[Federal Register Volume 61, Number 180 (Monday, September 16, 1996)]
[Rules and Regulations]
[Pages 48605-48609]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-23512]



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 Rules and Regulations
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  Federal Register / Vol. 61, No. 180 / Monday, September 16, 1996 / 
Rules and Regulations  

[[Page 48605]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1789

RIN 0572-AB17


Use of Consultants Funded by Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Utilities Service (RUS) hereby establishes 
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 expeditious review of 
applications for financial assistance or other approvals sought by 
borrowers.

EFFECTIVE DATE: This rule is effective October 16, 1996.

FOR FURTHER INFORMATION CONTACT: F. Lamont Heppe, Jr., Director, 
Program Support and Regulatory Analysis, U.S. Department of 
Agriculture, Rural Utilities Service, STOP 1522, Washington, D.C. 
20250-1522. Telephone: (202) 720-0736.

SUPPLEMENTARY INFORMATION: This final 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 a rule relating to the RUS electric loan program is not a rule as 
defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and, 
therefore, the Regulatory Flexibility Act 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 titled 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 
in accordance with Executive Order 12988 , Civil Justice Reform. RUS as 
determined that this rule meets the applicable standards provided in 
Section 3 of the Executive Order.
    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

    The recordkeeping and reporting burden contained in this rule will 
be submitted to the Office of Management and Budget (OMB) for approval 
under control number 0572-0108. The paperwork contained in this rule 
will not be effective until approved by OMB.
    Send questions or comments regarding any other aspect of this 
collection of information, including suggestions for reducing the 
burden, to F. Lamont Heppe, Jr., Director, Program Support and 
Regulatory Analysis, U.S. Department of Agriculture, Rural Utilities 
Service, STOP 1522, Washington, D.C. 20250-1522.

Background

    On January 2, 1996, at 61 FR 21, the Rural Utilities Service (RUS) 
published a proposed rule, 7 CFR Part 1789, Use of Consultants Funded 
by Borrowers, which proposed the agency's policies and procedures 
pursuant to which a borrower may fund consultants used by the 
Administrator for financial, legal, engineering, environmental and 
other technical advice and services.
    A total of eleven different organizations commented on the proposed 
rule. Comments were received from the National Rural Electric 
Cooperative Association (NRECA), the National Telephone Cooperative 
Association, CoBank, the National Rural Utilities Cooperative Finance 
Corporation (CFC), four borrowers, an engineering services firm, a law 
firm and the U.S. Department of Treasury.
    Comments by the NRECA asserted that staffing constraints at RUS and 
the Office of General Counsel (OGC) have often caused burdensome and 
costly delays for RUS borrowers in their applications and approval 
requests. NRECA recommended allowing the borrower to initiate RUS' 
consideration of use of a borrower-funded consultant. NRECA observed 
that following the lengthy full and open competition provisions of the 
Federal Acquisition Regulation (FAR) would, in many cases, negate the 
usefulness of hiring a third party consultant, and urged that RUS 
consider authorized exceptions to FAR's full competition requirements.
    RUS is of the view that the rule does not prohibit a borrower from 
initiating a discussion with the applicable regional director; however 
a requirement that obligates RUS program officials to extensive 
justification for turning down requests, is unnecessary and takes time 
away from the administration of RUS programs.
    RUS agrees that the application of the FAR may diminish the 
usefulness of hiring a third party consultant and will consider 
authorized exceptions to FAR's full competition requirements. RUS will 
continue to investigate ways in which the procurement process can be 
streamlined.
    NRECA and two other commentators protested that the conflict of 
interest provisions were too restrictive. They argue that timely 
response to borrower approval requests required, in many cases, that 
the consultant have extensive, ready knowledge of RUS programs. NRECA 
stated that there is a relatively small cadre of lawyers, accountants, 
and other professionals who are versed in the unique aspects of RUS 
programs. RUS is of the view that the agency has sufficient internal 
expertise with respect to specific attributes of the cooperative 
industry. However, the definition of organizational conflict of 
interest has

[[Page 48606]]

been modified to conform with the definition found in the FAR. The 
determination of whether or not a conflict exists, using the FAR 
definition, may be made by either the Administrator or the responsible 
contracting officer.
    NRECA, CoBank and CFC commented that RUS should consider a letter 
of credit payment mechanism as an alternative to the proposed escrow 
account arrangement. CFC and Oglethorpe supported direct payment from 
borrowers to consultants. The use of a letter of credit payment 
mechanism was one of the first inquiries made by RUS as the agency 
sought to implement this law. RUS is of the view that direct payment by 
borrowers to consultants can undermine the integrity of the client-
consultant relationship. The final rule is unchanged from the proposed 
rule with respect to the payment mechanism, but RUS will continue to 
explore whether a letter of credit mechanism may be substituted for the 
escrow account mechanism.
    One commenter argued that borrowers should be able to select the 
consultant used by RUS. Alternatively, the commenter said that a 
borrower should be able to veto RUS' selection of a consultant. Nothing 
in the proposed rule prohibits borrowers from making recommendations or 
suggestions to RUS regarding the choice of consultant. Under the final 
rule, the government retains the authority to select the consultant to 
be used.
    Oglethorpe proffered the third party contracting process set up by 
the Federal Energy Regulatory Commission (FERC) for preparing 
environmental impact statements as a model for RUS consultant 
procurements. RUS followed the FERC developments with great interest 
and actively explored the possibility of emulating it, with some 
modifications. The agency was particularly interested in adopting the 
``pre-qualified list'' approach. The statutory authorizations are 
sufficiently different so as to preclude the agency from emulating the 
FERC third party contracting process. Among other examples of how the 
FERC process differs from RUS, the guidance documents issued by FERC in 
this regard emphasize that those are not federal procurements.
    The only law firm which commented urged that the use of legal 
consultants should be kept to an absolute minimum. The firm voiced the 
concern that the proposed rule will create a class of ``professional 
consultants'' with a vested interest in promoting their participation 
in RUS transactions. From this, the firm projects the possibility of a 
proliferation in the use of legal consultants by RUS and its borrowers, 
thereby resulting in significantly increased time consumption and 
transaction costs for matters involving RUS approval.
    RUS believes that many aspects of this final rule will be self-
policing. The use of borrower funded consultants is a joint decision on 
the part of RUS and the borrower. If borrowers elect to incur the costs 
associated with funding third party consultants, it will be because it 
is to their advantage to do so. Proliferation under those circumstances 
is not necessarily undesirable.

List of Subjects in 7 CFR Part 1789

    Administrative practice and procedure, Electric power, Electric 
utilities, Legal services, Loan programs--energy, Loan programs--
telecommunications, Reporting and recordkeeping requirements.

    For the reasons stated, RUS amends 7 CFR Chapter XVII to add a new 
part 1789 to read 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

1789.166  Terms and conditions of funding agreement.
1789.167  Terms and conditions of escrow agreement.
1789.168--1789.175  [Reserved]

    Authority: 7 U.S.C. 901-950b; Pub. L. 103-354, 108 Stat. 3178 (7 
U.S.C. 6941 et seq.).

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 submitted or submits an Application before RUS.
    Consultant means a person or firm which has been retained pursuant 
to this subpart under a contract to provide financial, legal, 
engineering, environmental, or other technical advice and services.
    Consultant Contract means a contract for the performance of 
consulting services for RUS, to be paid using funds provided by a 
Borrower, which may be in the form of a Retainer Contract, purchase 
order, or other form as may be appropriate.
    Escrow Account means an account established pursuant to 
Sec. 1789.158.
    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 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.

[[Page 48607]]

    Organizational Conflict of Interest means that because of other 
activities or relationships with other persons, a person is unable or 
potentially unable to render impartial assistance or advice to the 
Government, or the person's objectivity in performing the contract work 
is or might be otherwise impaired, or a person has an unfair 
competitive advantage.
    Retainer Contract means a Consultant Contract providing for a 
minimum required payment to a Consultant irrespective of whether 
services are utilized by RUS thereunder.
    Task Order means a written request for consultant services pursuant 
to the terms of a Consultant Contract.
    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) The government shall retain sole discretion in the selection of 
Consultants to provide services to RUS and the form of contract 
utilized. RUS may either use the services of one or more Consultants 
retained under Retainer Contracts or the government may elect to retain 
a Consultant not otherwise on retainer. The government shall have sole 
discretion to prescribe terms and conditions of Consultant Contracts. 
The Borrower may bring considerations to the attention of the 
government which the Borrower deems pertinent to the selection process.
    (e) RUS shall retain sole discretion as to whether to further 
pursue use of an outside consultant for the relevant application in the 
event the Borrower does not enter into the agreements referenced in 
Sec. 1789.158(c)(3)(iii) within 60 days of the government providing to 
the Borrower the information set forth in Sec. 1789.158(c)(3).


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 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 the 
Agriculture Acquisition Regulation (AGAR), 48 CFR Ch. 4, shall apply to 
all Consultant Contracts entered into pursuant to this part except as 
provided in this section.
    (1) Contracts for Legal Consultants shall provide for a technical 
representative from OGC.
    (2) All Consultant Contracts shall provide for an escrow account 
funding mechanism pursuant to this part and for the government's sole 
discretion in determining whether payments are to be made from the 
Escrow Account to the Consultant.
    (3) All Consultant Contracts shall provide that payment of all 
obligations for work performed thereunder must be satisfied by amounts 
available in the Escrow Account; with the exception of the annual 
retainer fee, if any, Consultants shall not be entitled to any payments 
from the government.
    (b) The provisions of paragraph (a) of this section shall be given 
prominent emphasis in requests for proposals issued under this part.


Sec. 1789.158  Implementation.

    (a) Upon making a determination to go forward with Borrower funding 
for consulting services, RUS shall initiate a procurement request for a 
Consultant to provide the services. The government may either contract 
with a Consultant on a case by case basis or elect to use a Consultant 
pursuant to an outstanding

[[Page 48608]]

Retainer Contract. The Borrower will not be informed of the Consultant 
selected until such time as the government provides the information set 
forth in paragraph (c)(3) of this section.
    (b) If the government determines to contract with a Consultant on a 
case by case basis, the government shall notify the Borrower of the 
applicable procedures.
    (c) If the government determines to contract with a Consultant 
under an outstanding Retainer Contract, the following procedures will 
normally apply:
    (1) Pursuant to the terms of the contract, the government will 
prepare a draft Task Order requesting consultant services in connection 
with the review of the Borrower's Application. The draft Task Order 
shall set forth for the Consultant's review and acceptance, a 
description of the services to be provided and applicable time frames 
for the provision of such services.
    (2) The government will request that the Consultant:
    (i) Notify the government as to the acceptability of the form and 
substance of the draft Task Order;
    (ii) Notify the government as to its ability to provide a 
satisfactory conflict of interest certification consistent with the 
requirements of the FAR (48 CFR ch. 1); and
    (iii) Provide a cost estimate for the draft Task Order.
    (3) When the government is satisfied with the response(s) received 
pursuant to paragraph (c)(2) of this section, the government shall 
promptly provide to the Borrower:
    (i) A copy of the draft Task Order identifying the Consultant;
    (ii) The Consultant's cost estimate for the draft Task Order; and
    (iii) Contract information required to enable the Borrower to 
develop a Funding Agreement, an Escrow Agreement and an Indemnification 
Agreement (the ``agreements'').
    (4) The Borrower shall develop and submit to the government for 
approval executed originals of:
    (i) The agreements; and
    (ii) A certified copy of a resolution of the board of directors 
authorizing the Borrower to enter into the agreements and to take such 
other action as is necessary to effect the purposes of the agreements.
    (5) Upon receiving written RUS approval of the agreements and the 
form and substance of the board resolution, the Borrower shall:
    (i) Establish and fund the Escrow Account; and
    (ii) Provide written notice to the government of the Escrow Account 
number, the funding thereof, and such other information as required 
pursuant to the agreements.
    (6) After the Borrower has funded the Escrow Account, the 
government shall issue Task Order(s) for consultant services in 
accordance with the terms and conditions of the applicable Retainer 
Contract.


Sec. 1789.159  Contract administration.

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


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 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.

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


Sec. 1789.162  Indemnification agreement.

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


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, except that certain provision that the 
subject contracts are subject to the provisions of the FAR (48 CFR ch. 
1) and AGAR (48 CFR ch. 4).


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 the government and the Consultant;

[[Page 48609]]

    (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 the government for approval.
    (h) A form of Escrow Agreement satisfactory to the Borrower, 
Consultant and the designated Third-party Commercial Institution;
    (i) A schedule setting forth when and in what amounts the Borrower 
shall fund the Escrow Account;
    (j) Acknowledgment by the Consultant of the Indemnification 
Agreement provided by the Borrower to the government; and
    (k) The Funding Agreement shall not be effective unless and until 
approved in writing by RUS.


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;
    (b) Specific reference by number to the applicable Task Order;
    (c) Specific reference by number to the Escrow Account into which 
funds are to be deposited;
    (d) Invoices to specifically identify the applicable contract and 
Task Order(s);
    (e) Funds to be held in the Escrow Account by the escrow agent 
until paid to the Consultant pursuant to the government's 
authorization;
    (f) The Escrow Account to be closed and all remaining funds 
remitted to the Borrower after payment of the Final Invoice, unless 
otherwise directed by the government;
    (g) The government, the Consultant and the Borrower to have the 
right to be informed, in a timely manner and in such form as they may 
reasonably request, as to the status of and activity in the Escrow 
Account; and
    (h) The Escrow Agreement shall not be effective unless and until 
approved in writing by RUS.


Secs. 1789.168-1789.175  [Reserved]

    Dated: September 6, 1996.
Jill Long Thompson,
Under Secretary, Rural Development.
[FR Doc. 96-23512 Filed 9-13-96; 8:45 am]
BILLING CODE 3410-15-P