[Federal Register Volume 81, Number 201 (Tuesday, October 18, 2016)]
[Rules and Regulations]
[Pages 71579-71585]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-24945]



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 Rules and Regulations
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  Federal Register / Vol. 81, No. 201 / Tuesday, October 18, 2016 / 
Rules and Regulations  

[[Page 71579]]



DEPARTMENT OF AGRICULTURE

Rural Utilities Service

7 CFR Parts 1753 and 1755

RIN 0572-AC29


New Equipment Contract, RUS Contract Form 395 for 
Telecommunications and Broadband Borrowers

AGENCY: Rural Utilities Service, USDA.

ACTION: Final rule.

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

SUMMARY: The Rural Utilities Service (RUS), an agency of the United 
States Department of Agriculture (USDA), hereinafter referred to as RUS 
or the Agency, is issuing a final rule to streamline the contractual 
process for equipment procurement by replacing type-specific equipment 
contracts, RUS Forms 397, 398, 525, 545, and associated documents 
(Forms 231, 396, 396a, 517, 525a, 744, 752a, 754, and addenda) with a 
new, unified Equipment Contract, RUS Contract Form 395 and associated 
close-out documents (Forms 395a, 395b, 395c and 395d) and by removing 
construction standards RUS Forms 397b, 397c, 397d, 397f, 397g, 397h. On 
October 1, 2015, RUS published a Request for Comments in the Federal 
Register, to establish a new equipment contract and associated policies 
for Telecommunications and Broadband Borrowers, Equipment Contract, RUS 
Contract Form 395 (RUS Contract Form 395).

DATES: This final rule is effective October 18, 2016.

FOR FURTHER INFORMATION CONTACT: Aylene Mafnas, Chief, Engineering 
Branch, Policy and Outreach Division, Rural Utilities Service, 
Telecommunications Program, U.S. Department of Agriculture, STOP 1599, 
1400 Independence Ave. SW., Washington, DC 20250-1550, Telephone 
number: (202) 690-4673.

SUPPLEMENTARY INFORMATION: 

Executive Order 12866

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

Executive Order 12988

    This final rule has been reviewed under Executive Order 12988, 
Civil Justice Reform. The Agency 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 must be exhausted before an 
action against the Department or its agencies may be initiated.

Executive Order 12372

    This final rule is not subject to the requirements of Executive 
Order 12372, ``Intergovernmental Review'', as implemented under USDA's 
regulations at 7 CFR part 3015.

Regulatory Flexibility Act Certification

    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.). RUS provides 
loans to borrowers at interest rates and on 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 that exceed any direct economic costs associated with 
complying with RUS regulations and requirements.

Environmental Impact Statement

    This final rule has been examined under Agency environmental 
regulations at 7 CFR part 1794. The Administrator has determined that 
this is not a major Federal action significantly affecting the 
environment. Therefore, in accordance with the National Environmental 
Policy Act of 1969 (42 U.S.C. 4321 et seq.), an Environmental Impact 
Statement or Assessment is not required.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance (CFDA) number assigned 
to this program is 10.851. The Catalog is available on the Internet at 
http://www.cfda.gov.

Unfunded Mandates

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

E-Government Act Compliance

    RUS is committed to the E-Government Act, which requires Government 
agencies in general to provide the public the option of submitting 
information or transacting business electronically to the maximum 
extent possible.

Executive Order 13132, Federalism

    The policies contained in this final rule do not have any 
substantial direct effect on states, on the relationship between the 
national government and the states, or on the distribution of power and 
responsibilities among the various levels of government. Nor does this 
final rule impose substantial direct compliance costs on state and 
local governments. Therefore, consultation with the states is not 
required.

Executive Order 13175, Consultation and Coordination With Indian Tribal 
Governments

    Executive Order 13175 imposes requirements on RUS in the 
development of regulatory policies that have tribal implications or 
preempt tribal laws. RUS has determined that this rule does not have a 
substantial direct effect on one or more Indian tribes(s) or on either 
the relationship or the distribution of powers and responsibilities 
between the Federal Government and Indian tribes. Thus, this final rule 
is not subject to the requirements of Executive Order 13175. If a tribe 
determines that this final rule has implications of which RUS is not 
aware and would like to engage in consultation with RUS on this rule,

[[Page 71580]]

please contact the Rural Development Native American Coordinator at 
(720) 544-2911 or [email protected].

USDA Non-Discrimination Policy

    In accordance with Federal civil rights law and U.S. Department of 
Agriculture (USDA) civil rights regulations and policies, the USDA, its 
Agencies, offices, and employees, and institutions participating in or 
administering USDA programs are prohibited from discriminating based on 
race, color, national origin, religion, sex, gender identity (including 
gender expression), sexual orientation, disability, age, marital 
status, family/parental status, income derived from a public assistance 
program, political beliefs, or reprisal or retaliation for prior civil 
rights activity, in any program or activity conducted or funded by USDA 
(not all bases apply to all programs). Remedies and complaint filing 
deadlines vary by program or incident.
    Persons with disabilities who require alternative means of 
communication for program information (e.g., Braille, large print, 
audiotape, American Sign Language, etc.) should contact the responsible 
Agency or USDA's TARGET Center at (202) 720-2600 (voice and TTY) or 
contact USDA through the Federal Relay Service at (800) 877-8339. 
Additionally, program information may be made available in languages 
other than English.
    To file a program discrimination complaint, complete the USDA 
Program Discrimination Complaint Form, AD-3027, found online at http://www.ascr.usda.gov/complaint_filing_cust.html and at any USDA office or 
write a letter addressed to USDA and provide in the letter all of the 
information requested in the form. To request a copy of the complaint 
form, call (866) 632-9992. Submit your completed form or letter to USDA 
by: (1) Mail: U.S. Department of Agriculture, Office of the Assistant 
Secretary for Civil Rights, 1400 Independence Avenue SW., Washington, 
DC 20250-9410; (2) fax: (202) 690-7442; or (3) email: 
[email protected].
    USDA is an equal opportunity provider, employer, and lender.

Information Collection and Recordkeeping Requirements

    The information collection and recordkeeping requirements contained 
in this final rule are pending approval by OMB pursuant to the 
Paperwork Reduction Act 1995 (44 U.S.C. Chapter 35) under control 
number 0572-NEW. The paperwork contained in this rule will not be 
effective until approved by OMB.

Background

    Rural Development is a mission area within the U.S. Department of 
Agriculture comprising the Rural Utilities Service, Rural Housing 
Service and Rural Business/Cooperative Service. Rural Development's 
mission is to increase economic opportunity and improve the quality of 
life for all rural Americans. Rural Development meets its mission by 
providing loans, loan guarantees, grants and technical assistance 
through more than 40 programs aimed at creating and improving housing, 
businesses and infrastructure throughout rural America.
    The Rural Utilities Service (RUS) loan, loan guarantee and grant 
programs act as a catalyst for economic and community development. By 
financing improvements to rural electric, water and waste, and telecom 
and broadband infrastructure, RUS also plays a significant role in 
improving other measures of quality of life in rural America, including 
public health and safety, environmental protection, conservation and 
cultural and historic preservation.
    In order to continue to facilitate the programmatic interest of the 
Rural Electrification Act of 1936 (the ``RE Act''), as amended (7 
U.S.C. 901 et seq.), that loans and loans guaranteed by RUS are 
adequately secured, RUS has established the use of certain standardized 
forms for materials, equipment, and construction of electric and 
telecommunications systems. The use of standard forms, construction 
contracts, and procurement procedures help to assure that appropriate 
standards and specifications are maintained by the borrower in order to 
not adversely affect RUS's loan security, and ensure that loan and loan 
guarantee funds are effectively used for the intended purpose(s).
    RUS may, from time to time, promulgate new contract forms or revise 
or eliminate existing contract forms. In so doing, RUS is required by 7 
CFR 1755.29, to publish a notice of rulemaking in the Federal Register 
announcing, as appropriate, a revision in, or a proposal to amend Sec.  
1755.30(c), List of telecommunications standard contract forms. On 
February 12, 2014, RUS published a proposed rule in the Federal 
Register (79 FR 8327) to establish a new equipment contract and 
associated policies for Telecommunications and Broadband Borrowers, 
Equipment Contract, RUS Contract Form 395 (RUS Contract Form 395) under 
7 CFR parts 1753 and 1755. RUS Contract Form 395 reflects present 
business and RUS practices, as well as changes in technology, services 
and equipment. The Agency also issued a Request for Comments notice 
which published in the Federal Register on Thursday, October 1, 2015 at 
80 FR 59080, providing the public with an additional opportunity for 
public comment. Comments were received by the Agency which are 
summarized and addressed in the Comments Section of this final rule.
    In response to changes in competition, legislation, technologies, 
and regulation which have resulted in changes to business practices in 
the communications industry, RUS has undertaken a comprehensive review 
of its Telecommunications and Broadband Programs' contracts and 
contracting procedures. The purpose of this undertaking is to 
streamline the contractual process for equipment procurement and 
improve the customer service provided to the RUS rural 
telecommunications and broadband borrowers.
    Under this rulemaking, the new equipment contract RUS Contract Form 
395 and the associated close-out documents (Forms 395a, 395b, 395c and 
395d) replace the current equipment specific contracts, RUS Forms 397, 
398, 525, 545, and the associated close-out documents (Forms 231, 396, 
396a, 517, 744, 752, 752a, and 754). Furthermore, along with the 
elimination of the RUS Form 397, the associated construction standards 
RUS Forms 397b, 397c, 397d, 397f, 397g, 397h have also been eliminated. 
The contract terms and obligations included in the new RUS Contract 
Form 395 reflect current RUS and private sector industry practices, as 
well as changes in technology, services and equipment. This final rule 
also removes references to Informational Publication (I.P.) 344-2, 
``List of Material Acceptable for Use on Telecommunications Systems of 
RUS Borrowers'' (List of Materials) from the Telecommunications Program 
regulations. The maintenance and use of this list was discontinued by 
memorandum from the Agency Administrator dated May 23, 2011. Instead, 
in order to protect RUS's loan security and compliance with continuing 
Buy America statutory mandates, the Agency has incorporated an approach 
into the review of individual projects and the approval of loan 
advances for this purpose. Traditional telecommunications borrowers and 
broadband borrowers will both benefit from use of the new RUS Contract 
Form 395 contract as it reflects many of the changes the 
telecommunications industry has experienced as it has technologically

[[Page 71581]]

transitioned from narrowband to broadband. The new RUS Contract Form 
395 can assist RUS borrowers with the purchase of equipment 
specifically designed to meet or exceed the requirements of either 
narrowband or broadband systems.

Comments

    On February 12, 2014, RUS published a proposed rule in the Federal 
Register (79 FR 8327) to establish a new equipment contract and 
associated policies for Telecommunications and Broadband Borrowers, 
Equipment Contract, RUS Contract Form 395 (RUS Contract Form 395) under 
7 CFR parts 1753 and 1755. The Agency also issued a Request for 
Comments notice in the Federal Register on Thursday, October 1, 2015 at 
80 FR 59080, providing the public with an additional opportunity for 
public comment. Comments were received by the Agency which are 
summarized and addressed in this section of the final rule.
    Comments specifically concerning the new contract were submitted by 
Osmose Communications Services, LLC and by ACE, The Association of 
Communications Engineers. Two (2) comments were submitted on behalf of 
Osmose Communications Services, LLC and twenty-four (24) comments on 
behalf of ACE. Additionally, the Bloom Corporation submitted general 
comments non-related to the RUS Contract Form 395.

Osmose Communications Services, LLC

    Issue 1: The two (2) comments submitted on behalf of Osmose 
Communications Services, LLC concerned the provisions of the contract 
form to accommodate a buyer's request for partial or staged delivery of 
equipment covered under the contract.
    RUS Response: As written, the RUS Contract Form 395 already 
supports agreements for staged delivery by appropriately filling in the 
agreed to information in the table that comprises Schedule 1. Due to 
the fact that Schedule 1 is part of the contract, the delivery schedule 
is acknowledged by both parties of the contract by the signatures of 
offer and acceptance.

Association of Communications Engineers (ACE)

    Issue 1: Twenty-two (22) comments submitted on behalf of ACE were 
editorial in nature, providing typographical correction, consistency 
with other RUS contracts, and/or section clarity.
    RUS Response: RUS accepts these suggestions and has incorporated 
those suggestions into the document.
    Issue 2: ACE referenced the notice published in the Federal 
Register on October 1, 2015, that RUS technical specifications 397b, 
397c, 397d, 397g, and 397h are not being replaced as stated in the 
notice.
    RUS Response: RUS agrees. The Final Rule will state that these 
documents are being eliminated rather than replaced.
    Issue 3: ACE commented that they support RUS' inclusion of sales 
and use tax in Schedule 2 of RUS Contract Form 395.
    RUS Response: RUS acknowledges the comment.

Bloom Corporation

    Comments not specifically related to the new Equipment Contract, 
Form 395 were submitted on behalf of the Bloom Corporation, Bellevue, 
WA. In summary, the comment stated that as presently written, the 
revised regulations do not adequately ensure equipment purchased using 
program funds are in compliance with the ``Buy American'' Requirement 
of the Rural Electrification Act of 1936, as amended. The comments are 
summarized below with the Agency's responses as follows:
    Issue 1: Commenter states that only a manufacturer can certify Buy 
American compliance. Proposed regulations allow RUS Form No. 213 (Buy 
American) to be signed by a ``Contractor'', ``Subcontractor'', 
``Seller'' or ``Material Supplier''.
    RUS Response: The RUS Contract Form 395 does not include changes to 
Form 213 or its associated policy. The purpose of this rulemaking is to 
streamline the contractual process for the RUS Borrower and expedite 
the approval process of equipment during the duration of the project. 
Addressing changes to Buy American regulations or the procedure for 
certification is not within the scope of this rulemaking.
    Issue 2: Commenter states that only RUS can confirm that a Buy 
American Certification is adequate and in line with statutory 
requirements. Proposed regulations abdicate this oversight function to 
a ``Contractor'', ``Subcontractor'', ``Seller'' or ``Material 
Supplier''. RUS can rely on borrowers and their engineers to ascertain 
conformance with relevant standards but not the Buy American Act 
requirement.
    RUS Response: The RUS Contract Form 395 does not include changes to 
Form 213 or its associated policy. The purpose of this rulemaking is to 
streamline the contractual process for the RUS Borrower and expedite 
the approval process of equipment during the duration of the project. 
Changes to Buy American regulations or the procedure for certification 
is not within the scope of this rulemaking.
    Issue 3: Commenter states that if RUS never possesses the signed 
Buy American Certification, their role is not one of oversight, but is 
reduced to one of administration only. The proposed regulations do not 
require borrowers to submit the Buy American Certification paperwork 
they assembled to RUS. Without that paperwork, RUS is entrusting 
borrowers to enforce the statutory Buy American requirement in a way 
the Commenter believes they are not permitted.
    RUS Response: The procedure specifies the requirement that the 
certification be maintained and presented to RUS if and when requested.
    Issue 4: Commenter states that retiring the Information Publication 
(I.P.) 344-2, ``List of Material acceptable for Use on 
Telecommunications Systems of RUS Borrowers'' reference tool, while 
still requiring that equipment be in compliance with the Buy American 
Act, will create an exponential increase in work for borrowers and 
engineers as they are left to their own devices to determine Buy 
American compliance, a function the RUS List of Materials once 
performed. The proposed regulations intentionally or not will require 
every borrower, for every project, for every component to ascertain Buy 
American compliance by their own means. And in turn every manufacturer 
will have to address every inquiry, for every component, from every 
borrower on a case-by-case basis. The RUS List of Materials was created 
to avoid this exact scenario.
    RUS Response: In an open letter from the Rural Utilities Service 
(RUS) Administrator on May 23, 2011, it was announced that RUS would no 
longer accept applications for equipment to be added to the List of 
Materials for Telecommunications and immediately ceased publication of 
the List of Materials for Telecommunications. To protect the Agency's 
loan security and compliance with continuing Buy America statutory 
mandates, RUS transitioned from a listing process to an approach which 
ensures that construction financed by RUS meets applicable industry 
standards. This approach has been incorporated into the Agency's review 
of individual projects and the approval of loan advances. The purpose 
of this rulemaking is to streamline the contractual process for the RUS 
Borrower and expedite the approval process of equipment during the 
duration of the project and not to reinstate the listing process.

[[Page 71582]]

    Issue 5: Commenter states that RUS should create and maintain a Buy 
American Registry listing of all the equipment for which RUS themselves 
have collected documented proof are compliant with the Buy American 
Act. Such a list will resolve most if not all of the issues I raise.
    RUS Response: The discontinuance of the RUS List of Material, under 
which the Buy American registry would be maintained, was announced by 
the RUS Administrator in an open letter on May 23, 2011. The purpose of 
this rulemaking is to streamline the contractual process for the RUS 
Borrower and expedite the approval process of equipment during the 
duration of the project and not to reinstate a listing process.

List of Subjects

7 CFR Part 1753

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

7 CFR Part 1755

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

    For the reasons set forth in the preamble, the Rural Utilities 
Service is amending Chapter XVII of Title 7 of the Code of Federal 
Regulations as follows:

PART 1753--TELECOMMUNICATIONS SYSTEM CONSTRUCTION POLICIES AND 
PROCEDURES

0
1. The authority citation for part 1753 continues to read as follows:

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

Subpart A--General

0
2. Amend Sec.  1753.2:
0
 a. By removing the definition of ``RTB'';
0
b. By revising the definitions of ``Contract'' and ``Project'' to read 
as follows:


Sec.  1753.2  Definitions.

* * * * *
    Contract--``Contract'' means collectively the Seller's Proposal, 
Seller's Technical Proposal including any general or feature 
descriptions, equipment lists, Seller's responses to the Buyer's 
specifications and Performance Requirements, the Buyer's Acceptance, 
Articles I through X herein, the Performance Requirements, and the 
Contractor's Bond when required by the Buyer.
* * * * *
    Project--``Project'' means any equipment, including but not limited 
to switching, routing, access, video, and/or transport equipment, which 
will be used in the delivery of voice, video, or data services, which 
are listed under Column 2, ``Equipment,'' in Schedule 1 hereto. A 
Project will have a single delivery and completion schedule listed 
under Column 7 and Column 8. The Contract may consist of one or more 
Projects.
* * * * *

0
3. Amend Sec.  1753.6 by revising paragraph (a) to read as follows:


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 in 7 CFR 
1755.97 which lists the RUS Bulletins containing the standards and 
specifications for telephone facilities.
* * * * *

0
4. Amend Sec.  1753.7 by:
0
a. Revising paragraph (c),
0
b. Removing paragraph (f)(4).
    The revision reads 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 all appropriate 
project specific engineering requirements and specifications prepared 
by the borrower's engineer. The specifications prepared by the 
borrower's engineer and based on appropriate project specific 
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.
* * * * *

0
5. Amend Sec.  1753.9 by revising paragraphs (a) and (c) to read as 
follows:


Sec.  1753.9  Subcontracts.

    (a) RUS construction contract Forms 257, 395, and 515, contain 
provisions for subcontracting. Reference should be made to the 
individual contracts for the amounts and conditions under which a 
contractor may subcontract work under the contract.
* * * * *
    (c) As stated in contract Forms 257, 395, and 515, the contractor 
shall bear full responsibility for the acts and omissions of the 
subcontractor and is not relieved of any obligations to the borrower 
and to the Government under the contract.
* * * * *

Subpart B--Engineering Services

0
6. Amend Sec.  1753.18 by revising paragraph (c) to read as follows:


Sec.  1753.18  Engineer and architect contract closeout certifications.

* * * * *
    (c) A statement that construction used 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 and that it meets all applicable national and local code 
requirements as to strength and safety.
* * * * *

Subpart E--Purchase and Installation of Central Office Equipment

0
 7. Amend Sec.  1753.36 by revising paragraphs (b), (c), (e), and (g) 
to read as follows:


Sec.  1753.36  General.

* * * * *
    (b) Terms used in this subpart are defined in Sec.  1753.2 and 
Equipment Contract, RUS Contract Form 395 (RUS Contract Form 395).
    (c) Borrowers shall use RUS Contract Form 395, and associated RUS 
Form 395a, Equipment Contract Certificate of Completion (Including 
Installation), when the firm supplying the equipment will install it 
and RUS Contract Form 395 and associated RUS Form 395b, Equipment 
Contract Certificate of Completion (Not Including Installation) when 
the supplier of the equipment will not be installing it. In either case 
the appropriate specifications shall be included in the contract.
* * * * *
    (e) The borrower shall take sealed competitive bids for all central 
office equipment to be purchased under RUS Contract Form 395 using the 
procedure set forth in Sec. 1753.38(a), unless RUS approval to 
negotiate is obtained.
* * * * *
    (g) Materials and equipment must meet the standards and general 
specifications approved by RUS.
* * * * *

0
8. Amend Sec.  1753.37 by revising paragraphs (a) and (b) to read as 
follows:

[[Page 71583]]

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

    (a) General. (1) Prior to the preparation of P&S, the borrower 
shall review with the GFR the current and future requirements for 
central office equipment.
    (2) The P&S shall specify the delivery and completion time required 
for each exchange.
    (3) P&S for equipment to be provided under an Equipment Contract, 
RUS Contract Form 395 (RUS Contract Form 395) contract without 
installation shall require the supplier to provide specific 
installation information and a detailed bonding and grounding plan to 
be utilized by the engineer, borrower, and others responsible for the 
installation of the equipment.
    (b) Preparation of P&S. The P&S shall include RUS Contract Form 
395, Notice and Instructions to Bidders, specifications for the 
required equipment for each exchange, provision for spare parts, and 
all other pertinent data needed by the bidder to complete its proposal.
* * * * *

0
9. Amend Sec.  1753.38 by:
0
a. Revising paragraphs (a)(1)(i), (a)(1)(iii), (a)(2)(i)(J), and 
(a)(2)(i)(K)(v);
0
b. Revising paragraph (b)(10);
0
c. Removing paragraph (c) and redesignating paragraphs (d), (e), and 
(f) as paragraphs (c), (d), and (e); and
0
d. Revising newly redesignated paragraphs (d)(3) and (d)(5).
    The revisions read as follows:


Sec.  1753.38  Procurement procedures.

    (a) * * *
    (1) * * *
    (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.
* * * * *
    (iii) Equipment Contract, RUS Contract Form 395 (RUS Contract Form 
395) shall be used, except that the ``Notice'' shall state that prior 
to the bid opening a technical session will be conducted with each 
supplier to resolve any questions related to the technical proposal 
submitted by the supplier. The suppliers' technical proposals should be 
requested for presentation 30 days in advance of the bid opening to 
enable sufficient time to make the technical evaluation.
* * * * *
    (2) * * *
    (i) * * *
    (J) Some types of equipment contain software. RUS Contract Form 395 
indicates whether the equipment contains software and whether the 
software contract stipulations are applicable.
    (K) * * *
    (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.
* * * * *
    (b) * * *
    (10) Installation of the central office equipment and materials 
provided under RUS Contract Form 395 may be made in accordance with 
subpart I, if applicable, or by an approved Force Account Proposal 
(FAP).
* * * * *
    (d) * * *
    (3) If RUS approval was required by paragraph (d)(2) of this 
section, upon RUS approval the purchase may be made using RUS Contract 
Form 395, or when applicable, the procedures contained in subpart I of 
this part.
* * * * *
    (5) Installation of the central office equipment and materials 
procured by RUS Contract Form 395 without installation may be made in 
accordance with subpart I, if applicable, or by an approved FAP.
* * * * *

0
10. Revise Sec.  1753.39 to read as follows:


Sec.  1753.39   Closeout documents.

    Closeout of Equipment Contract, RUS Contract Form 395 (RUS Contract 
Form 395) (including or not including installation) shall be conducted 
as follows:
    (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.
    (b) Acceptance tests. The borrower will perform acceptance tests as 
part of the partial closeout and final closeout of RUS Contract Form 
395 that will demonstrate compliance with the requirements as specified 
by the borrower's engineer in the Performance Requirements. Other tests 
demonstrating compliance will be acceptable.
    (c) Grounding system audit. A grounding system audit shall be 
performed and found acceptable for equipment provided under RUS 
Contract Form 395, (including or not including installation), prior to 
placing a central office or remote switching terminal into full service 
operation. The audits are to be conducted in accordance with the 
requirements specified by the borrower's engineer in the Performance 
Requirements. The audits shall be performed by the contractor and 
borrower when using the RUS Contract Form 395 with equipment 
installation and by the borrower when using the RUS Contract Form 395 
without equipment installation.
    (d) Partial Closeout Procedure. Under conditions set forth in RUS 
Contract Form 395, a contractor may, when approved by the borrower, 
receive payment in full for central offices and their respective 
associated remote switching terminals upon completion of the 
installation without awaiting completion of the project. The contractor 
is to receive such payment, according to procedures contained in the 
applicable sections of RUS Contract Form 395. In addition to complying 
with the appropriate partial closeout procedure contained in RUS 
Contract Form 395, the borrower shall:
    (1) Obtain from the engineer a certification of partial closeout; 
and
    (2) Submit one copy of the summary to RUS with an FRS.
    (e) Final contract closeout procedure. The documents required for 
the final closeout of the equipment contract, RUS Contract Form 395 
with or without installation, are listed in the Table 1 to paragraph 
(e), which also indicates the number of copies and their distribution.

[[Page 71584]]



                  Table 1 to Paragraph (e)--Documents Required To Close Out Equipment Contract,
                                              RUS Contract Form 395
----------------------------------------------------------------------------------------------------------------
                                            Number of copies prepared by                 Distribution
 RUS Form No.         Description      -------------------------------------------------------------------------
                                              Seller            Engineer            Buyer            Seller
----------------------------------------------------------------------------------------------------------------
213...........  Certificate (Buy        1................  .................  1...............
                 American).
238...........  Construction or         .................  3 sent to RUS....  1 from RUS......  1 from RUS.
                 Equipment Contract
                 Amendment (If not
                 previously submitted,
                 send to RUS for
                 approval).
395a..........  Certificate of          .................  2................  1...............  1.
                 Completion for
                 Equipment Contract
                 (Including
                 Installation).
395b..........  Certificate of          .................  2................  1...............  1.
                 Completion for
                 Equipment Contract
                 (Not Including
                 Installation).
395c..........  Certificate of          1................  .................  1...............
                 Contractor and
                 Indemnity Agreement
                 (Use only for
                 installation
                 contracts).
None..........  Report in writing,      .................  1................  1...............
                 including all
                 measurements, any
                 acceptance test
                 report and other
                 information required
                 under Part II of the
                 applicable
                 specifications (Form
                 395d may be used).
None..........  Set of maintenance      1................  .................  1...............
                 recommendations for
                 all equipment
                 furnished under the
                 contract.
----------------------------------------------------------------------------------------------------------------

    (f) 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.
    (g) 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.

Subpart H--Purchase and Installation of Special Equipment

0
11. Revise Sec.  1753.66 to read as follows:


Sec.  1753.66  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 purchasing and installing special equipment 
financed with loan funds.
    (b) Terms used in this subpart are defined in Sec.  1753.2 and 
Equipment Contract, RUS Contract Form 395 (RUS Contract Form 395).
    (c) Borrowers must obtain RUS review and approval of the LD for 
their telephone systems. Applications of equipment not included in an 
approved LD must conform to the modernization plan as required by 7 CFR 
part 1751, subpart B, and must be submitted to RUS for review and 
approval.
    (d) RUS Contract Form 395 and applicable specifications shall be 
used for the purchase of special equipment for major construction on a 
furnish-and-install basis, as well as on a furnish-only basis.
    (e) The procedures provided in subpart I, if applicable, or a FAP 
approved by RUS may be used for the installation of special equipment 
purchased with a RUS Contract Form 395 contract not including 
installation.
    (f) For special equipment purchases for minor construction, the 
borrower may at its option use the Methods of Minor Construction 
procedures contained in subpart I or the purchase procedures contained 
in this subpart H.
    (g) Some types of special equipment contain software. RUS Contract 
Form 395 indicates whether the equipment contains software and whether 
the software contract stipulations are applicable.

0
12. Revise Sec.  1753.67 to read as follows:


 Sec.  1753.67   Contracts and specifications.

    (a) Equipment Contract, RUS Contract Form 395 shall be used to 
purchase equipment on a furnish-and-install basis, as well as on a 
furnish-only basis.
    (b) The equipment specifications must accompany the equipment 
contract form and each specification consists of performance 
specifications, installation requirements (if applicable), and 
application engineering requirements.

0
13. Amend Sec.  1753.68:
0
a. In paragraph (a)(1)(iv) by removing the term ``Form 398 Contract'' 
and adding in its place ``Equipment Contract, RUS Contract Form 395 
(RUS Contract Form 395) without installation'' ;
0
b. In paragraph (a)(8) by removing the term ``Form 397'' and adding in 
its place ``RUS Contract Form 395'';
0
c. By revising paragraph (a)(9);
0
d. In the heading of paragraph (d)(1) by removing the term ``Form 397'' 
and adding in its place ``RUS Contract Form 395 with installation'';
0
e. By revising paragraph (d)(2) ;
0
f. In paragraph (d)(3)(i) by removing the phrase ``special equipment 
contract'' and adding in its place the phrase ``equipment contract''; 
and
0
g. By revising the table in paragraph (d)(3)(i).
    The revisions read as follows:


 Sec.  1753.68  Purchasing special equipment.

    (a) * * *
    (9) The specifications for the various applications of equipment is 
prepared by the RUS borrower's engineer and based on generally accepted 
engineering considerations and practices found in the 
Telecommunications Industry.
* * * * *
    (d) * * *
    (2) Acceptance tests for RUS Contract Form 395 without 
installation. (Upon completion of the installation and alignment of the 
equipment (under this contract the installation alignment will be by 
other than the seller) the borrower shall perform all the inspections 
and tests outlined in the specifications.
* * * * *

[[Page 71585]]



               Table 1 to Paragraph (d)(3)(i)--Documents Required To Close Out Equipment Contract,
                                              RUS Contract Form 395
----------------------------------------------------------------------------------------------------------------
                                            Number of copies prepared by                 Distribution
 RUS Form No.         Description      -------------------------------------------------------------------------
                                              Seller            Engineer            Buyer            Seller
----------------------------------------------------------------------------------------------------------------
213...........  Certificate (Buy        1................  .................  1...............
                 American).
238...........  Construction or         .................  3 sent to RUS....  1 sent to RUS...  1 from RUS.
                 Equipment Contract
                 Amendment (If not
                 previously submitted,
                 send to RUS for
                 approval).
395a..........  Certificate of          .................  2................  1...............  1.
                 Completion for
                 Equipment Contract
                 (Including
                 Installation).
395b..........  Certificate of          .................  2................  1...............  1.
                 Completion for
                 Equipment Contract
                 (Not Including
                 Installation).
395c..........  Certificate of          .................  .................  1...............
                 Contractor and
                 Indemnity Agreement
                 (Use only for
                 installation
                 contracts).
None..........  Report in writing,      .................  1................  1...............
                 including all
                 measurements, any
                 acceptance test
                 report and other
                 information required
                 under Part II of the
                 applicable
                 specifications. (Form
                 395d may be used.).
None..........  Set of maintenance      1................  .................  1...............
                 recommendations for
                 all equipment
                 furnished under the
                 contract.
----------------------------------------------------------------------------------------------------------------

* * * * *

Subpart I--Minor Construction

0
14. Amend Sec.  1753.80 by:
0
a. Removing in paragraph (b)(3) the phrase ``special equipment'' and 
adding in its place ``equipment''; and
0
b. Revising paragraph (d)(2).
    The revision reads as follows:


Sec.  1753.80  Minor construction procedure.

* * * * *
    (d) * * *
    (2) All standard RUS procedures are followed, including the 
application of RUS construction practices (see Sec.  1753.6).
* * * * *

Subpart J--Construction Certification Program


Sec.  1753.93  [Amended]

0
15. In Sec.  1753.93, remove paragraphs (b)(7) and (8) and redesignate 
paragraphs (b)(9) through (13) as (b)(7) through (11).


Sec.  1753.96  [Amended]

0
16. Amend the Certification Addendum in Sec.  1753.96 by removing the 
words ``or Rural Telephone Bank,'' from the second sentence.

PART 1755--TELECOMMUNICATIONS POLICIES ON SPECIFICATIONS, 
ACCEPTABLE MATERIALS, AND STANDARD CONTRACT FORMS

0
17. The authority citation for part 1755 continues to read as follows:

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


0
18. Amend Sec.  1755.30 by revising paragraphs (c)(25) through (c)(45), 
and removing paragraphs (c)(46) through paragraphs (c)(56)to read as 
follows:


Sec.  1755.30  List of telecommunications standard contract forms.

* * * * *
    (c) * * *
    (25) RUS Form 395, October 18, 2016, Equipment Contract.
    (26) RUS Form 395a, October 18, 2016, Equipment Contract 
Certificate of Completion (Including Installation).
    (27) RUS Form 395b, October 18, 2016, Equipment Contract 
Certificate of Completion (Not Including Installation).
    (28) RUS Form 395c, October 18, 2016, Certificate of Contractor and 
Indemnity Agreement.
    (29) RUS Form 395d, October 18, 2016, Results of Acceptance Tests.
    (30) RUS Form 506, issued 3-97, Statement of Engineering Fee--
Telecommunications.
    (31) RUS Form 515, issued September 17, 2001, Telecommunications 
Systems Construction Contract (Labor and Materials).
    (32) RUS Form 526, issued 8-66, Construction Contract Amendment.
    (33) RUS Form 527, issued 3-71, Statement of Construction, 
Telephone System ``Outside Plant''.
    (34) RUS Form 553, issued 5-67, Check List for Review of Plans and 
Specifications.
    (35) RUS Form 724, issued 10-63, Final Inventory, Telephone 
Construction Contract.
    (36) RUS Form 724a, issued 4-61, Final Inventory, Telephone 
Construction--Telephone Construction Contract (Labor and Materials), 
columns 1-8.
    (37) RUS Form 724b, issued 3-61, Final Inventory, Telephone 
Construction Contract (Labor and Materials), columns 9-14.
    (38) RUS Form 771, issued 10-75, Summary of Work Orders (Inspected 
by RUS Field Engineer).
    (39) RUS Form 771a, issued 10-75, Summary of Work Orders (Inspected 
by Licensed Engineer or Borrower's Staff Engineer).
    (40) RUS Form 773, issued 12-90, Miscellaneous Construction Work 
and Maintenance Services Contract.
    (41) RUS Form 787, issued 8-63, Supplement A to Construction 
Contract.
    (42) RUS Form 817, issued 6-60, Final Inventory, Telephone Force 
Account Construction.
    (43) RUS Form 817a, issued 6-60, Final Inventory, Telephone Force 
Account Construction, columns 1-8.
    (44) RUS Form 817b, issued 6-60, Final Inventory, Telephone Force 
Account Construction, Columns 9-14.
    (45) RUS Form 835, issued 3-66, Preloan Engineering Service 
Contract, Telephone System Design.

    Dated: October 5, 2016.
Brandon McBride,
Administrator, Rural Utilities Service.
[FR Doc. 2016-24945 Filed 10-17-16; 8:45 am]
 BILLING CODE P