[Federal Register Volume 69, Number 30 (Friday, February 13, 2004)]
[Rules and Regulations]
[Pages 7105-7111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 04-3115]


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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: Final rule.

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SUMMARY: The Rural Utilities Service (RUS) is amending 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 is updating, consolidating, and 
streamlining these standard forms of contracts. These changes are being 
made 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: This rule will become effective on March 15, 2004.

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].

SUPPLEMENTARY INFORMATION:

Executive Order 12866

    This 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 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.

[[Page 7106]]

Executive Order 12988

    This 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 section 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

    It has been determined that the Regulatory Flexibility Act is not 
applicable to this rule since the Rural Utilities Service is not 
required by 5 U.S.C. 551 et seq. or any other provision of law to 
publish a notice of proposed rulemaking with respect to the subject 
matter of this rule.

National Environmental Policy Act Certification

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

Catalog of Federal Domestic Assistance

    The program described by this 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

    The reporting and recordkeeping requirements contained in this rule 
have been approved by the Office of Management and Budget (OMB) 
pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35) 
under OMB control number 0572-0107.

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 is updating, 
consolidating, and streamlining 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

[[Page 7107]]

bond and is included in RUS Forms 200, 203, 257, 764, 830, and 831.
    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.

Major Changes

    The 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 eliminating 
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 
Assembly Units'' pages as a separate bulletin. This would allow the 
borrower to include in its bid package only those construction assembly 
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 also published a Notice of Proposed Rulemaking in the 
Federal Register on July 2, 2002, at 67 FR 44396. Comments were 
received from one distribution borrower, one power supply borrower, and 
two engineering consultants. 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. This comment has been incorporated. RUS has removed many of 
the tables contained in the forms and made them optional attachments 
which may be modified (electronically or otherwise) as needed. RUS is 
also allowing exact electronic reproduction of the contract forms. This 
change is also being 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 has modified the 
contract provisions as appropriate to clarify the contractor's 
obligations.
     Clarify the nature of Form 830. Form 830 is 
called a ``Lump Sum'' contract, but the document refers to a ``Proposal 
on Unit Basis'' (Article I, Section 5). This comment has been 
incorporated by revising the subtitle of the Form 830 to read ``Project 
Construction.''
     Expand the ``Discrepancy in Unit Prices'' 
section (Notice & Instructions to Bidders, Item 15) to include 
multiplication as well as addition. This comment has been incorporated.
     Add a statement regarding new equipment and 
materials to Article I, Section 4. This comment has been incorporated 
and we have combined Sections 2 and 4.
     Add a provision that observation or testing by 
the Owner does not relieve the Bidder of its obligations under the 
contract. This comment has been incorporated.
     Add a provision to the warranty concerning 
warranty of work repaired or replaced under the warranty. This comment 
has been incorporated.
     Change payment terms to allow the Owner to 
determine the number of elapsed days before payment is due to the 
Bidder. In the interest of fairness to both parties to the contract, 
RUS has determined that it will not make this suggested change.
     Revise payment terms on ``1 Lot'' contracts. 
Since projects of this type are not common under this standard form of 
contract, RUS has determined that it will not make this suggested 
change.
     Add ``grazing land'' to the protection provision 
concerning ``cultivated lands.'' This comment has been incorporated.
     Add a provision for contract termination for 
Owner's convenience. In

[[Page 7108]]

the interest of fairness to both parties to the contract, RUS has 
determined that it will not make this suggested change.
     Add a provision concerning Owner's right to 
duplicate and use drawings and other technical data furnished under the 
contract. Since the contract form does not specifically request 
drawings and other technical data, RUS has determined that it will not 
make this suggested change. If the Owner or Engineer requests such 
information, details concerning the Owner's right to duplicate and use 
such information should be included in such a request.
     In Form 257, Buildings, remove references to 
``unit prices'' and ``de-energize.'' This comment has been 
incorporated.
     In Form 198, Equipment Contract, revise the 
``Due Diligence'' provision concerning knowledge of the site. This 
comment has been incorporated.
     RUS should specify when contracts require RUS 
approval. RUS has determined that it will not make this suggested 
change. The Owner is to insert this information into the standard form.
     Eliminate the requirement for bid bonds for 
small projects. RUS has determined that it will not make this suggested 
change. A bid bond (or check) is equally important for a small project 
as for a large project.
     Remove the cost of ``Owner Furnished Materials'' 
from ``labor only'' contracts. RUS has determined that it will not make 
this suggested change. However, if a borrower can demonstrate a 
reasonable benefit and adequate material control, we will consider 
allowing a borrower to remove the cost of owner furnished material from 
the cost of the contract on a case-by-case basis.
     Eliminate the requirement to include ``Owner 
Furnished Materials'' under the Contractor's Bond. RUS has determined 
that it will not make this suggested change. Since the contractor has 
control of the Owner Furnished Materials, it is important to have the 
protection of the Contractor's Bond for the full amount of the 
contract.
     Include a provision to prevent the Contractor 
for changing the Owner for salvaged materials reused in the line 
construction. RUS has determined that it will not make this suggested 
change. With proper material control, this should not be an issue.
     Clarify whether the Form 830, Project 
Construction Contract, will include a provision concerning salvage and 
reuse of the Owner's material. RUS has determined that it will not make 
this suggested change. With proper material control, this should not be 
an issue.
     Clarify whether a Form 254, Construction 
Inventory, is needed with a Form 830, Project Construction Contract. 
Form 254 is required for a Form 830 contract by Sec. 1726.403.
     Include a provision for assessing damages for 
late performance by the contractor in the Form 790, Non-Site Specific 
Construction Contract. RUS has determined that it will not make this 
suggested change. The borrower has adequate remedies under the law.
     Clarify the remedy for Contractor's failure to 
pay material suppliers and subcontractors. RUS has determined that it 
will not make this suggested change. The borrower has adequate remedies 
under the law.
     Change the engineer's certification in Form 187, 
Certificate of Completion, from ``in all respects in strict 
compliance'' to ``in compliance'' with the contract. This comment has 
been incorporated.
     Allow an ``Hourly Labor and Equipment Rate 
Schedule'' in the contract forms. RUS has determined that it will not 
make this suggested change.
     Add a ``Third Year'' option to the Form 790, 
Non-Site Specific Construction Contract. This comment has been 
incorporated by changing the form to allow the borrower to insert an 
option of up to four years.
     Correct various editorial and reference 
inconsistencies. This comment has been incorporated by making these 
corrections as applicable.
    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 eliminating 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 changing the 
list of forms in 7 CFR 1755. RUS is also removing 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.

0
For reasons set forth in the preamble, RUS amends 7 CFR chapter XVII as 
follows:

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

0
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

0
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.
* * * * *

[[Page 7109]]

PART 1726--ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES

0
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

0
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.)

0
5. Revise 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.
* * * * *

0
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.

0
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

0
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.
* * * * *

0
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--Non-Site Specific Construction, 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--Project Construction, for all other distribution 
line construction.
* * * * *

Subpart C--Substation and Transmission Facilities

0
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.
* * * * *

0
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--Project Construction, for construction of 
substations, except for minor modifications or improvements.
* * * * *

Subpart D--Generation Facilities

0
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

0
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

0
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 
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.

0
15. Amend Sec. 1726.252 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

[[Page 7110]]

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 the 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]

0
16. Remove and reserve Sec. 1726.254.

0
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 
paragraph (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--Non-Site 
Specific Construction, article IV, section 1(g).
    (6) RUS Form 830, Electric System Construction Contract--Project 
Construction, article IV, section 1(g).

Subpart I--RUS Standard Forms

0
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.
* * * * *

0
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 Web 
site at: http://www.usda.gov/rus/electric/forms/index.htm. The listed 
standard forms of contract can be found in Sec. 1724.304(c), List of 
Required Contract Forms.

0
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. 2-04, 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. 2-04, 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. 2-04, 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. 2-04, Equipment Contract. This form is used 
for equipment purchases.
    (5) RUS Form 200, Rev. 2-04, 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. 2-04, Certificate (``Buy American''). This 
form is used to document compliance with the ``Buy American'' 
requirement.
    (7) RUS Form 224, Rev. 2-04, 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. 2-04, 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. 2-04, Construction or Equipment Contract 
Amendment. This form is used for amendments.
    (10) RUS Form 254, Rev. 2-04, 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. 2-04, Contract to Construct Buildings. This 
form is used to construct headquarters buildings and other structure 
construction.
    (12) RUS Form 307, Rev. 2-04, Bid Bond. This form is used to obtain 
a bid bond.
    (13) RUS Form 786, Rev. 2-04, 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. 2-04, Electric System Construction 
Contract--Non-Site Specific Construction. This form is used for limited 
distribution construction accounted for under work order procedure.
    (15) RUS Form 792b, Rev. 2-04, Certificate of Construction and 
Indemnity Agreement. This form is used for the closeout of RUS Form 
790.
    (16) RUS Form 830, Rev. 2-04, Electric System Construction 
Contract--Project Construction. 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

0
21. Amend Sec. 1726.401 by removing the introductory text.

0
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

[[Page 7111]]

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.
* * * * *

0
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

0
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.


0
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 2-04, Contractor's Bond.
    (5) RUS Form 168c, issued 2-04, Contractor's Bond.
    (6) RUS Form 181a, issued 3-66, Certificate of Completion (Force 
Account Construction).
    (7) RUS Form 187, issued 2-04, Certificate of Completion, Contract 
Construction.
    (8) RUS Form 213, issued 2-04, Certificate (Buy American).
* * * * *
    (12) RUS Form 224, issued 2-04, Waiver and Release of Lien.
    (13) RUS Form 231, issued 2-04, Certificate of Contractor.
    (14) RUS Form 238, issued 2-04, Construction or Equipment Contract 
Amendment.
* * * * *
    (17) RUS Form 257, issued 2-04, Contract to Construct Buildings.
* * * * *
    (24) RUS Form 307, issued 2-04, Bid Bond.
* * * * *

    Dated: January 30, 2004.
Hilda Gay Legg,
Administrator, Rural Utilities Service.
[FR Doc. 04-3115 Filed 2-12-04; 8:45 am]
BILLING CODE 3410-15-P