Service
7 CFR 1789
RIN 0572-AB17
Use of Consultants Funded by Borrowers
AGENCY: Rural Utilities Service, USDA.
ACTION: Proposed rule.
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SUMMARY: The Rural Utilities Service (RUS) hereby proposes to implement
recent amendments to the Rural Electrification Act of 1936, as amended,
(RE Act) (7 U.S.C. 918(c)) and to amend 7 CFR chapter XVII by adding a
new Part 1789, Use of Consultants Funded by Borrowers. This part would
set forth procedures and policies pursuant to which a borrower under
the RE Act may fund consultants used by the Administrator for
financial, legal, engineering, environmental and other technical advice
and services. The use of the consultants will assist RUS in the
[[Page 22]]
expeditious review of applications for financial assistance or other
approvals sought by borrowers.
DATES: Written comments concerning the proposed rule and/or its
information collection requirements must be received by RUS or carry a
postmark or equivalent by March 4, 1996.
ADDRESSES: Written comments should be addressed to F. Lamont Heppe,
Jr., Deputy Director, Program Support Staff, U.S. Department of
Agriculture, Rural Utilities Service, AG Box 1522, Washington, DC
20250-1522. RUS requires a signed original and 3 copies of all comments
(7 CFR 1700.30(e)). Comments will be available for public inspection
during regular business hours (7 CFR 1.27(b)).
FOR FURTHER INFORMATION CONTACT: F. Lamont Heppe, Jr., Deputy Director,
Program Support Staff, (address as above). Telephone: (202) 720-0736.
Facsimile: (202) 720-4120.
SUPPLEMENTARY INFORMATION: This proposed rule has been determined to be
not significant for purposes of Executive Order 12866, Regulatory
Planning and Review, and therefore has not been reviewed by the Office
of Management and Budget (OMB). The Administrator of RUS has determined
that the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) does not
apply to this rule. The Administrator of RUS has determined that this
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. This rule is excluded from the scope of
Executive Order 12372, Intergovernmental Consultation, which may
require consultation with State and local officials. A Notice of Final
Rule title Department Programs and Activities Excluded from Executive
Order 12372 (50 FR 47034) exempts RUS electric loans and loan
guarantees from coverage under this Order. This rule has been reviewed
under Executive Order 12778, Civil Justice Reform. This proposed rule:
(1) Will not preempt any State or local laws, regulations, or policies,
unless they present an irreconcilable conflict with this rule; (2) will
not have any retroactive effect; and (3) will not require
administrative proceedings before any parties may file suit challenging
the provisions of this rule in accordance with existing law.
The programs covered by this rule are listed in the Catalog of
Federal Domestic Assistance Programs under numbers 10.850, Rural
Electrification Loans and Loan Guarantees, 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.
Information Collection and Recordkeeping Requirements
Summary: In accordance with the Paperwork Reduction Act of 1995 (44
U.S.C. Chapter 35, as amended) RUS is requesting comments on the
information collection incorporated in this proposed rule.
Dates: Comment on this information collection must be received by
March 4, 1996.
Comments are invited on: (a) Whether the proposed collection of
information is necessary for the proper performance of the functions of
the agency, including whether the information will have practical
utility; (b) the accuracy of the agency's estimate of the burden of the
proposed collection of information; (c) ways to enhance the quality,
utility and clarity of the information to be collected; and (d) ways to
minimize the burden of the collection of information on respondents,
including through the use of automated collection techniques or other
forms of information technology.
For Further Information Contact: Sue Arnold, Financial Analyst,
Program Support Staff, Rural Utilities Service, U.S. Department of
Agriculture, 14th & Independence Avenue, SW., AG Box 1522, Washington,
DC 20250. Telephone: (202) 690-1078. FAX: (202) 720-4120.
Supplementary Information:
Title: Title 7 Part 1789, Use of Consultants Funded by Borrowers.
Type of Request: New information collection.
Abstract: On November 1, 1993, Public Law 103-129 amended section
18 of the RE Act to provide a mechanism for expediting RUS reviews. As
amended, section 18(c) authorized RUS to use consultants voluntarily
funded by borrowers for financial, legal, engineering, and other
technical services. The consultant may to be used to facilitate timely
action on applications by borrowers for financial assistance and for
approvals required by RUS, pursuant to the terms of outstanding loans,
or otherwise. RUS may not require borrowers to fund consultants. The
provisions of section 18(c) may be utilized only at the borrower's
request.
Estimate of Burden: Public reporting burden for this collection of
information is estimated to average 2 hours per response.
Respondents: Business or other for-profit, small businesses or
organizations.
Estimated Number of Respondents: 6.
Estimated Number of Responses per Respondent: 1.
Estimated Total Annual Burden on Respondents: 12.
Copies of this information collection can be obtained from Dawn
Wolfgang, Program Support Staff, at (202) 720-0812.
Comments: Send comments regarding this information collection
requirement to the Office of Information and Regulatory Affairs, OMB,
ATTN: Desk Officer, USDA, Room 10102, New Executive Office Building,
Washington, DC 20503, and F. Lamont Heppe, Jr., Deputy Director,
Program Support Staff, Rural Utilities Service, AG Box 1522,
Washington, DC 20250-1522.
Comments to OMB are best assured of having full effect if OMB
receives them within 30 days of publication in the Federal Register.
All responses to this information collection requirement will be
summarized and included in the final rule. All comments will become a
matter of public record.
Background
Section 18 of the RE Act was amended effective November 1, 1993,
pursuant to Public Law 103-129, 2(c)(4), 107 Stat. 1364. As amended,
subsection (c) of section 18 authorizes the RUS to use consultants
funded by borrowers for financial, legal, engineering, and other
technical advice and services. The consultants are to be used to
facilitate timely action on applications by borrowers for financial
assistance and for approvals required by RUS pursuant to the terms of
outstanding loan or security instruments or otherwise.
Subsection (c) expressly requires that RUS establish procedures for
the use of consultants to ensure that the consultants have no financial
or other conflicts of interest in the outcome of the application.
Subsection (c) further provides that funding of consultants is strictly
voluntary with the borrowers, that RUS may not require borrowers to
agree to fund consultants. This proposed rule sets forth procedures and
policies implementing the authority under subsection (c).
Policy
RUS believes that both RUS and its borrowers will be well served by
the prudent use of this authority. It will assist RUS in the processing
of certain complex transactions that have placed a
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burden on its staff and resources. For example, financial and legal
consultants may assist in the review of certain transactions involving
complicated financing arrangements between borrowers and third parties
that potentially impact on the feasibility of and security for
outstanding government loans. Such transactions may require the review
and analysis of voluminous documents and the development of an
extensive administrative record. The transactions may involve complex
technical issues regarding which RUS has limited expertise thus slowing
the review process. Such transactions may be very time sensitive; any
delays may jeopardize the transaction or reduce the benefits of the
transaction to the borrower. In some cases, the transactions are very
important to the borrower but cannot be given corresponding priority by
the RUS as it dedicates its resources to matters that have program wide
significance. It is in the interests of both RUS and the borrower to
expedite review of such transactions with borrower funded consultants.
Examples of how RUS might use borrower funded consultants include,
but are not limited to, the use of an engineering firm to review
proposed generation projects for technical or financial feasibility,
e.g., wind or hydroelectric projects utilizing relatively new
technology. RUS could use consultants to make periodic visits to major
construction projects and report to RUS on the status of construction
and whether or not the project is on budget. Financial advisory
consultants may be used to evaluate new financial products which are
the basis for requests to modify the RUS mortgage. Legal support
services will enhance RUS' ability to review and process merger,
consolidation and holding company applications from both telephone and
electric borrowers. RUS would also consider using environmental
consultants to prepare environmental assessments and environmental
impact studies under RUS' direction and supervision.
RUS does not, however, believe that use of subsection (c) authority
is authorized or appropriate for all transactions requiring RUS review.
The authority will not be used unless it is reasonably expected to
facilitate timely action on an application by RUS. Even then, it may
not always be in RUS' interest to rely on consultants. For example,
transactions that involve matters that RUS is particularly qualified to
address or which have program wide implications may not be well suited
for expedited processing facilitated with borrower funded consultants.
Thus, RUS will weigh its use of the authority under subsection (c) on a
case by case basis.
Procedure
Under the proposed rule RUS may enter into contracts on the basis
of case by case procurements or on a retainer basis with a series of
consultants having different areas of expertise, i.e. financial, legal,
engineering, or environmental. In order to assure that sufficient
consultant resources are available and to allow for competition in
terms of both quality and cost, RUS may contract with several different
consultants in a given area of expertise.
RUS will solicit bids for the services of financial, legal,
engineering, and environmental consultants in accordance with the
provisions of the Federal Acquisition Regulations (FAR), 48 CFR Chapter
1. Notwithstanding the use of borrowers' funds, it has been determined
that such funding must be treated as appropriated funds and the
contracts are subject to the provisions of FAR.
The proposed rule provides that RUS will decide when timely
consideration of an application or approval would best be facilitated
by the use of borrower funded consultants. When the RUS has made such a
determination, and the borrower in question is willing to fund
consulting services, the borrower must provide to RUS an appropriate
notice of proposal to fund consulting services. RUS will consider the
borrower's proposal, whether it is consistent with this regulation and
otherwise in the interests of the government. If RUS chooses to proceed
with the borrower's proposal, RUS will require the borrower and the
consultant selected by RUS to execute a funding agreement which
complies with the regulation. The funding agreement will provide for
the borrower to establish and fund an escrow account with a third-party
commercial institution prior to the commencement of work by the
consultant.
The use of a third-party commercial institution will allow for the
escrow account to be interest-bearing and greatly ease the
administrative burden of arranging for any excess funds to be remitted
to the borrower upon the closing out of a task order. With the
exception of an annual retainer fee, if applicable, the consultants
shall not be entitled to any payments from RUS. Rather, all payment
obligations for work performed must be satisfied by amounts available
in the escrow account and RUS shall have sole discretion in directing
that payments be made from the escrow account.
Once the escrow account is funded, RUS will then issue a task order
to the consultant under the applicable contract and the consultant will
commence work for RUS. Periodically, the consultant will submit
invoices to RUS. Upon due authorization by RUS, the escrow agent will
make payments to the consultant. The escrow account will be closed and
any remaining funds remitted to the borrower upon direction from RUS.
The procedure outlined above generally applies to financial, legal,
engineering and environmental consultant services. The proposed rule
reserves the discretion, however, for RUS to contract for any type of
consultant services on a case by case basis after receipt of an
appropriate notice of proposal to fund from the borrower.
Legal and Selected Other Consultants
The procedures and policies applicable to the use of legal
consultants pursuant to subsection 18(c) differs from the use of other
consultants in several key respects. First, pursuant to 7 CFR part
2.47(a)(1), the Administrator may utilize consultants and attorneys for
the provision of legal services with the concurrence of the General
Counsel. The Secretary by regulation (7 CFR 2.31) has designated the
General Counsel as the chief law officer of the Department and legal
advisor to the Secretary with the responsibility for providing legal
services for all activities of the Department; accordingly, any
proposal by RUS to use outside legal counsel will require the approval
of the General Counsel. The approval will include a review of the
nature of the transaction and the scope of legal services to be
provided. Moreover, any contracts for legal consultants will provide
that an attorney from OGC will serve as a technical representative and
adviser to the contracting officer. The technical representative will
be responsible for, among other matters, evaluating the adequacy of
performance.
The conflict of interest provisions in the proposed rule are
different from the FAR in certain respects, particularly in the case of
legal and financial consultants. For all consultants, however, it is
important to protect against the possibility, or the appearance, that
those consultants providing services to RUS might handle particular
assignments in such a way as to encourage their own future employment
with RUS program beneficiaries after fulfilling their government
contract requirements. The electric and telephone borrowers are
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particularly closely tied to RUS since RUS is responsible for a
significant percentage of their annual capital requirements. Because of
the unique position of RUS vis a vis its borrowers, it is in the
government's interest that prospective legal counsel, financial
consultants and other consultants be reasonably indifferent to the
subsequent marketing implications of having RUS as a client.
Additionally, because of the special nature of the attorney/client
relationship, there is a need to provide for maximum discretion on the
part of the RUS Administrator in the determination of conflict criteria
for legal consultants. Accordingly, proposed conflict provisions
specific to borrower funded RUS consultants are as follows:
(1) Disclosure requirements incorporated in procurements under the
proposed rule shall provide that consultants disclose all business
relationships with current or former RUS borrowers at the time
proposals to offer consulting services are made to RUS and in the event
additional business relationships are entered into subsequent to the
original disclosure.
(2) Certification requirements incorporated in procurements under
the proposed rule shall provide that consultants certify, at the time a
proposal is made to provide consulting services to RUS, to the best of
their knowledge and belief, that no Organizational Conflict of Interest
exists and there are no relevant facts or circumstances which could
give rise to an Organizational Conflict of Interest, or the consultant
has disclosed all such relevant information. The representations in the
certificate shall be deemed reaffirmed upon the execution of the
Consultant Contract and upon the undertaking of each Task Order by the
contractor.
(3) The determination of whether or not an Organizational Conflict
of Interest exists shall rest with the Administrator in his sole
discretion; RUS shall not award a contract or Task Order, as the case
by be, to a consultant if an Organizational Conflict of Interest
exists.
(4) Authority to waive an Organizational Conflict of Interest vests
with the RUS Administrator; such waivers must be in writing to be
effective.
(5) Consultant contracts with all legal consultants, all financial
consultants and such other consultants as the RUS may determine on a
case by case basis (selected other consultants) shall provide that such
consultants agree not to undertake during the term of the applicable
contract, inclusive of option or renewal periods, to represent any RUS
borrower on the same or other matters without the express written
consent of RUS.
(6) Consultant contracts with all legal consultants, all financial
consultants and selected other consultants shall provide that such
consultants agree not to undertake, for a period of not less than four
years from the contract expiration date, to represent any RUS borrower
or generation and transmission (G&T) affiliate thereof, including a
borrower which may prepay outstanding RUS indebtedness subsequent to
the consultant undertaking to represent RUS, on any matter in which RUS
has a significant interest in the outcome, where such borrower(s) were
the subject of consulting services rendered by that consultant during
the tenure of the applicable contract, without the express written
consent of RUS. G&T affiliate in this context shall refer to all
members of the applicable generation and transmission cooperative and
the cooperative(s) in which the borrower was itself a member.
Representation includes any retainer or advisory contract and is not
limited to representation relating to negotiations with or applications
before RUS.
(7) RUS may waive any of the foregoing requirements or procedures
by determining that its application in a particular situation would not
be in the government's interest.
Key Personnel
Legal service contracts are distinguished from other consulting
services funded by borrowers pursuant to Section 18 of the RE Act with
respect to provisions relating to key personnel. Factors such as trust,
judgment, negotiating style and presence and other intangibles affect
the quality and effectiveness of representation and client
satisfaction. Borrower funded legal service contracts will provide that
no substitution of key personnel may occur without prior approval of
the contracting officer, who may confer with the legal and RUS
technical representatives for the applicable contract.
List of Subjects in 7 CFR Part 1789
Administrative practice and procedure, legal services, Electric
power, Electric utilities, Loan programs--energy, Loan programs--
telecommunications, escrow fund, consulting contracts.
For the reasons stated, RUS proposes to add a new part 1789 to
chapter XVII of title 7 of the Code of Federal Regulations as follows:
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.
1789.162 Indemnification agreement.
1789.163 Waiver.
1789.164-1789.165 [Reserved]
Subpart B--Escrow Account Funding and Payments
Sec.
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 et seq.; Pub. L. 103-354, 108 Stat. 3178
(7 U.S.C. 6941 et seq.); [Title I, Subtitle D, Pub. L. 100-203, 101
Stat. 1330].
Subpart A--Policy and Procedures With Respect to Consultant
Services Funded by Borrowers--General
Sec. 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.
Sec. 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 an Application before RUS.
Consultant means a person or firm which has been retained by RUS
under
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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 such other form as RUS may choose.
Escrow Account means an account established pursuant to
Sec. 1789.158 herein.
Escrow Agreement means an agreement, between a Borrower, a
Consultant and a Third-party Commercial Institution, meeting the
requirements of Sec. 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 Sec. 1789.166.
Indemnification Agreement means an agreement by a Borrower meeting
the requirements of Sec. 1789.162.
Invoice means an invoice, satisfactory to RUS, 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 Sec. 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. Organizational conflicts of interest shall
include, but not be limited to, a financial interest in the project
which is the subject of the Application; and providing advice and
services concurrently to RUS and to the Borrower which submitted the
relevant Application, on the same or different matters. Organizational
conflicts of interest may also include activities or relationships
determined by the Administrator pursuant to Sec. 1789.161 to constitute
an organizational conflict of interest.
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 made by
RUS pursuant to the terms of a Consultant Contract.
Third-party Commercial Institution means a commercial financial
institution mutually acceptable to the Borrower and the Consultant.
Sec. 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) RUS shall retain sole discretion in the selection of
Consultants to provide services to RUS. RUS may use the services of one
or more Consultants retained under Retainer Contracts to provide
services for projects to be identified by RUS. Alternatively, RUS may
elect to retain a Consultant in connection with a specific project. RUS
shall have sole discretion to prescribe terms and conditions of
Consultant Contracts. The Borrower shall be advised of the Consultant
selected only after committing to fund consultant services.
Sec. 1789.153 Borrower funding.
Borrowers shall use their general funds for the purposes of funding
consultant 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.
Sec. 1789.154 Eligible borrowers.
All Borrowers are eligible to fund consultant services under this
part.
Sec. 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.
Sec. 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 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
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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.
Sec. 1789.157 Consultant contract.
(a) The Federal Acquisition Regulation (FAR), 48 CFR Ch. 1 and Ch.
4 of the Agriculture Acquisition Regulation (AGAR) shall apply to all
Consultant Contracts entered into pursuant to this part except as
herein provided. Where there is a conflict between FAR and AGAR and the
provisions of this part, the provision of this part shall apply.
Exceptions to FAR and/or AGAR shall be incorporated in Consultant
Contracts under this part as follows:
(1) Contracts for Legal Consultants shall provide for a technical
representative from OGC and that no substitution of key personnel may
occur without the prior approval of the applicable contracting officer.
(2) All Consultant Contracts shall provide for an escrow account
funding mechanism pursuant to this part and for RUS 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 RUS.
(4) Consultant Contracts, as applicable, shall incorporate the
applicable conflict of interest provisions set forth in Sec. 1789.161.
(b) Notice of the provisions herein shall be given by RUS at such
time as requests for proposals are issued under this part.
Sec. 1789.158 Implementation.
(a) Upon making a determination to go forward with Borrower funding
for consulting services, RUS shall select a Consultant to provide the
services. RUS 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
by RUS until such time as RUS provides the information set forth in
subparagraph (c)(3) of this section.
(b) If RUS determines to contract with a Consultant on a case by
case basis, RUS shall notify the Borrower of the applicable procedures.
(c) If RUS 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, RUS 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) RUS will request that the Consultant:
(i) notify RUS as to the acceptability of the form and substance of
the draft Task Order;
(ii) notify RUS as to its ability to provide RUS with a
satisfactory conflict of interest certification consistent with the
requirements of Sec. 1789.161; and
(iii) provide a cost estimate for the draft Task Order.
(3) When RUS is satisfied with the response(s) received pursuant to
paragraph (c)(2) of this section, RUS 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
(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 RUS 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 RUS 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, RUS shall
issue Task Order(s) for consultant services in accordance with the
terms and conditions of the applicable Retainer Contract.
Sec. 1789.159 Contract administration.
RUS shall be solely responsible for the administration of a
Consulting Contract and shall have complete control over the scope,
content, timeliness, and quality of the Consultant's work and the
approval of payment Invoices.
Sec. 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 with RUS 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.
Sec. 1789.161 Conflicts of interest.
(a) Disclosure requirements incorporated in procurements under this
part shall provide that Consultants disclose all business relationships
with current or former RUS Borrowers at the time proposals to offer
consulting services are made to RUS and in the event additional
business relationships are entered into subsequent to the original
disclosure.
(b) Certification requirements incorporated in procurements under
this part shall provide that Consultants certify, at the time a
proposal is made to provide consulting services to RUS, to the best of
their knowledge and belief, that no Organizational Conflict of Interest
exists and there are no relevant facts or circumstances which could
give rise to an Organizational Conflict of Interest, or the Consultant
has disclosed all such relevant information. The representations in the
certificate shall be deemed reaffirmed upon the execution of the
Consultant Contract and upon the undertaking of each Task Order by the
Contractor.
(c) The determination of whether or not an Organizational Conflict
of Interest exists shall rest with the Administrator in his sole
discretion; RUS shall not award a contract or task order, as the case
may be, to a Consultant if an Organizational Conflict of Interest
exists.
(d) The Administrator may waive an Organizational Conflict of
Interest pursuant to Sec. 1789.163 hereof; such waivers must be in
writing to be effective.
(e) Consultant Contracts with all Legal Consultants, all Financial
Consultants and such other Consultants as the RUS may determine on a
case by case basis (selected other Consultants) shall provide that such
Consultants agree not to undertake during the term of the
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applicable contract, inclusive of option or renewal periods, to
represent any RUS Borrower on the same or other matters, without the
express written consent of RUS.
(f) Consultant Contracts with all Legal Consultants, all Financial
Consultants and selected other Consultants shall provide that such
Consultants agree not to undertake, for a period of not less than four
years from the contract expiration date, to represent any RUS Borrower
or G&T affiliate thereof, including a Borrower which may prepay
outstanding RUS indebtedness subsequent to the Consultant undertaking
to represent RUS, on any matter in which RUS has a significant interest
in the outcome, where such Borrower(s) were the subject of consulting
services rendered by that Consultant during the tenure of the
applicable contract, without the express written consent of RUS. G&T
affiliate in this context shall refer to all members of the applicable
generation and transmission cooperative and the cooperative(s) in which
the Borrower was itself a member. Representation includes any retainer
or advisory contract and is not limited to representation relating to
negotiations with or Applications before RUS.
Sec. 1789.162 Indemnification agreement.
As a condition of approving Borrower funding, RUS will require the
Borrower to enter into an Indemnification Agreement, in form and
substance satisfactory to RUS, providing 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 administration and supervision of, the contract funded by the
Borrower for consultant services relating to the Borrower's
Application.
Sec. 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.
Secs. 1789.164-1789.165 [Reserved]
Subpart B--Escrow Account Funding and Payments
Sec. 1789.166 Terms and conditions of funding agreement.
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 RUS 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;
(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 RUS 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.
Sec. 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 entered into between RUS and the Consultant;
(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 RUS direction;
(f) The Escrow Account to be closed and all remaining funds
remitted to the Borrower after payment of the Final Invoice, or upon
notice from RUS to the escrow agent that RUS is satisfied no further
payments are required under the Funding Agreement; and
(g) RUS, 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.
Secs. 1789.168-1789.175 [Reserved]
Dated: December 21, 1995.
Jill Long Thompson,
Under Secretary, Rural Economic and Community Development.
[FR Doc. 95-31452 Filed 12-29-95; 8:45 am]
BILLING CODE 3410-15-P