[Federal Register Volume 67, Number 127 (Tuesday, July 2, 2002)]
[Proposed Rules]
[Pages 44396-44401]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-16278]


 ========================================================================
 Proposed Rules
                                                 Federal Register
 ________________________________________________________________________
 
 This section of the FEDERAL REGISTER contains notices to the public of 
 the proposed issuance of rules and regulations. The purpose of these 
 notices is to give interested persons an opportunity to participate in 
 the rule making prior to the adoption of the final rules.
 
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 

  Federal Register / Vol. 67, No. 127 / Tuesday, July 2, 2002 / 
Proposed Rules  

[[Page 44396]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Parts 1724, 1726, and 1755

RIN 0572-AB67


Revision of Electric Program Standard Contract Forms

AGENCY: Rural Utilities Service, USDA.

ACTION: Proposed rule.

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

SUMMARY: The Rural Utilities Service (RUS) is proposing to amend its 
regulations to revise its standard forms of contracts that borrowers 
are required to use when contracting for construction and procurement, 
that are or will be financed by loans made or guaranteed by RUS, in 
accordance with applicable RUS regulations. RUS proposes to update, 
consolidate, and streamline these standard forms of contracts. These 
changes are needed to improve the usefulness of the standard forms of 
contract and to make it easier for RUS borrowers to utilize these 
standard forms of contract.

DATES: Written comments must be received by RUS, or bear a postmark or 
equivalent, no later than October 30, 2002. Please note that comments 
concerning the information collection and recordkeeping requirements 
must be received by September 3, 2002.

ADDRESSES: Written comments should be addressed to F. Lamont Heppe, 
Jr., Director, Program Development and Regulatory Analysis, Rural 
Utilities Service, U.S. Department of Agriculture, Stop 1522, 1400 
Independence Avenue, SW., Washington, DC 20250-1522. Telephone: (202) 
720-9550. RUS requires a signed original and three copies of all 
comments (7 CFR 1700.4). Comments will be available for public 
inspection during regular business hours (7 CFR 1.27(b)).

FOR FURTHER INFORMATION CONTACT: Fred J. Gatchell, Deputy Director, 
Electric Staff Division, Rural Utilities Service, U.S. Department of 
Agriculture, Stop 1569, 1400 Independence Ave., SW., Washington, DC 
20250-1569. Telephone: (202) 720-1398. FAX: (202) 720-7491. E-mail: 
[email protected]. The proposed contract forms are available on the 
RUS website at: http://www.usda.gov/rus/electric/regs.htm.

SUPPLEMENTARY INFORMATION:

Executive Order 12866

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

Executive Order 12372

    This proposed rule is excluded from the scope of Executive Order 
12372, Intergovernmental Consultation, which may require consultation 
with State and local officials. See the final rule related notice 
entitled, ``Department Programs and Activities Excluded from Executive 
Order 12372,'' (50 FR 47034) advising that RUS loans and loan 
guarantees were not covered by Executive Order 12372.

Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. RUS has determined that this 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. sec. 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

    RUS has determined that this proposed rule will not have a 
significant economic impact on a substantial number of small entities, 
as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). 
The RUS electric program provides loans and loan guarantees to 
borrowers at interest rates and on terms that are more favorable than 
those generally available from the private sector. Small entities are 
not subjected to any requirements which are not applied equally to 
large entities. RUS borrowers, as a result of obtaining federal 
financing, receive economic benefits that exceed any direct economic 
costs associated with complying with RUS regulations and requirements.

National Environmental Policy Act Certification

    The Administrator of RUS has determined that this proposed rule 
will not significantly affect the quality of the human environment as 
defined by the National Environmental Policy Act of 1969 (42 U.S.C. 
4321 et seq.). Therefore, this action does not require an environmental 
impact statement or assessment.

Catalog of Federal Domestic Assistance

    The program described by this proposed rule is listed in the 
Catalog of Federal Domestic Assistance Programs under number 10.850, 
Rural Electrification Loans and Loan Guarantees. This catalog is 
available on a subscription basis from the Superintendent of Documents, 
the United States Government Printing Office, Washington, DC 20402-
9325, telephone number (202) 512-1800.

Information Collection and Recordkeeping Requirements

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 
Chapter 35), RUS invites comments on this information collection. RUS 
will request approval from the Office of Management and Budget (OMB).
    Comments on this notice must be received by September 3, 2002.
    Comments are invited on (a) whether the collection of information 
is necessary for the proper performance of the functions of the agency, 
including whether the information will have practical utility; (b) the 
accuracy of the agency's estimate of burden including the validity of 
the methodology and assumption used; (c) ways to enhance the quality, 
utility and clarity of the information to be collected; and (d) ways to 
minimize the burden of the collection of information on those who are 
to respond, including through the use of appropriate automated, 
electronic, mechanical, or other technological collection techniques or 
other forms of information technology.
    Comments may be sent to F. Lamont Heppe, Jr., Director, Program 
Development and Regulatory Analysis,

[[Page 44397]]

Rural Utilities Service, U.S. Department of Agriculture, 1400 
Independence Ave., SW., Stop 1522, Room 4034 South Building, 
Washington, DC 20250-1522.
    For further information contact Mr. Fred Gatchell, Deputy Director, 
Electric Staff Division, Rural Utilities Service, U.S. Department of 
Agriculture, 1400 Independence Avenue, SW., STOP 1569, Washington, DC 
20250-1569. Telephone: (202) 720-1398. Fax: (202) 720-7491. E-mail: 
[email protected]. deg.
    Title: 7 CFR 1726, ``Electric System Construction Policies and 
Procedures--Electric.''
    OMB Control Number: 0572-0107.
    Type of Request: Revision of a currently approved collection.
    Abstract: In order to facilitate the programmatic interest of the 
Rural Electrification Act of 1936, 7 U.S.C. 901 et seq. (RE Act), and, 
in order to assure that loans made or guaranteed by RUS are adequately 
secured, RUS , as a secured lender, has established certain standards 
and specifications for materials, equipment, and the construction of 
electric systems. The use of standards forms, construction contracts, 
and procurement procedures helps assure RUS that appropriate standards 
and specifications are maintained; RUS'' loan security is not adversely 
affected; and the loan and loan guarantee funds are used effectively 
and for the intended purposes.
    Estimate of Burden: Public reporting burden for this collection of 
information is estimated to average 1.5 minutes per response.
    Respondents: Not-for-profit institutions, business or other for-
profit.
    Estimated Number of Respondents: 697.
    Estimated Number of Responses per Respondent: 5.
    Estimated Total Annual Burden on Respondents: 71 hours.
    Copies of this information collection can be obtained from Michele 
Brooks, Program Development and Regulatory Analysis, at (202) 690-1078.
    All responses to this information collection and recordkeeping 
notice will be summarized and included in the request for OMB approval. 
All comments will also become a matter of public record.

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 sections 202 and 205 of the 
Unfunded Mandates Reform Act of 1995.

Background

    The standard loan agreement between RUS and its electric borrowers 
provides that, in accordance with applicable RUS regulations, the 
borrower shall use standard forms of contracts promulgated by RUS for 
construction, procurement, engineering services, and architectural 
services financed by a loan made or guaranteed by RUS. RUS also 
provides forms of contracts which serve as guidance to borrowers and 
which borrowers may use at their discretion. RUS proposes to update, 
consolidate, and streamline the standard forms of contracts used for 
construction and procurement. The forms affected are:

Primary Contract Forms

    1. RUS Form 198, Rev. 2-95, Equipment Contract. This form is used 
for equipment purchases.
    2. RUS Form 200, Rev. 2-95, Construction Contract--Generating. This 
form is used for generating plant construction or for the furnishing 
and installation of major items of equipment.
    3. RUS Form 201, Rev. 2-95, Right-of-Way Clearing Contract. This 
form is used for distribution line right-of-way clearing work which is 
to be performed separate from line construction.
    4. RUS Form 203, Rev. 2-95, Transmission System Right-of-Way 
Clearing Contract. This form is used for transmission right-of-way 
clearing work which is to be performed separate from line construction.
    5. RUS Form 257, Rev. 2-95, Contract to Construct Buildings. This 
form is used to construct headquarters buildings and other structure 
construction.
    6. RUS Form 764, Rev. 2-95, Substation and Switching Station 
Erection Contract. This form is used to construct substations and 
switching stations.
    7. RUS Form 786, Rev. 2-95, Electric System Communications and 
Control Equipment Contract. This form is used for delivery and 
installation of equipment for system communications.
    8. RUS Form 790, Rev. 2-95, Distribution Line Extension 
Construction Contract (Labor and Materials). This form is used for 
limited distribution construction accounted for under work order 
procedure.
    9. RUS Form 792, Rev. 2-95, Distribution Line Extension 
Construction Contract (Labor Only). This form is used for limited 
distribution construction accounted for under work order procedure.
    10. RUS Form 830, Rev. 2-95, Electric System Construction Contract 
(Labor and Materials). This form is used for distribution and 
transmission line project construction.
    11. RUS Form 831, Rev. 2-95, Electric Transmission Construction 
Contract (Labor and Materials). This form is used for transmission line 
project construction.

Secondary Contract Forms

    1. RUS Form 168b, Rev. 2-95, Contractor's Bond. This form is used 
to obtain a surety bond and is included in RUS Forms 200, 201, 203, 
257, 764, 786, 790, 792, 830, and 831.
    2. RUS Form 168c, Rev. 2-95, Contractor's Bond (less than $1 
million). This form is used in lieu of RUS Form 168b to obtain a surety 
bond when contractor's surety has accepted a Small Business 
Administration guarantee.
    3. RUS Form 180, Rev. 2-95, Construction Contract Amendment. This 
form is used to amend distribution line construction contracts.
    4. RUS Form 181, Rev. 2-95, Certificate of Completion, Contract 
Construction for Buildings. This form is used for the closeout of RUS 
Form 257.
    5. RUS Form 187, Rev. 2-95, Certificate of Completion, Contract 
Construction. This form is used for the closeout of and is included in 
RUS Forms 200, 203, 764, 786, 830, and 831.
    6. RUS Form 213, Rev. 11-99, Certificate (``Buy American''). This 
form is used to document compliance with the ``Buy American'' 
requirement.
    7. RUS Form 224, Rev. 2-95, Waiver and Release of Lien. This form 
is used for the closeout of and is included in RUS Forms 200, 203, 764, 
786, 830, and 831.
    8. RUS Form 231, Rev. 2-95, Certificate of Contractor. This form is 
used for the closeout of and is included in RUS Forms 200, 203, 764, 
786, 830, and 831.
    9. RUS Form 238, Rev. 2-95, Construction or Equipment Contract 
Amendment. This form is used to amend contracts except distribution 
line construction contracts.
    10. RUS Form 251, Rev. 2-95, Material Receipt. This form is used to 
document receipt of owner furnished materials and is included in RUS 
Forms 764, 830, and 831.
    11. RUS Form 254, Rev. 2-95, Construction Inventory. This form is 
used for the closeout of RUS Forms 203, 764, 830, and 831.
    12. RUS Form 307, Rev. 2-95, Bid Bond. This form is used to obtain 
a bid bond and is included in RUS Forms 200, 203, 257, 764, 830, and 
831.

[[Page 44398]]

    13. RUS Form 792b, Rev. 2-95, Certificate of Construction and 
Indemnity Agreement. This form is used for the closeout of and is 
included in RUS Forms 201, 790, 792.
    14. RUS Form 792c, Rev. 2-95, Supplemental Contract for Additional 
Project. This form is used to amend and is included in RUS Forms 201, 
790, 792.

Guidance Forms

    1. RUS Form 172, Rev. 9-58, Certificate of Inspection, Contract 
Construction. This form is used to notify RUS that construction is 
ready for inspection.
    2. RUS Form 173, Rev. 3-55, Materials Contract. This form is used 
for distribution, transmission, and general plant material purchases.
    3. RUS Form 274, Rev. 6-81, Bidder's Qualifications. This form is 
used to document bidder's qualifications.
    4. RUS Form 282, Rev. 11-53, Subcontract. This form is used for 
subcontracting.
    5. RUS Form 458, Rev. 3-55, Materials Contract. This form is used 
to obtain generation plant material and equipment purchases not 
requiring acceptance tests at the project site.

Proposed Changes

    The proposed revisions to the listed contract forms include:
    1. Eliminate unneeded forms. This includes merging the Form 181 
into the Form 187, merging the Form 180 and 792c into the Form 238, 
merging the Form 201, 203, and 764 into the Form 830, and eliminating 
Forms 180, 181, 201, 203, 764 and 792c. We are also proposing to 
eliminate infrequently used guidance forms (Forms 172, 173, 274, 282, 
and 458.)
    2. Make forms suitable for ``subject to'' or ``not subject to'' RUS 
approval. This includes merging the Form 831 into the Form 830 and 
eliminating Form 831.
    3. Make construction contract forms suitable for ``labor only'' or 
``labor and material.'' This includes merging the Form 792 into the 
Form 790 and eliminating Form 792.
    4. Standardize tables and information pages and incorporate them as 
separate attachments. RUS is planning to publish the ``Construction 
Units'' pages as a separate bulletin. This would allow the borrower to 
include in its bid package only those construction unit pages that are 
relevant to a particular project.
    5. Maximize consistency among forms. This includes standardizing 
common provisions and terminology, and adding a ``Notice and 
Instructions to Bidders'' to forms not having one. This also includes 
restructuring the Form 198, Equipment Contract, to a ``proposal'' and 
``acceptance'' format (like the other forms), and adding certain 
provisions, such as insurance and protection to persons and property, 
applicable to work performed at the project site, such as technical 
assistance during installation.
    6. Add a provision regarding assignment of the contract to RUS for 
security purposes.
    7. Update and clarify certain contract provisions in the forms. 
This includes:
    a. Clarify that the contractor (not the owner or engineer) is 
solely responsible for the means and methods of construction and for 
the supervision of the contractor's employees.
    b. Delete the reference to a ``Supervisor'' appointed by RUS.
    c. Delete the reference to the loan contract and owner's access to 
funding.
    d. Delete the option for eliminating retainage after the contract 
is 50 percent complete.
    e. Update the ``Buy American'' and ``Civil Rights'' requirements.
    f. Eliminating gender specific terms such as him, his, and 
materialmen.

Comments

    RUS published an Advanced Notice of Proposed Rulemaking in the 
Federal Register on September 16, 1998, at 63 FR 49503. Comments were 
received from two distribution borrowers and two power supply 
borrowers. RUS reviewed and considered all comments. Several of the 
comments are addressed herein.
    Commenters requested that RUS:
     Add a liquidated damages clause to the Forms 198 and 200. 
This comment has been incorporated.
     Allow electronic reproduction for all or part of the 
forms. In this proposal, RUS is proposing to remove many of the tables 
contained in the forms and to make them optional attachments which may 
be modified (electronically or otherwise) as needed. RUS is also 
proposing to allow exact electronic reproduction of the contract forms. 
This change will also be made to 7 CFR 1724, Electric Engineering, 
Architectural Services and Design Policies and Procedures.
     Modify the closeout and accounting requirements for 
certain types of contract forms. RUS has determined that it will not 
make this suggested change. RUS believes that the existing requirements 
are a reasonable balance between ease of use and accountability.
     Include certification forms concerning lobbying and 
debarment. RUS has included a certification form for debarment. RUS has 
determined that a lobbying form is not needed in the contract forms.
     Eliminate the requirement to include owner furnished 
materials under the contractor's bond for certain contracts. RUS has 
determined that it will not make this suggested change. RUS believes 
that the existing bonding requirements are necessary for protection of 
the borrower's and the government's financial interests.
     Add or modify a number of contract provisions to define or 
clarify the contractor's obligations. RUS proposes to modify the 
contract provisions as appropriate to clarify the contractor's 
obligations.

One commenter suggested that by eliminating Form 274, Bidder's 
Qualifications, RUS is not encouraging prequalification of bidders. On 
the contrary, RUS requires prequalification of bidders (see 7 CFR 
1726.23) for all contracts. RUS is proposing to eliminate the Form 274 
because RUS believes that the substance of the bidder's qualification 
is more important than the form used. Borrowers and engineers may use 
whatever form or format they feel is appropriate for obtaining bidder's 
qualifications.

Other Changes

    In addition to the modifications of the contract forms and the 
associated changes in 7 CFR 1726, RUS is making several other minor 
changes and corrections to 7 CFR 1726. For example, Sec. 1726.125(b), 
which covers approval by RUS of plans and specifications for generating 
facilities, is being removed because this topic is now covered in 7 CFR 
1724, Electric Engineering, Architectural Services and Design Policies 
and Procedures. Since some of the electric program contract forms are 
also used in the RUS telecommunications program, RUS is proposing to 
change the list of forms in 7 CFR 1755. RUS is proposing to remove the 
reference to year 2000 compliance since this is no longer relevant.

List of Subjects

7 CFR Part 1724

    Electric power, Loan programs--energy, Reporting and recordkeeping 
requirements, Rural areas.

7 CFR Part 1726

    Electric power, Loan programs--energy, Reporting and recordkeeping 
requirements, Rural areas.

7 CFR Part 1755

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

[[Page 44399]]

    For reasons set forth in the preamble, RUS proposes to amend 7 CFR 
chapter XVII as follows:

PART 1724--ELECTRIC ENGINEERING, ARCHITECTURAL SERVICES AND DESIGN 
POLICIES AND PROCEDURES

    1. The authority citation for part 1724 continues to read as 
follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart F--RUS Contract Forms

    2. Amend Sec. 1724.71 by revising paragraph (b) to read as follows:


Sec. 1724.71  Borrower contractual obligations.

* * * * *
    (b) Compliance. If a borrower is required by this part or by its 
loan agreement with RUS to use a listed standard form of contract, the 
borrower shall use the listed contract form in the format available 
from RUS, either paper or electronic format. Exact electronic 
reproduction is acceptable. The approved RUS standard forms of contract 
shall not be retyped, changed, modified, or altered in any manner not 
specifically authorized in this part or approved by RUS in writing on a 
case-by-case basis. Any modifications approved by RUS on a case-by-case 
basis must be clearly shown so as to indicate the modification 
difference from the standard form of contract.
* * * * *

PART 1726--ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES

    3. The authority citation for part 1726 continues to read as 
follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

Subpart A--General

    4. Revise Sec. 1726.20 to read as follows:


Sec. 1726.20  Standards and specifications.

    All materials, equipment, and construction must meet the minimum 
requirements of all applicable RUS standards and specifications. (See 
part 1728 of this chapter, Electric Standards and Specifications for 
Materials and Construction, which is applicable regardless of the 
source of funding.)
    5. Amend Sec. 1726.24 by revising paragraph (b)(1) to read as 
follows:


Sec. 1726.24  Standard forms of contracts for borrowers.

* * * * *
    (b) * * *
    (1) Contract forms. The borrower must use RUS Form 238, 
Construction or Equipment Contract Amendment, for any change or 
addition in any contract for construction or equipment.
* * * * *
    6. Revise Sec. 1726.25 to read as follows:


Sec. 1726.25  Subcontracts.

    Subcontracts are not subject to RUS approval and need not be 
submitted to RUS unless specifically requested by RUS on a case by case 
basis.
    7. Amend Sec. 1726.27 by revising paragraphs (a) and (b) to read as 
follows:


Sec. 1726.27  Contractor's bonds.

    (a) RUS Form 168b, Contractor's Bond, shall be used when a 
contractor's bond is required by RUS Forms 200, 257, 786, 790, or 830 
unless the contractor's surety has accepted a Small Business 
Administration guarantee and the contract is for $1 million or less.
    (b) RUS Form 168c, Contractor's Bond, shall be used when a 
contractor's bond is required by RUS Forms 200, 257, 786, 790, or 830 
and the contractor's surety has accepted a Small Business 
Administration guarantee and the contract is for $1 million or less.
* * * * *

Subpart B--Distribution Facilities

    8. Amend Sec. 1726.50 by revising paragraph (a)(2) to read as 
follows:


Sec. 1726.50  Distribution line materials and equipment.

    (a) * * *
    (2) The borrower may, in its discretion, use RUS Form 198, 
Equipment Contract, or a written purchase order for purchases of 
equipment of less than $500,000 and for all materials.
* * * * *
    9. Amend Sec. 1726.51 by revising paragraph (a) to read as follows


Sec. 1726.51  Distribution line construction.

    (a) Contract forms. The borrower must use RUS Form 790, or 830, as 
outlined in this paragraph (a), for distribution line construction, 
except for minor modifications or improvements.
    (1) The borrower may use RUS Form 790, Electric System Construction 
Contract--Unit Price, under the following circumstances:
    (i) For contracts for which the borrower supplies all materials and 
equipment; or
    (ii) For non-site specific construction contracts accounted for 
under the work order procedure; or
    (iii) If neither paragraph (a)(1)(i) or (a)(1)(ii) of this section 
are applicable, the borrower may use RUS Form 790 for contracts, up to 
a cumulative total of $250,000 or one percent of net utility plant 
(NUP), whichever is greater, per calendar year of distribution line 
construction, exclusive of the cost of owner furnished materials and 
equipment.
    (2) The borrower must use RUS Form 830, Electric System 
Construction Contract--Lump Sum, for all other distribution line 
construction.
* * * * *

Subpart C--Substation and Transmission Facilities

    10. Amend Sec. 1726.76 by revising paragraph (a)(2) to read as 
follows:


Sec. 1726.76  Substation and transmission line materials and equipment.

    (a) * * *
    (2) The borrower may, in its discretion, use RUS Form 198, 
Equipment Contract, or a written purchase order for purchases of 
equipment of less than $500,000 and for all materials.
* * * * *
    11. Amend Sec. 1726.77 by revising paragraph (a) to read as 
follows:


Sec. 1726.77  Substation and transmission line construction.

    (a) Contract forms. The borrower must use RUS Form 830, Electric 
System Construction Contract--Lump Sum, for construction of 
substations, except for minor modifications or improvements.
* * * * *

Subpart D--Generation Facilities


Sec. 1726.125  [Amended]

    12. Amend Sec. 1726.125 by removing paragraph (b) and redesignating 
paragraphs (c) and (d) as paragraphs (b) and (c), respectively.

Subpart F--General Plant

    13. Amend Sec. 1726.175 by revising paragraph (a) to read as 
follows:


Sec. 1726.175  General plant materials.

* * * * *
    (a) Contract forms. The borrower may, in its discretion, use RUS 
Form 198, Equipment Contract, or a written purchase order.
* * * * *

Subpart H--Modifications to RUS Standard Contract Forms

    14. Amend Sec. 1726.250 by revising it to read as follows:


Sec. 1726.250  General.

    RUS provides standard forms of contract for the procurement of

[[Page 44400]]

materials, equipment, and construction and for contract amendments and 
various related forms for use by RUS borrowers. See Sec. 1726.304 for a 
listing of these forms and how to obtain them. The standard forms of 
contract shall be used by the borrowers in accordance with the 
provisions of this part. RUS will give prior approval to certain 
modifications to these forms without changing the applicable 
requirements for RUS approval. Such approved modifications are set 
forth in this subpart. These are the only modifications given prior RUS 
approval.
    15. Amend Sec. 1726.252 by revising paragraph (a) and removing 
paragraph (d) to read as follows:

Sec. 1726.252  Prior approved contract modification related to 
liability for special and consequential damages.

* * * * *
    (a) Insert new paragraphs in the ``Notice and Instructions to 
Bidders'' as follows:

    ``Proposals are invited on the basis of alternative Liability 
Clause Numbers 1 and 2. The Owner will determine on which Liability 
Clause basis the award will be made. Any other liability clauses in 
the proposal or any other modifications will be considered not 
responsive and unacceptable. These Liability Clauses are defined as 
follows:
    Liability Clause Number 1. This will include unmodified all of 
the standard terms and conditions of the form of contract furnished 
by the Owner and attached hereto.
    Liability Clause Number 2. This will include the following 
paragraph, in addition to all of the standard terms and conditions, 
otherwise unmodified, of the form of contract furnished by the Owner 
and attached hereto:
    `Except for Bidder's willful delay or refusal to perform the 
contract in accordance with its terms, the Bidder's liability to the 
Owner for special or consequential damages on account of breach of 
this contract shall not exceed in total an amount equal to---- 
percent [the borrower will insert an appropriate percentage between 
0 and 100 percent, inclusive] of the contract price.' ''

* * * * *


Sec. 1726.254  [Removed and Reserved]

    16. Remove and reserve Sec. 1726.254.
    17. Amend Sec. 1726.255 by revising paragraph (c) and removing 
paragraphs (d) and (e) to read as follows:


Sec. 1726.255  Prior approved contract modification related to 
indemnification.

* * * * *
    (c) If the alternative indemnification provision in paragraph (a) 
or (b) of this section is chosen by the borrower, the language of 
paragraph (a) or (b) of this section would be inserted in lieu of 
subsection (i) of the section indicated in the RUS standard 
construction contract forms as follows:
    (1) RUS Form 198, Equipment Contract, article IV, section 1(d).
    (2) RUS Form 200, Construction Contract `` Generating, article IV, 
section 1(d).
    (3) RUS Form 257, Contract to Construct Buildings, article IV, 
section 1(d).
    (4) RUS Form 786, Electric System Communications and Control 
Equipment Contract, article IV, section 1(d).
    (5) RUS Form 790, Electric System Construction Contract--Unit 
Price, article IV, section 1(g).
    (6) RUS Form 830, Electric System Construction Contract--Lump Sum, 
article IV, section 1(g).

Subpart I--RUS Standard Forms

    18. Amend Sec. 1726.301 by revising paragraph (b) to read as 
follows:


Sec. 1726.301  Borrower contractual obligations.

* * * * *
    (b) Compliance. If a borrower is required by this part or by its 
loan agreement with RUS to use a listed standard form of contract, the 
borrower shall use the listed contract form in the format available 
from RUS, either paper or electronic format. Exact electronic 
reproduction is acceptable. The approved RUS standard forms of contract 
shall not be retyped, changed, modified, or altered in any manner not 
specifically authorized in this part or approved by RUS in writing on a 
case-by-case basis. Any modifications approved by RUS on a case-by-case 
basis must be clearly shown so as to indicate the modification 
difference from the standard form of contract.
* * * * *
    19. Amend Sec. 1726.302 by revising paragraph (b) to read as 
follows:


Sec. 1726.302  Notice and publication of listed contract forms.

* * * * *
    (b) Availability. Listed standard forms of contract are available 
from: Rural Utilities Service, Program Development and Regulatory 
Analysis, U.S. Department of Agriculture, Stop 1522, 1400 Independence 
Avenue, SW., Washington DC 20250-1522, telephone number (202) 720-8674. 
The listed standard forms of contract are also available on the RUS 
website at: http://www.usda.gov/rus/electric/forms.htm. The listed 
standard forms of contract can be found in Sec. 1724.304(c), List of 
Required Contract Forms.
    20. Amend Sec. 1726.304 by revising paragraph (c) and (d) to read 
as follows:


Sec. 1726.304  List of electric program standard contract forms.

* * * * *
    (c) List of required contract forms.
    (1) RUS Form 168b, Rev. 11-01, Contractor's Bond. This form is used 
to obtain a surety bond and is used with RUS Forms 200, 257, 786, 790, 
and 830.
    (2) RUS Form 168c, Rev. 11-01, Contractor's Bond (less than $1 
million). This form is used in lieu of RUS Form 168b to obtain a surety 
bond when contractor's surety has accepted a Small Business 
Administration guarantee.
    (3) RUS Form 187, Rev. 11-01, Certificate of Completion, Contract 
Construction. This form is used for the closeout of RUS Forms 200, 257, 
786, and 830.
    (4) RUS Form 198, Rev. 11-01, Equipment Contract. This form is used 
for equipment purchases.
    (5) RUS Form 200, Rev. 11-01, Construction Contract--Generating. 
This form is used for generating plant construction or for the 
furnishing and installation of major items of equipment.
    (6) RUS Form 213, Rev. 11-01, Certificate (``Buy American''). This 
form is used to document compliance with the ``Buy American'' 
requirement.
    (7) RUS Form 224, Rev. 11-01, Waiver and Release of Lien. This form 
is used for the closeout of RUS Forms 198, 200, 257, 786, 790, and 830.
    (8) RUS Form 231, Rev. 11-01, Certificate of Contractor. This form 
is used for the closeout of RUS Forms 198, 200, 257, 786, 790, and 830.
    (9) RUS Form 238, Rev. 11-01, Construction or Equipment Contract 
Amendment. This form is used for amendments.
    (10) RUS Form 254, Rev. 11-01, Construction Inventory. This form is 
used for the closeout of RUS Form 830. Minor electronic modifications 
are acceptable for RUS Form 254.
    (11) RUS Form 257, Rev. 11-01, Contract to Construct Buildings. 
This form is used to construct headquarters buildings and other 
structure construction.
    (12) RUS Form 307, Rev. 11-01, Bid Bond. This form is used to 
obtain a bid bond.
    (13) RUS Form 786, Rev. 11-01, Electric System Communications and 
Control Equipment Contract (including installation). This form is used 
for delivery and installation of equipment for system communications.
    (14) RUS Form 790, Rev. 11-01, Electric System Construction 
Contract--Unit Price. This form is used for limited distribution 
construction accounted for under work order procedure.
    (15) RUS Form 792b, Rev. 11-01, Certificate of Construction and

[[Page 44401]]

Indemnity Agreement. This form is used for the closeout of RUS Form 
790.
    (16) RUS Form 830, Rev. 11-01, Electric System Construction 
Contract--Lump Sum. This form is used for distribution and transmission 
line project construction.
    (d) List of guidance contract forms. RUS does not currently publish 
any guidance forms for electric borrowers.

Subpart J--Contract Closeout


Sec. 1726.401  [Amended]

    21. Amend Sec. 1726.401 by removing the introductory text.
    22. Amend Sec. 1726.403 by revising the introductory text and 
paragraph (c) to read as follows:


Sec. 1726.403  Project construction contract closeout.

    This section is applicable to contracts executed on RUS Forms 200, 
257, 786, and 830.
* * * * *
    (c) Closeout documents. (1) Upon satisfactory completion of 
construction (including all changes and corrections by the contractor), 
the borrower (acting through its architect or engineer, if applicable) 
will obtain executed copies of the following documents:
    (i) RUS Form 187, Certificate of Completion, Contract Construction.
    (ii) RUS Form 213, ``Buy American'' certificate.
    (iii) RUS Form 224, Waiver and Release of Lien, from each 
manufacturer, supplier, and contractor which has furnished material or 
services or both in connection with the construction.
    (iv) RUS Form 231, Certificate of Contractor.
    (v) RUS Form 254, Construction Inventory, including all supporting 
documents, such as RUS Forms 254a-c, construction change orders, and 
amendments for contracts executed on RUS Form 830.
    (vi) Certification by the project architect or engineer in 
accordance with Sec. 1726.403(a), if applicable.
    (vii) Final design documents, as outlined in part 1724 of this 
chapter.
    (2) Distribution of closeout documents. (i) The borrower will 
retain one copy of each of the documents identified in paragraph (c)(1) 
of this section in accordance with applicable RUS requirements 
regarding retention of records.
    (ii) For contracts subject to RUS approval, the borrower will 
submit the following closeout documents for RUS approval (through the 
GFR except for generation projects):
    (A) RUS Form 187, Certificate of Completion, Contract Construction.
    (B) RUS Form 231, Certificate of Contractor.
    (C) RUS Form 254, Construction Inventory, including all supporting 
documents, such as RUS Forms 254a-c and construction change orders, for 
contracts executed on RUS Form 830.
    (iii) For contracts not subject to RUS approval, the closeout is 
not subject to RUS approval. The borrower will send one copy of RUS 
Form 187 to RUS for information prior to or in conjunction with the 
applicable RUS Form 219, Inventory of Work Orders. The remaining 
closeout documents need not be sent to RUS unless specifically 
requested by RUS.
* * * * *
    23. Amend Sec. 1726.404 by revising the introductory text to read 
as follows:


Sec. 1726.404  Non-site specific construction contract closeout.

    This section is applicable to contracts executed on RUS Form 790.
* * * * *

PART 1755--TELECOMMUNICATIONS STANDARDS AND SPECIFICATIONS FOR 
MATERIALS, EQUIPMENT, AND CONSTRUCTION

    24. The authority citation for part 1755 continues to read as 
follows:

    Authority: 7 U.S.C. 901 et seq., 1921 et seq., 6941 et seq.

    25. Amend Sec. 1755.30 by revising paragraphs (c)(4) through 
(c)(8), (c)(12) through (c)(14), (c)(17), and (c)(24) to read as 
follows:


Sec. 1755.30  List of telecommunications standard contract forms.

* * * * *
    (c) * * *
    (4) RUS Form 168b, issued 11-01, Contractor's Bond.
    (5) RUS Form 168c, issued 11-01, Contractor's Bond.
    (6) RUS Form 181a, issued 3-66, Certificate of Completion (Force 
Account Construction).
    (7) RUS Form 187, issued 11-01, Certificate of Completion, Contract 
Construction.
    (8) RUS Form 213, issued 11-01, Certificate (Buy American).
* * * * *
    (12) RUS Form 224, issued 11-01, Waiver and Release of Lien.
    (13) RUS Form 231, issued 11-01, Certificate of Contractor.
    (14) RUS Form 238, issued 11-01, Construction or Equipment Contract 
Amendment.
* * * * *
    (17) RUS Form 257, issued 11-01, Contract to Construct Buildings.
* * * * *
    (24) RUS Form 307, issued 11-01, Bid Bond.
* * * * *

Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 02-16278 Filed 7-1-02; 8:45 am]
BILLING CODE 3410-15-P