[Federal Register Volume 64, Number 65 (Tuesday, April 6, 1999)]
[Rules and Regulations]
[Pages 16602-16612]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-8380]


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DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Part 1753

RIN 0572-AB34


Telecommunications System Construction Policies and Procedures

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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SUMMARY: The Rural Utilities Service (RUS) hereby amends its 
regulations on telecommunications system construction policies and 
procedures. This revision includes empowering the telecommunications 
borrowers by reducing oversight by RUS with respect to preparation of 
plans and specifications, bid approvals, and final document approvals. 
In addition to reducing the requirements for facilities construction, 
RUS will also make technical corrections and clarifications, and minor 
technical changes.

EFFECTIVE DATE: This regulation is effective on May 6, 1999.

FOR FURTHER INFORMATION CONTACT:
Orren E. Cameron III, Director, Telecommunications Standards Division, 
Rural Utilities Service, U.S. Department of Agriculture, 1400 
Independence Avenue, SW, STOP 1598, Washington, DC 20250-1598. 
Telephone: (202) 720-8660; e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This final rule has been determined to be not significant for 
purposes of Executive Order 12866 and therefore has not been reviewed 
by the Office of Management and Budget.

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil

[[Page 16603]]

Justice Reform. RUS has determined that this final rule meets the 
applicable standards provided in Section 3. of the Executive Order. In 
addition, all State and local laws and regulations that are in conflict 
with this rule will be preempted, no retroactive effect will be given 
to this rule, and, in accordance with Sec. 212(e) of the Department of 
Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(e)), 
administrative appeal procedures, if any, must be exhausted before an 
action against the Department or its agencies may be initiated.

Regulatory Flexibility Act Certification

    The Administrator of RUS has determined that this final 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 RUS telecommunications program provides loans to borrowers 
at interest rates and terms that are more favorable than those 
generally available from the private sector. RUS borrowers, as a result 
of obtaining federal financing, receive economic benefits which exceed 
any direct economic costs associated with complying with RUS 
regulations and requirements. Moreover, this action liberalizes certain 
contract requirements by changing contract limits thereby reducing RUS 
oversight requirements and further offsetting economic costs. Therefore 
an analysis under the Regulatory Flexibility act is not required.

Information Collection and Recordkeeping Requirements

    The Office of Management and Budget (OMB) approval of the 
information collection requirements of this rule under the Paperwork 
Reduction Act of 1995 (44 U.S.C. Chapter 35, as amended), OMB control 
number 0572-0059, has expired. In the preamble of its Notice of 
Proposed Rulemaking on Telecommunications System Construction Policies 
and Procedures, published July 17, 1998, (63 FR 38503), RUS included a 
statement regarding the collection of information in this rule and 
provided an opportunity for public comment. RUS will publish a Notice 
in the Federal Register upon receipt of OMB approval of the collection 
of information. No person is required to respond to the collection of 
information required by this rule until such Notice is published.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this final 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 of assessment.

Catalog of Federal Domestic Assistance

    The program described by this final rule is listed in the Catalog 
of Federal Domestic Assistance Programs under No. 10.851, Rural 
Telephone Loans and Loan Guarantees, and No. 10.852, Rural Telephone 
Bank Loans. This catalog is available on a subscription basis from the 
Superintendent of Documents, United States Government Printing Office, 
Washington, DC 20402-9325.

Executive Order 12372

    This final rule is excluded from the scope of Executive Order 
12372, Intergovernmental Consultation, which may require consultation 
with State and local officials. See notice related to a final rule 
entitled ``Department Programs and Activities Excluded from Executive 
Order 12372,'' (50 FR 47034) which published re-determined that RUS 
loans, loan guarantees, and RTB bank loans were exempted from coverage 
under this order.

Unfunded Mandates

    This rule contains no Federal Mandates (under the regulatory 
provision of Title II of the Unfunded Mandates Reform Act of 1995) for 
State, local, and tribal governments or the private sector. Thus, this 
rule is not subject to the requirements of section 202 and 205 of the 
Unfunded Mandates Reform Act.

Background

    RUS has undertaken a strategic review of all policies and 
procedures covering its preloan and postloan requirements of borrowers. 
This review was part of RUS efforts in governmental streamlining and 
empowering the recipients of the loans provided under the Rural 
Electrification Act (RE Act) of 1936, (7 U.S.C. 901 et seq.). As a 
result of this review, several procedures and policies were deemed no 
longer necessary. Other policies and procedures have been streamlined 
and RUS will place more responsibility with the borrowers to insure a 
more cost effective review process while maintaining the required loan 
security. In view of this increased reliance upon borrowers and their 
consultants, certain provisions have been added to reduce the 
government's vulnerability to conflicts of interest. Provisions have 
also been added for construction of headquarters facilities pursuant to 
the Rural Electrification Loan Restructuring Act of 1993 (107 Stat. 
1356).
    RUS is also making technical corrections to final regulations which 
were reorganized and redesignated on September 27, 1990, at 55 FR 
39393. In particular, certain regulations contained cross references 
which inadvertently had not been updated. This action is simply a 
correction to these regulations with no change to substance. Changes to 
regulatory text are merely to update cross references. As currently 
published, the final regulations may prove to be misleading.

Comments

    Public comments were received from Hicks and Ragland Engineering 
Company, Harry Hutson, and Century Telephone Enterprises. The comments, 
recommendations, and responses are summarized as follows:
    Comment: In regard to Sec. 1753.7(e) one commenter questioned 
whether new bids had to be taken on a project or changes with the 
awarded bidder could be negotiated when a substantial change in the 
plans and specifications (P&S) is required after executed contacts have 
been obtained.
    Response: Changes in the plans and specifications do not require 
new bids but can be handled by contract amendments as described in 
Sec. 1753.11.
    Comment: One commenter stated that Sec. 1753.2 defines major 
construction as projects estimated to cost more than $250,000, and 
minor construction as projects estimated to cost $250,000 or less. 
Section 1753.46(2) states that contracts under $250,000, may, at the 
borrower's option, be negotiated. Section 1753.5(2) states that RUS 
approval is required for negotiated major construction contracts. By 
definition there is no major construction below $250,000. Therefore, we 
cannot have a negotiated major construction contract.
     Response: Certain RUS contracts such as RUS Forms 525 and 545 for 
central office equipment may be used for negotiated major construction 
with RUS approval.
    Comment: One commenter stated that Sec. 1753.46 discusses minor 
construction. Since the limit for minor construction is now $250,000, 
this information should be in the minor construction section not the 
major construction section.
    Response: RUS believes that a discussion of the use of the RUS 
Forms 515 and 773 is appropriate in this section. RUS added a sentence 
to Sec. 1753.77 in this final rule indicating that the rules for using 
these forms are contained in subpart F.

[[Page 16604]]

    Comment: One commenter stated that minor construction can be 
accomplished via work order, RUS Forms 773 or 515. A Form 515 contract 
under $250,000 can be negotiated except if equal to $250,000, which is 
almost impossible. To make this more sensible, the borrower should be 
able to negotiate, at their option, Form 515 contracts costing $250,000 
or less.
    Response: RUS agrees with this comment and made the change in the 
appropriate paragraphs.
    Comment: One commenter stated that Sec. 1753.7(e) contains the 
statement ``estimated to cost over $500,000 or 25% of the total loan, 
whichever is less.'' This statement appears in numerous paragraphs 
throughout this part 1753 but in these statements ``whichever is less'' 
does not appear. For clarity, it should be stated each time the 
statement appears whether you mean it to be less than or more than.
    Response: RUS agrees with this comment. The phrase ``whichever is 
less'' is added in the appropriate paragraphs.
    Comment: One commenter stated Sec. 1753.48(b) should be eliminated 
since you can not negotiate above $250,000.
    Response: RUS agrees in part with this comment. The first sentence 
in Sec. 1753.48(b) raises the negotiation limit to $250,000 and is 
useful. The second sentence is deleted in this final rule.
    Comment: One commenter said there should be no reference in the 
major construction section to negotiated RUS Form 515 or 773 contracts.
    Response: Negotiated RUS Form 515 contracts operate under the same 
rules as any other Form 515 contract so it is covered in subpart F. RUS 
Form 773 is only mentioned in subpart F for the reader's convenience. 
For rules regarding the use of RUS Form 773, the reader is referred by 
subpart F to subpart I.
    Comment: One commenter stated that Sec. 1653.47(c) requires 
checklist Form 553 be completed and signed by the borrower's engineer 
and submitted to RUS for review with the plans and specifications. RUS 
Form 553 is so out of date that the Washington, D.C., staff does not 
use it or require it. Rus Form 553 should be updated or eliminated.
    Response: RUS agrees with this comment and references to Form 553 
are deleted in this final rule.
    Comment: One commenter stated that there is confusing language in 
Sec. 1753.48(b) regarding negotiated procurement for RUS Form 515 
contract. The first part of the paragraph says bids are not required 
for outside plant construction which is estimated to cost less than 
$250,000, but the last part says plans and specifications for proposed 
contracts exceeding $500,000 must be approved by RUS before 
negotiations with a contractor may begin.
    Response: RUS agrees with this comment. The second sentence in 
Sec. 1753.48(b) is deleted in this final rule.

List of Subjects in 7 CFR Part 1753

    Communications equipment, Loan programs--communications, Reporting 
and recordkeeping requirements, Rural areas, Telecommunication, 
Telephone.

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

PART 1753--TELECOMMUNICATION SYSTEM CONSTRUCTION POLICIES AND 
PROCEDURES

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

    Authority: 5 U.S.C. 501, 7 U.S.C. 901 et seq.

    2. Revised Sec. 1753.1, paragraph (a) to read as follows:


Sec. 1753.1  General.

    (a) The standard RUS Telecommunications Loan Documents contain 
provisions regarding procurement of materials and equipment and 
construction of telecommunications facilities by telecommunications 
borrowers. This part implements certain of the provisions by setting 
forth requirements and procedures. Borrowers shall follow these 
requirements and procedures whenever using loan funds to purchase 
materials and equipment or perform construction, unless they have 
received the Administrator's written approval to do otherwise.
* * * * *
    3. Amend Sec. 1753.2 to add a new definitions for ``loan 
purposes,'' ``RUS,'' and ``RTB,'' and revise the definitions of ``major 
construction'', ``minor construction'' and ``modernization plan'' to 
read as follows:


Sec. 1753.2  Definitions.

* * * * *
    Loan purposes--The high level objectives of the loan are to fund 
the construction. These purposes are first stated in the 
characteristics letter described in 7 CFR 1737.80, which is sent to the 
applicant to offer a loan after RUS has completed its preloan studies.
    Major construction--A telecommunications plant project estimated to 
cost more than $250,000, including all labor and materials.
    Minor construction--A telecommunications plant project estimated to 
cost $250,000 or less, including all labor and materials.
* * * * *
    Modernization plan--A State plan, which has been approved by RUS, 
for improving the telecommunications network of those 
Telecommunications Providers covered by the plan. A Modernization Plan 
must conform to the provisions of 7 CFR part 1751, subpart B.
* * * * *
    RTB--the Rural Telephone Bank, established as a body corporate and 
an instrumentality of the United States, to obtain supplemental funds 
from non-Federal sources and utilize them in making loans, for the 
purposes of financing, or refinancing, the construction, improvement, 
expansion, acquisition, and operation of telephone lines, facilities, 
or systems, for RUS borrowers financed under sections 201 and 408 of 
the Act.
    RUS--the Rural Utilities Service, an agency of the United States 
Department of Agriculture established pursuant to Section 232 of the 
Federal Crop Insurance and Reform and Department of Agriculture 
Reorganization Act of 1994 (Pub. L. 103-354, 108 Stat. 3178), successor 
to Rural Electrification Administration with respect to administering 
certain electric and telecommunications program. See 7 CFR 1700.1.
* * * * *
    4. Revise the first word of Sec. 1753.3(a) from ``Prior'' to 
``Advance.''
    5. Amend Sec. 1753.5, to revise paragraph (b)(1), redesignate 
paragraph (b)(2) to (b)(3), and add a new paragraph (b)(2) to read as 
follows:


Sec. 1753.5  Methods of major construction.

* * * * *
    (b) Contract construction. (1) RUS approval of the borrower's award 
of the contract is not required if the contractor is selected through 
sealed competitive bidding, the bid amount is $500,000 or less and the 
contractor is not a company or organization affiliated with the 
borrower. This does not relieve the borrower of the requirements of 
bidding or bid evaluation set contained in this part.
    (2) RUS approval of the borrower's award of the contract is 
required for all other competitively-bid and for negotiated major 
construction contracts.
* * * * *
    6. Amend Sec. 1753.6, to revise paragraph (a) and add paragraph (e) 
to read as follows:

[[Page 16605]]

Sec. 1753.6  Standards, specifications, and general requirements.

    (a) Materials, equipment, and construction financed with loan funds 
must meet the standards and specifications established by RUS. 7 CFR 
part 1755 lists the RUS Bulletins containing the standards and 
specifications for telephone facilities. Materials and equipment 
meeting these standards are included on the List of Material Acceptable 
for Use on Telecommunications Systems of RUS Borrowers, I.P. 300-4. 
This bulletin may be obtained by subscription from the Superintendent 
of Documents, Government Printing Office, Washington, DC 20402.
* * * * *
    (e) All software, software systems, and firmware financed with loan 
funds must be year 2000 compliant, as defined in 7 CFR 1732.22(e).
    7. Amend Sec. 1753.7, to revise paragraphs (c) and (e) to read as 
follows:


Sec. 1753.7  Plans and specifications (P&S).

* * * * *
    (c) The appropriate standards and specifications listed in 7 CFR 
part 1755 shall be included in the P&S. When RUS has not prepared 
standards and specifications, the borrower shall use general 
engineering requirements and specifications prepared by the borrower's 
engineer. The specifications prepared by the borrower's engineer and 
based on general engineering requirements shall be subject to review 
and approval by RUS for all major construction, including major 
projects which would be exempted from RUS approval under paragraph (e) 
of this section.
* * * * *
    (e) RUS approval of P&S is required for construction that is 
estimated to cost over $500,000 or 25% of the total loan, whichever is 
less, and for all building construction. P&S for all other construction 
are exempt from RUS review and approval except that, at the time of 
contract approval, RUS will examine the plans and specifications for 
conformity with the loan purposes and to determine that they comply 
with other requirements of this part.
* * * * *
    8. Amend Sec. 1753.8, to revise paragraphs (a)(1), (a)(11)(i), 
(a)(11)(ii) introductory text, (a)(11)(iii) introductory text, and 
(a)(12)(i), and add a new paragraph (a)(11)(iv) is added to read as 
follows:


Sec. 1753.8  Contract construction procedures.

    (a) Sealed, competitive bidding--(1) Bid opening date: The borrower 
is responsible for scheduling the bid opening date. If RUS review of 
P&S is required by Sec. 1753.7, the borrower shall wait until approval 
has been received before setting the date. In setting the date, 
sufficient time should be allowed for the bidders to examine the 
project site and prepare their bids. The borrower shall notify GFR of 
the bid date and invite GFR to attend.
* * * * *
    (11) Award of contract: (i) The borrower shall obtain from the 
engineer the determination of the lowest responsive bid, a tabulation 
of all bids and the engineer's recommendation for award of the 
contract. Contract award is subject to RUS approval if either the cost 
of the project is over $500,000 or the contract is with an organization 
affiliated with the borrower. Contract award of all other projects is 
not subject to RUS approval.
    (ii) If an award is made, the borrower shall award the contract to 
the lowest responsive bidder. The borrower may award the contract 
immediately upon determination of the lowest responsive bidder if the 
following conditions are met:
* * * * *
    (iii) If RUS approval of the award of contract is required under 
this paragraph (a)(11), the borrower shall send to RUS for 
consideration of approval of the award:
* * * * *
    (iv) If RUS approval of the award of contract is not required under 
this paragraph (a)(11), the borrower shall keep a file available for 
inspection by RUS. The file shall be kept for at least two years and 
shall include:
    (A) One copy of all received bids.
    (B) The engineer's recommendation and tabulation of all bids 
including ``Buy American'' evaluations, if any, and all other 
evaluations required by law.
    (C) Evidence of acceptance of the low bid by the borrower, such as 
a copy of the board resolution certified by the Secretary of the board.
    (12) Execution of contract: (i) The borrower shall submit to RUS 
three original counterparts of the contract executed by the contractor 
and borrower.
* * * * *
    9. Revise Sec. 1753.11, paragraphs (a)(3), (b) and (d) to read as 
follows:


Sec. 1753.11  Contract amendments.

    (a) * * *
    (3) The amendment causes an unbonded contract to require a 
contractor's performance bond. This would occur when a contract that is 
executed in an amount below that requiring a performance bond by 7 CFR 
part 1788, subpart C, is amended to an amount above that amount.
    (b) Advance RUS approval to execute other contract amendments is 
not required. These amendments may be submitted to RUS at any time 
prior to closeout. If a borrower wishes to receive an advance of funds 
based on an amended contract amount (i.e., amendments that increase a 
contract by less than 20%), the borrower may initiate an increase in 
the amount approved for advance by submitting three copies of the 
amendment to RUS for approval.
* * * * *
    (d) Upon execution of any amendment that causes the amended 
contract amount to exceed the original contract amount by 20% or more, 
three copies of the amendment shall be submitted to RUS for approval.
    10. Amend Sec. 1753.15, to redesignate paragraphs (a)(2) through 
(a)(5) as (a)(3) through (a)(6), add a new paragraph (a)(2), and revise 
paragraphs (a)(1) and newly designated paragraphs (a)(5)(i) and (ii) to 
read as follows:


Sec. 1753.15  General.

    (a)(1) The standard RUS loan documents contain provisions regarding 
engineering and architectural services performed by or for RUS 
telecommunications borrowers. This part implements certain of the 
provisions by setting forth the requirements and procedures to be 
followed by borrowers in selecting architects and engineers and 
obtaining architectural and engineering services by contract or by 
force account.
    (2) Borrowers shall obtain architectural and engineering services 
only from persons or firms which are not affiliated with, and have not 
represented, a contractor, vendor or manufacturer who may provide 
labor, materials, or equipment to the borrower under any current loan.
* * * * *
    (5)(i) For major construction, services provided by architects and 
engineers not on the borrower's staff must be provided under Form 220, 
Architectural Service Contract, or Form 217, Postloan Engineering 
Service Contract--Telecommunications. These contracts require RUS 
approval.
    (ii) For minor construction, borrowers may use the contracts in 
paragraph (a)(5)(i) of this section for postloan architectural or 
engineering services or any other form of contract, such as Form 245, 
Engineering Service Contract, Special Services--Telephone. RUS

[[Page 16606]]

approval of contracts for postloan architectural or engineering 
services associated with minor construction, except for buildings 
covered in paragraph (a)(6) of this section, is not required.
* * * * *
    11. Amend Sec. 1753.16, to revise paragraphs (b)(1) through (b)(4) 
to read as follows:


Sec. 1753.16  Architectural services.

* * * * *
    (b)(1) The borrower shall use Form 220 when contracting for 
architectural services for major construction, except that the borrower 
may use either Form 220 or Form 217 if the building is an unattended 
central office building.
    (2) The borrower and the architect negotiate the fees for services 
under Form 220.
    (3) Reasonable modifications or additions to the terms and 
provisions in Form 220 may be made, subject to RUS approval, to obtain 
the specific services needed for a building.
    (4)(i) Three copies of Form 220, executed by the borrower and the 
architect, shall be sent to GFR to be forwarded to RUS for approval. 
RUS will review the contract terms and conditions. RUS will not approve 
the contract if, in RUS's judgment:
    (A) Unacceptable modifications have been made to the contract form.
    (B) The contract will not accomplish loan purposes.
    (C) The architectural service fees are unreasonable.
    (D) The contract presents unacceptable loan security risk to RUS.
    (ii) If RUS approves the contract, RUS will send one copy to the 
architect and one copy to the borrower.
* * * * *
    12. Amend Sec. 1753.17(b)(1)(ii)(D) to remove ``(See 7 CFR part 
1758)'', add paragraph (b)(1)(ii)(E), and revise paragraphs 
(c)(1)(i)(C) and (c)(2)(i)(A) to read as follows:


Sec. 1753.17  Engineering services.

* * * * *
    (b) * * *
    (1) * * *
    (ii) * * *
    (E) The consulting engineering firm is affiliated with or has 
represented a contractor, vendor, or manufacturer who may provide 
labor, materials, or equipment to the borrower under any current loan.
* * * * *
    (c) * * *
    (1) * * *
    (i) * * *
    (C) The names, qualifications, and responsibilities of other 
principal employees who will be associated with providing the 
engineering services.
* * * * *
    (2) * * *
    (i) * * *
    (A) A copy of the employee's qualifications and experience record, 
unless previously submitted. RUS requires a minimum of four years of 
construction and inspection experience. The employee cannot be engaged 
in the actual construction.
* * * * *
    13. Add Sec. 1753.18 to read as follows:


Sec. 1753.18  Engineer and architect contract closeout certifications.

    A certification of completion and inspection of construction signed 
by the borrower and countersigned in accordance with accepted 
professional engineering and architectural practice, by the engineer or 
architect, shall be prepared as evidence of completion of a major 
construction project. This certification shall make reference to the 
contract number and contract amount, and shall include the following:
    (a) A statement that the construction is complete and was done in 
accordance with the RUS approved system design or layout or subsequent 
RUS approved changes.
    (b) A statement that the construction was for loan purposes.
    (c) A statement that construction used RUS-accepted materials and 
was in accordance with specifications published by RUS covering the 
construction which were in effect when the contract was executed, or in 
the absence of such specifications, that it meets other applicable 
specifications and standards (specify), and that it meets all 
applicable national and local code requirements as to strength and 
safety.
    (d) A statement that the construction complies with the ``Buy 
American'' provision (7 U.S.C. 903 note) of the Rural Electrification 
Act of 1936 (7 U.S.C. 901 et seq.).
    (e) A statement that all necessary approvals have been obtained 
from regulatory bodies and other entities with jurisdiction over the 
project.
    (f) A statement that all closeout documents required by this part 
have been examined and found complete such that the Contractor has 
fulfilled all obligations under the contract except for warranty 
coverage.
    (g) A statement that the engineer or architect is not affiliated 
with and does not represent the contractor, vendor, or manufacturer who 
is a participant in the contract.
    14. Revise Sec. 1753.25, paragraphs (a), (c), and (d) as follows:


Sec. 1753.25  General.

    (a) This subpart implements and explains the provisions of the Loan 
Documents setting forth the requirements and the procedures to be 
followed by borrowers in constructing headquarters, commercial office, 
central office, warehouse, and garage buildings with loan funds.
* * * * *
    (c) All plans and specifications for buildings to be constructed 
with loan funds are subject to the approval of RUS. In addition, 
preliminary plans and specifications for headquarters and commercial 
office buildings to be constructed with loan funds are subject to RUS 
approval.
    (d) RUS Form 257, Contract to Construct Buildings, shall be used 
for the construction of all headquarters, commercial office, central 
office, warehouse, and garage buildings with loan funds. Refer to 
Sec. 1753.26 for further instructions.
* * * * *
    15. Amend Sec. 1753.26, to redesignate paragraphs (a) through (d) 
and (b) through (e) respectively, revise redesignated paragraph (b)(1) 
and add a new paragraph (a) to read as follows:


Sec. 1753.26  Plans and specifications (P&S).

    (a) For headquarters and commercial office buildings only, the 
borrower shall prepare preliminary P&S showing the floor plan and 
general architectural details of the building to be constructed using 
loan funds. In particular, the preliminary P&S shall address the 
requirements of Sec. 1753.25(f) and the Uniform Relocation Assistance 
and Real Property Acquisition Policies Act of 1970 (42 U.S.C. 4601 et 
seq.). The P&S shall be submitted to the GFR and are subject to RUS 
approval.
    (b) * * *
    (1) RUS Contract Form 257, Contract to Construct Buildings, 
completed to the extent explained in (c) of this section.
* * * * *
    16. Revise Sec. 1753.30, paragraphs (b), (c)(2), and (c)(3) to read 
as follows:


Sec. 1753.30  Closeout procedures.

* * * * *
    (b) RUS Form 257 Contract. (1) Whenever changes were made in the 
plans and specifications which did not require immediate submission to 
RUS of an amendment under Sec. 1753.11, a final contract amendment 
showing the changes shall be prepared.
    (2) Upon completion of the project, the borrower shall obtain 
certifications from the architect or engineer that the project and all 
required documentation are satisfactory and complete. The

[[Page 16607]]

requirements for this certification are contained in Sec. 1753.18.
    (3) The engineer's or architect's contract closeout certification 
and the final amendment shall be submitted to RUS as a basis for the 
final advance of funds for the contract.
    (4) After all required RUS approvals are obtained, final payment is 
made in accordance with article III of RUS Form 257 once the borrower 
has received the architect's or engineer's certifications regarding 
satisfactory completion of the project.
    (c) * * *
    (2) Complete, with the assistance of its architect or engineer, the 
documents listed in the following table that are required for the 
closeout of force account construction.

                                                Documents Required To Closeout Construction of Buildings
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Use with                No. of copies prepared by             Distribution
                                                         -----------------------------------------------------------------------------------------------
           RUS Form No.                  Description                                                        Architect/
                                                             Contract      Force account    Contractor       engineer        Borrower       Contractor
--------------------------------------------------------------------------------------------------------------------------------------------------------
238...............................  Construction or                    X  ..............  ..............             (3)        (to RUS)        (to RUS)
                                     Equipment Contract
                                     Amendment (if not
                                     previously
                                     submitted, send to
                                     RUS for approval).
181...............................  Certificate of                     X  ..............  ..............               2               1               1
                                     Completion
                                     (contract
                                     construction) \1\.
231...............................  Certificate of                     X  ..............               1  ..............               1  ..............
                                     Contractor.
224...............................  Waiver and Release                 X  ..............               1  ..............               1  ..............
                                     of Lien From Each
                                     Supplier.
213...............................  Certificate (buy                   X  ..............               1  ..............               1  ..............
                                     American).
None \2\..........................  ``As Built'' Plans                 X               X  ..............               1               1  ..............
                                     and Specifications.
None..............................  Guarantees,                        X  ..............               1  ..............               1  ..............
                                     Warranties, Bonds,
                                     Operating or
                                     Maintenance
                                     Instructions, etc.
None..............................  Architect/Engineer                 X               X  ..............               2               1               1
                                     seismic safety
                                     certification.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Cost of materials and services furnished by borrower are not to be included in Total Cost on RUS 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 instead of the
  ``as built'' Plans and Specifications.

    (3) Make distribution of the completed documents as indicated in 
the table in this section.
* * * * *
    17. Revise Sec. 1753.36, paragraph (g) to read as follows:


Sec. 1753.36  General.

* * * * *
    (g) Materials and equipment must meet the standards and general 
specifications approved by RUS. Materials and equipment included in 
I.P. 300-4, ``List of Materials Acceptable for Use on 
Telecommunications Systems of RUS Borrowers'', have been accepted as 
meeting these requirements. If the equipment is not included in the 
``List of Materials'' but has been approved for field trial 
installation, the borrower must in each instance obtain field trial 
approval from RUS prior to entering into any agreement with a supplier.
* * * * *
    18. Revise Sec. 1753.37, paragraph (c) to read as follows:


Sec. 1753.37  Plans and specifications (P&S).

* * * * *
    (C) RUS review of P&S is required for construction estimated to 
cost over $500,000 total or estimated to cost more than 25% of the 
total loan, whichever is less.
    (1) If RUS review is required, the borrower shall submit one copy 
of the P&S to the GFR for RUS review.
    (2) RUS will review the P&S and notify the borrower in writing of 
approval or disapproval.
    19. Revise Sec. 1753.38, paragraphs (a)(1)(i), (a)(1)(v), 
(a)(2)(i), (a)(2)(v), (b)(1), (b)(3), (b)(5), (e)(2), and (e)(3) to 
read as follows:


Sec. 1753.38  Procurement procedures.

    (a) * * *
    (1) Solicitation of bids. (i) After RUS approval of the 
specifications and equipment requirements (required only for projects 
expected to exceed $500,000 or 25% of the loan, whichever is less), the 
borrower shall send ``Notice and Instructions to Bidders'' to suppliers 
with central office equipment included in the current Informational 
Publication (I.P.) 300-4, ``List of Materials Acceptable for Use on 
Telecommunications Systems of RUS Borrowers.'' I.P. 300-4 is a 
subscription item available from the Superintendent of Documents, U.S. 
Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. 
This ``Notice'' may also be sent to suppliers of non-domestic equipment 
currently accepted by RUS as meeting RUS technical standards. The 
``Notice'' may also be sent to suppliers of central office equipment 
accepted for field trial.
* * * * *
    (v) At the request of an invited supplier, the borrower shall 
provide two copies of the P&S.
    (2) Technical sessions. (i) The borrower shall schedule individual 
technical sessions by the suppliers, notify each supplier of its 
scheduled date and time, notify the GFR of all scheduled dates and 
times, and request the following be available at the technical session:
* * * * *
    (v) After evaluation of the technical proposals and RUS approval of 
the changes to P&S (required only for projects that are expected to 
exceed $500,000 or 25% of the loan, whichever is less), sealed bids 
shall be solicited from only those bidders whose technical proposals 
meet P&S requirements. When fewer than three bidders are adjudged 
qualified by the borrower to bid, RUS approval must be obtained to 
proceed. Generally, RUS will grant such approval only if the borrower 
can demonstrate to the satisfaction of RUS that a good faith effort was 
made to obtain at least three competitive bids. This would be 
demonstrated if all suppliers currently listed in I.P. 300-4

[[Page 16608]]

were invited to submit technical proposals.
* * * * *
    (b) * * *
    (1) After RUS approval of the P&S and equipment requirements 
(required only for contracts expected to exceed $500,000 or 25% of the 
loan, whichever is less), the borrower shall send two complete copies 
of the approved P&S to the supplier an request that a proposal be 
submitted.
* * * * *
    (3) If the contract is expected to exceed $500,000 or 25% of the 
loan, whichever is less, changes in the P&S resulting from the 
technical session shall be subject to RUS review and approval.
* * * * *
    (5) The borrower shall obtain an award recommendation from its 
engineer.
* * * * *
    (e) * * *
    (2) The borrower shall prepare a plan containing an outline of the 
proposed use of the equipment, the proposal from the supplier and an 
estimate of the installation cost. If the total cost exceeds $500,000, 
RUS approval of the award of contract is required. The borrower shall 
in this case submit its plan and the supplier's proposal to GFR. If the 
cost does not exceed $500,000, the borrower's award of contract is not 
subject to RUS approval.
    (3) If RUS approval was required by paragraph (e)(2) of this 
section, upon RUS approval the purchase may be made using RUS Contract 
Form 525, or 545, or when applicable, the procedures contained in 
subpart I of this part.
* * * * *
    (20) Amend Sec. 1753.39 to revise paragraphs (a), (e)(1), (3)(2), 
(f) introductory text, (f)(1)(ii)(A), (f)(1)(iii), (f)(1)(iv) and (g), 
delete paragraph (e)(3), and add paragraph (h) to read as follows:


Sec. 1753.39  Closeout documents.

* * * * *
    (a) Contract amendments. Amendments that must be submitted to RUS 
for approval, as required by Sec. 1753.11, shall be submitted promptly. 
All other amendments may be submitted to RUS with the engineer's 
contract closeout certification.
* * * * *
    (e) * * *
    (1) Obtain from the engineer a certification of partial closeout.
    (2) Submit one copy of the summary to RUS with an FRS.
    (f) Final contract closeout procedure. The documents required for 
the final closeout of the central office equipment contract, RUS 
Contract Forms 525 and 545, are listed in the following table, which 
also indicates the number of copies and their distribution. The 
procedure to be followed is as follows:

                        Documents Required To Closeout Central Office Equipment Contract
----------------------------------------------------------------------------------------------------------------
                                            Use with                 Prepared by              Distribution
                                   -----------------------------------------------------------------------------
  RUS Form No.      Description       RUS Form     RUS Form
                                        525          545       Contractor    Engineer     Borrower    Contractor
----------------------------------------------------------------------------------------------------------------
238............  Construction or              X            X  ...........          (3)     (to RUS)     (to RUS)
                  Equipment
                  Contract
                  Amendment (if
                  not previously
                  submitted, send
                  to RUS for
                  approval).
754............  Certificate of               X  ...........            3            3            2            1
                  Completion and
                  Certificate of
                  Contractor and
                  Indemnity
                  Agreement (if
                  submitted, Form
                  744 is not
                  required).
517............  Results of                   X  ...........  ...........            2            1            1
                  Acceptance Tests
                  (prepare and
                  distribute
                  copies
                  immediately upon
                  completion of
                  the acceptance
                  tests of each
                  central office).
752a...........  Certificate of     ...........            X  ...........            2            1            1
                  Completion--Not
                  Including
                  Installation.
224............  Waiver and                   X  ...........            1  ...........            1  ...........
                  Release of Lien
                  (from each
                  supplier).
231............  Certificate of               X  ...........            1  ...........            1  ...........
                  Contractor.
213............  Certificate (Buy             X            X            1  ...........            1  ...........
                  American).
None...........  Switching                    X            X            2  ...........            2  ...........
                  Diagram, as
                  installed.
None...........  Set of Drawings              X            X            2  ...........            2  ...........
                  (each set to
                  include all the
                  drawings
                  required under
                  the
                  Specification,
                  RUS Form 522).
----------------------------------------------------------------------------------------------------------------

    (1) * * *
    (ii) * * *
    (A) Prepare and assemble the documents listed in the table in this 
section, Documents Required to Close Out Central Office Equipment 
Contracts.
* * * * *
    (iii) Make the documents listed in the table available for GFR 
review on the date of final inspection.
    (iv) Distribute the documents as indicated in the table. The 
documents listed for RUS shall be retained by the borrower for 
inspection by RUS for at least two years from the date of the 
engineer's contract closeout certificate.
* * * * *
    (g) Once RUS approval has been obtained for any required 
amendments, the borrower shall obtain certifications from the engineer 
that the project and all required documentation are satisfactory and 
complete. The requirements for the final contract certification are 
contained in Sec. 1753.18.
    (h) Once these certifications have been received, final payment 
shall be made according to the payment terms of the contract. Copies of 
the certifications shall be submitted with the FRS, requesting the 
remaining funds on the contract.
    21. Revise Sec. 1753.46, pararaphs (c)(2) and (c)(3) to read as 
follows:


Sec. 1753.46  General.

* * * * *
    (c) * * *
    (2) Contract Form 515, which is for $250,000 or less, may, at the 
borrower's option, be negotiated. See Sec. 1753.48(b).
    (3) RUS Form 773 may be used for minor outside plant projects which 
are not competitively bid because they cannot be designed and staked at 
the

[[Page 16609]]

time of contract execution. Projects of this nature include routine 
line extensions and placement of subscriber drops. See subpart I of 
this part.
    22. Revise Sec. 1753.47, paragraph (c) to read as follows:


Sec. 1753.47  Plans and specifications (P&S).

* * * * *
    (c) Submission of plans and specifications to RUS. (1) If the 
project does not exceed $500,000 or 25% of the loan, whichever is less, 
the borrower shall furnish GFR one set of P&S. The borrower may then 
proceed with procurement in accordance with Sec. 1753.48.
    (2) If the project exceeds $500,000 or 25% of the loan, whichever 
is less, RUS approval of P&S is required. Two sets of P&S shall be 
furnished to GFR. RUS will return one set to the borrower upon notice 
of approval. The borrower may then proceed with procurement in 
accordance with Sec. 1753.48.
    23. Revise Sec. 1753.48, paragraphs (a)(4) and (b)(1) to read as 
follows:


Sec. 1753.48  Procurement procedures.

    (a) * * *
    (4) Bid openings. (i) Bid openings and award of the contract shall 
be conducted in accordance with Secs. 1753.5(b)(1) and 1753.8(a).
    (ii) If Sec. 1753.8 requires RUS approval of award of the bid, the 
borrower shall submit to RUS two copies of the assembly unit sections 
of the apparent lowest responsive bid accepted by the borrower.
    (b) Negotiated procurement. (1) Competitive bids are not required 
for outside plant construction that is estimated to cost $250,000, or 
less, inclusive of labor and materials.
* * * * *
    24. Revise Sec. 1753.49, paragraphs (b), (c)(2) and (c)(3) to read 
as follows:


Sec. 1753.49  Closeout documents.

* * * * *
    (b) Documents required. The following table lists the documents 
required to closeout the RUS contract Form 515.

                              Documents Required To Closeout Construction Contract
                                                 [RUS Form 515]
----------------------------------------------------------------------------------------------------------------
                                                               No. of copies prepared         Distribution
                                                                         by            -------------------------
        RUS Form No.                    Description          --------------------------
                                                               Contractor    Engineer     Borrower    Contractor
----------------------------------------------------------------------------------------------------------------
724.........................  Final Inventory--Certificate    ...........            2            1            1
                               of Completion.
724a........................  Final Inventory--Assembly       ...........            2            1            1
                               Units.
None........................  Contractor's Bond Extension             (3)  ...........     (to RUS)     (to RUS)
                               (send to RUS when required).
281.........................  Tabulation of Materials                   2  ...........            1            1
                               Furnished by Borrower.
213.........................  Certificate--``Buy American''.            1  ...........            1  ...........
None........................  Listing of Construction Change  ...........            1            1  ...........
                               Orders.
224.........................  Waiver and Release of Lien                1  ...........            1  ...........
                               (from each supplier).
231.........................  Certificate of Contractor.....            1  ...........            1  ...........
527.........................  Final Statement of              ...........            2            1            1
                               Construction.
None........................  Reports on Results of           ...........            1            1            1
                               Acceptance Tests.
None........................  Set of Final Staking Sheets...  ...........            1            1  ...........
None........................  Tabulation of Staking Sheets..  ...........            1            1  ...........
None........................  Correction Summary (legible     ...........            1            1  ...........
                               copy).
None........................  Treated Forest Products         ...........  ...........            1  ...........
                               Inspection Reports or
                               Certificates of Compliance
                               (prepared by inspection
                               company or supplier).
None........................  Final Key Map (when             ...........            1            1  ...........
                               applicable).
None........................  Final Central Office Area and   ...........            1            1  ...........
                               Town Maps.
----------------------------------------------------------------------------------------------------------------

    (c) * * *
    (2) Final inventory documents. (i) The borrower shall obtain 
certifications from the engineer that the project and all required 
documentation are satisfactory and complete. Requirements for these 
contract closeout certifications are contained in Sec. 1753.18.
    (ii) The borrower shall prepare and distribute the final inventory 
documents in accordance with the tables contained in this section. The 
documents listed for RUS shall be retained by the borrower for 
inspection by RUS for at least two years from the date of the 
engineer's contract closeout certification.

                          Step-by-Step Procedure for Closeout of Construction Contract
                                                 [RUS Form 515]
----------------------------------------------------------------------------------------------------------------
                      Sequence
----------------------------------------------------           By                         Procedure
        Step No.                    When
----------------------------------------------------------------------------------------------------------------
1                        Upon Completion of          Borrower's Engineer..  Prepares the following: a set of
                          Construction.                                      Detail Maps and a set (when
                                                                             applicable) of Key Maps which show
                                                                             in red the work done under the 515
                                                                             contract; a Tabulation of Staking
                                                                             Sheet; and a tentative Final
                                                                             Inventory, RUS Forms 724 and 724a.
2                        After acceptance tests      Borrower's Engineer..  Forwards letter to the borrower with
                          made.                                              copies to the GFR stating that the
                                                                             project is ready for final
                                                                             inspection. Schedules inspection
                                                                             date.
3                        Upon receipt of letter      GFR..................  Advises borrower whether attending
                          from Borrower's Engineer.                          the final inspection will be
                                                                             possible.

[[Page 16610]]

 
4                        By inspection date........  Borrower's Engineer..  Obtains and makes available the
                                                                             following documents: a set of ``as
                                                                             constructed'' detail maps and (when
                                                                             applicable) ``as built'' key maps;
                                                                             a list of construction change
                                                                             orders; the final staking sheets;
                                                                             the tabulation staking sheets; the
                                                                             treated forest products inspection
                                                                             reports or certificates of
                                                                             compliance; the tentative final
                                                                             inventory, RUS Forms 724 and 724a;
                                                                             the tentative tabulation, RUS Form
                                                                             231 (if borrower furnished part of
                                                                             material); and, a report of results
                                                                             of acceptance tests.
5                        During inspection.........  Borrower's Engineer..  Issues instructions to contractor
                                                                             covering corrections to be made in
                                                                             construction as a result of
                                                                             inspection.
6                        During inspection.........  Contractor...........  Corrects 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.
7                        During inspection.........  Borrower's Engineer..  Inspects and approves corrected
                                                                             construction. Marks inspected areas
                                                                             on the key map, if available,
                                                                             otherwise on the detail maps.
8                        Upon completion of          Borrower's Engineer..  Prepares or obtains all the closeout
                          inspection.                                        documents listed in Table 3.
9                        After signing final         Borrower.............  Prepares and submits to RUS the
                          inventory.                                         engineer's certifications of
                                                                             completion and a Financial
                                                                             Requirement Statement, RUS Form
                                                                             481, requesting amount necessary to
                                                                             make final payment due under
                                                                             contract.
10                       On receipt of final         Borrower.............  Promptly forwards check for final
                          advance.                                           payment to contractor.
11                       During subsequent loan      RUS Field Accountant.  Examines borrower's construction
                          fund audit review                                  records for compliance with the
                          following final payment.                           construction contract and Subpart
                                                                             F, and examines RUS Form 281
                                                                             (Tabulation of Materials Furnished
                                                                             by Borrower) if any, for
                                                                             appropriate costs.
----------------------------------------------------------------------------------------------------------------

    (iii) When the total inventory price exceeds the maximum contract 
by more than 20 percent, an extension to the contractor's bond is 
required.
    (iv) The borrower shall submit the engineer's contract closeout 
certification with FRS for the final advance of funds.
    (3) Final payment shall be made according to the payment provisions 
of article III of RUS Form 515, except that certificates and other 
documents required to be submitted to or approved by the Administrator 
shall be submitted to and approved by the Owner.


Sec. 1753.50  [Removed and Reserved]

    25. Section 1753.50 is removed and reserved.
    26. Revise Sec. 1753.58, paragraphs (b), (c)(2) and (c)(5) to read 
as follows:


Sec. 1753.58  Closeout documents.

* * * * *
    (b) Documents. The documents required to close the FAP are listed 
in the following table. The following is a brief description of the 
closeout documents:

Documents Required To Close Out Force Account Outside Plant Construction
------------------------------------------------------------------------
         RUS Form No.                         Description
------------------------------------------------------------------------
817, 817a, 817b..............  Final Inventory Force Account
                                Construction and Certificate of
                                Engineer. Submit one copy to RUS, if
                                required \1\
213..........................  Certificate--``Buy American'' (as
                                applicable from each supplier).
None.........................  Detail Maps.
None.........................  Key map, if applicable.
None.........................  Staking Sheets.
None.........................  Tabulation of staking sheets.
None.........................  Treated Forest Products Inspection
                                Reports or Certificates of Compliance
                                (prepared by inspection company or
                                supplier).
------------------------------------------------------------------------
\1\ RUS Forms 817, 817a, and 817b are to be submitted to GFR only if
  required in paragraph (c)(5) of this section. Otherwise, the final
  inventory documents are to be assembed and retained by the borrower
  for at least two years.

    (c) * * *
    (2) The GFR shall be invited to make the final inspection 
accompanied by the engineer and the borrower.
* * * * *
    (5) After inspection, the final inventory documents shall be 
assembled as indicated in the table in this section. RUS Forms 817, 
817a, and 817b are to be submitted to GFR only if the amount of the 
closeout exceeds the original force account proposal by 20% or more. 
Otherwise, the final inventory documents are to be assembed and 
retained by the borrower for at least two years.
* * * * *

[[Page 16611]]

    27. Revise Sec. 1753.68, paragraphs (b)(2)(i), (b)(2)(ii), 
(b)(2)(iii), (b)(2)(iv), (b)(2)(v), (b)(4)(i), (b)(4)(ii), (c)(2), and 
(d)(3) to read as follows:


Sec. 1753.68  Purchasing special equipment.

* * * * *
    (b) * * *
    (2) Initial equipment purchase. (i) The borrower prepares P&S and, 
for projects estimated to exceed $500,000 or 25% of the loan, whichever 
is less, sends two copies to GFR for approval.
    (ii) For projects estimated to exceed $500,000 or 25% of the loan, 
whichever is less, RUS will either approve P&S in writing or notify the 
borrower of the reasons for withholding approval.
    (iii) For projects estimated to cost less than $500,000 or 25% of 
the loan, whichever is less, the borrower may proceed with procurement 
upon completion of the P&S.
    (iv) If the borrower has employed full competitive bidding in the 
selection, a contract may be executed with the successful bidder and 
the borrower may proceed to paragraph (b)(2)(vi) of this section.
    (v) If the borrower did not follow a fully competitive bidding 
process as described in Sec. 1753.8, the selection, along with a 
summary of all proposals and an engineer's recommendation, shall be 
sent to RUS. RUS shall approve the proposal selection in writing or 
notify the borrower of any reason for withholding approval.
* * * * *
    (4) New system additions. (i) The borrower prepares the P&S and, if 
the project is estimated to exceed $500,000 or 25% of the loan, 
whichever is less, sends two copies to the GFR for approval. The 
borrower may request RUS approval to negotiate for the purpose of 
standardization on a system basis prior to preparing the P&S.
    (ii) RUS notifies the borrower in writing as to whether the 
borrower may negotiate for specific equipment. If P&S were required to 
be submitted to RUS under paragraph (b)(4)(i) of this section, RUS 
notifies the borrower in writing of P&S approval (or notifies the 
borrower of the reasons for withholding approval).
* * * * *
    (c) * * *
    (2) The borrower shall prepare any required amendments to the 
special equipment contract, arrange for the execution by all parties, 
and submit these amendments to RUS in accordance with Sec. 1753.11(d). 
RUS Form 238, Construction or Equipment Contract Amendment, shall be 
used for this purpose.
* * * * *
    (d) * * *
    (3) Closeout documents. When the acceptance tests have been 
completed and all deficiencies have been corrected, the borrower:
    (i) Assembles and distributes the documents listed in the following 
table that are required for the closeout of the special equipment 
contract. The documents listed for RUS shall be retained by the 
borrower for inspection by RUS for at least two years from the date of 
the engineer's contract closeout certification.

                           Documents Required To Close Out Special Equipment Contracts
                                             [RUS Forms 397 and 398]
----------------------------------------------------------------------------------------------------------------
                                          No. of copies prepared by                           Distribution
  RUS Form No.      Description    ---------------------------------------   Engineer  -------------------------
                                      Form 397     Form 398    Contractor                 Borrower    Contractor
----------------------------------------------------------------------------------------------------------------
238              Construction or    ...........          (3)  ...........          (3)     (to RUS)     (to RUS)
                  Equipment
                  Contract
                  Amendment (if
                  not previously
                  submitted, send
                  to RUS for
                  approval).
396              Certificate of     ...........            2  ...........  ...........            1            1
                  Completion--Spec
                  ial Equipment
                  Contract
                  (Including
                  Installation).
396a             Certificate of     ...........  ...........  ...........            2            1            1
                  Completion--Spec
                  ial Equipment
                  Contract (Not
                  Including
                  Installation).
744              Certificate of               1  ...........  ...........  ...........            1  ...........
                  Contractor and
                  Indemnity
                  Agreement.
213              Certificate (Buy             1  ...........            1  ...........            1  ...........
                  American).
None             Report in                    1  ...........  ...........            1            1  ...........
                  writing,
                  including all
                  measurements and
                  other
                  information
                  required under
                  Part II of the
                  applicable
                  specifications.
None             Set of                       1  ...........            1  ...........            1  ...........
                  maintenance
                  recommendations
                  for all
                  equipment
                  furnished under
                  the contract.
----------------------------------------------------------------------------------------------------------------

    (ii) Obtains certifications from the engineer that the project and 
all required documentation are satisfactory and complete. Requirements 
for this contract closeout certification are contained in Sec. 1753.18.
    (iii) Submits copies of the engineer's certifications to RUS with 
the FRS requesting the remaining funds on the contract.
    (iv) Makes final payment in accordance with the payment terms of 
the contract.
    28. Revise Sec. 1753.76, paragraph (a) is revised to read as 
follows:


Sec. 1753.76  General.

    (a) This subpart implements and explains the provisions of the Loan 
Documents containing the requirements and procedures to be followed by 
borrowers for minor construction of telecommunications facilities using 
RUS

[[Page 16612]]

loan funds. Terms used in this subpart are defined in Sec. 1753.2.
* * * * *
    29. Revise Sec. 1753.77 to read as follows:


Sec. 1753.77  Methods of minor construction.

    Minor construction may be performed by contract using RUS Contract 
Form 773, ``Miscellaneous Construction Work and Maintenance Services'', 
by RUS Contract Form 515, or by work order construction. The rules for 
using Form 515 for minor construction are contained in subpart F of 
this part.
    30. Revise Sec. 1753.80, paragraph (b) to read as follows:


Sec. 1753.80  Minor construction procedure.

* * * * *
    (b) RUS financing under Form 773 contracts dated in the same 
calendar year is limited to the following amounts for the following 
discrete categories of minor construction. The date of the Form 773 
contract is the date the Form 773 contract is executed.
    (1) For outside plant construction, the limit is $500,000 or ten 
per cent (10%) of the borrower's previous calendar year's outside plant 
total construction, whichever is greater.
    (2) For central office equipment, the limit is $500,000.
    (3) For special equipment and buildings, the limit is $250,000 in 
each category.
* * * * *

Appendices A-F Removed

    31. Remove Appendices A through F to part 1753.

    Dated: March 31, 1999.
Inga Smulkstys,
Deputy Under Secretary, Rural Development.
[FR Doc. 99-8380 Filed 4-5-99; 8:45 am]
BILLING CODE 3410-15-M