PART 1726—ELECTRIC SYSTEM CONSTRUCTION POLICIES AND PROCEDURES Authority: 7 U.S.C. 901 et seq., et seq., et seq. Source: 60 FR 10155, Feb. 23, 1995, unless otherwise noted. Subpart A—General §§ 1726.1-1726.9 [Reserved] § 1726.10 Introduction. The policies, procedures and requirements included in this part are intended to implement provisions of the standard form of loan documents between the Rural Utilities Service (RUS) and its electric borrowers. Unless prior written approval is received from RUS, borrowers are required to comply with RUS policies and procedures as a condition to RUS providing loans, loan guarantees, or reimbursement of general funds for the construction and improvement of electric facilities. Requirements relating to RUS approval of plans and specifications, duties and responsibilities of the engineer and architect, and engineering and architectural services contracts, are contained in other RUS regulations. The terms “RUS form”, “RUS standard form”, “RUS specification”, “and RUS bulletin” have the same meanings as the terms “REA form”, “REA standard form”, “REA specification”, “and REA bulletin”, respectively, unless otherwise noted. § 1726.11 Purpose. Each borrower is responsible for the planning, design, construction, operation and maintenance of its electric system. RUS, as a secured lender, has a legitimate interest in accomplishing RUS's programmatic objectives, and in assuring that the costs of construction, materials, and equipment are reasonable and economical and that the property securing the loans is constructed adequately to serve the purposes for which it is intended. § 1726.12 Applicability. The requirements of this part apply to the procurement of materials and equipment for use by electric borrowers in their electric systems and to the construction of their electric systems if such materials, equipment, and construction are financed, in whole or in part, with loans made or guaranteed by RUS, including reimbursable projects. In order for general fund expenditures for procurement or construction to be eligible for reimbursement from loan funds, the borrower must comply with the procedures required by this part. In the case of jointly owned projects, RUS will determine on a case by case basis the applicability of the requirements of this part. § 1726.13 Waivers. The Administrator may waive, for good cause on a case by case basis, certain requirements and procedures of this part. RUS reserves the right, as a condition of providing loans, loan guarantees, or other assistance, to require any borrower to make any specification, contract, or contract amendment subject to the approval of the Administrator. § 1726.14 Definitions. Terms used in this part have the meanings set forth in 7 CFR 1710.2. References to specific RUS forms and other RUS documents, and to specific sections or lines of such forms and documents, shall include the corresponding forms, documents, sections and lines in any subsequent revisions of these forms and documents. In addition to the terms defined in 7 CFR 1710.2, the following terms have the following meanings for the purposes of this part: Approval of proposed construction Architect Bona fide bid “Buy American” certificate Competitive procurement Construction unit Contracting committee Encumbrance Engineer Equipment Force account construction Formal competitive bidding Goods or services Informal competitive bidding Material Minor error or irregularity Minor modification or improvement Multiparty lump sum quotations Multiparty negotiation Net utility plant (NUP) Procurement method Owner furnished materials Responsive bid RUS approval Unit prices [60 FR 10155, Feb. 23, 1995, as amended at 77 FR 3071, Jan. 23, 2012; 81 FR 11027, Mar. 2, 2016; 89 FR 17275, Mar. 11, 2024] § 1726.15 “Buy American”. The borrower must ensure that all materials and equipment financed with loans made or guaranteed by RUS complies with the “Buy American” provisions of the Rural Electrification Act of 1938 (7 U.S.C. 903 note), as amended by the North American Free Trade Agreement Implementation Act (107 Stat 2129). When a “Buy American” certificate is required by this part, this must be on RUS Form 213. § 1726.16 Debarment and suspension. Borrowers are required to comply with certain requirements on debarment and suspension in connection with procurement activities set forth in 2 CFR part 180, as adopted by USDA through 2 CFR part 417, particularly with respect to lower tier transactions, e.g., [79 FR 76003, Dec. 19, 2014] § 1726.17 Restrictions on lobbying. Borrowers are required to comply with certain restrictions and requirements in connection with procurement activities as set forth in 2 CFR part 418. [79 FR 76003, Dec. 19, 2014] § 1726.18 Pre-loan contracting. Borrowers must consult with RUS prior to entering into any contract for material, equipment, or construction if a construction work plan, general funds, loan or loan guarantee for the proposed work has not been approved. While the RUS staff will work with the borrower in such circumstances, nothing contained in this part is to be construed as authorizing borrowers to enter into any contract before the availability of funds has been ascertained by the borrower and all environmental review requirements in accordance with 7 CFR part 1970, have been met. [81 FR 11027, Mar. 2, 2016] § 1726.19 Use of competitive procurement. RUS borrowers' procurement is not subject to the provisions of the Federal Acquisition Regulation (48 CFR chapter 1); however, since borrowers receive the benefit of Federal financial assistance borrowers must use competitive procurement to the greatest extent practical. The borrower must use competitive procurement for obtaining all goods or services when a RUS loan or loan guarantee is involved except: (a) As specifically provided for in subparts B through F of this part; or (b) A waiver is granted. § 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.) [69 FR 7109, Feb. 13, 2004] § 1726.21 New materials. The borrower shall purchase only new materials and equipment unless otherwise approved by RUS, on a case by case basis, prior to the purchase. § 1726.22 Methods of construction. The borrower is generally responsible for determining whether construction will be by contract or force account. If construction is by contract, the borrower must determine whether materials will be supplied by the contractor or will be furnished by the borrower. RUS reserves the right to require contract construction in lieu of force account construction on a case by case basis. § 1726.23 Qualification of bidders. (a) Qualified bidder list (QBL). (b) Conflict of interest. § 1726.24 Standard forms of contracts for borrowers. (a) General. (b) Amendments to contracts Contract forms. (2) Special considerations. (3) Amendment approval requirements. (ii) The borrower must make a contract amendment subject to RUS approval if the underlying contract was made subject to RUS approval and the total amended contract price exceeds 120 percent of the original contract price (excluding any escalation provision contained in the contract). (iii) Contract amendments, except as provided in paragraph (b)(3)(ii) of this section, are not subject to RUS approval and need not be submitted to RUS unless specifically requested by RUS on a case by case basis. [60 FR 10155, Feb. 23, 1995, as amended at 63 FR 58286, Oct. 30, 1998; 69 FR 7109, Feb. 13, 2004] § 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. [69 FR 7109, Feb. 13, 2004] § 1726.26 Interest on overdue accounts. Certain RUS contract forms contain a provision concerning payment of interest on overdue accounts. Prior to issuing the invitation to bidders, the borrower must insert an interest rate equal to the lowest “Prime Rate” listed in the “Money Rates” section of the Wall Street Journal on the date such invitation to bid is issued. If no prime rate is published on that date, the last such rate published prior to that date must be used. The rate must not, however, exceed the maximum rate allowed by any applicable state law. [63 FR 58286, Oct. 30, 1998] § 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. (c) Surety companies providing contractor's bonds shall be listed as acceptable sureties in the U.S. Department of the Treasury Circular No. 570, Companies Holding Certificates of Authority as Acceptable Sureties on Federal Bonds and as Acceptable Reinsuring Companies. Copies of the circular and interim changes may be obtained directly from the Government Printing Office (202) 512-1800. Interim changes are published in the Federal Register http://www.fms.treas.gov/c570/index.html [63 FR 58286, Oct. 30, 1998, as amended at 69 FR 7109, Feb. 13, 2004] §§ 1726.28-1726.34 [Reserved] § 1726.35 Submission of documents to RUS. (a) Where to send documents. (b) Borrower certification. (c) Contracts requiring RUS approval. (1) A bid tabulation and evaluation and, if applicable, a written recommendation of the architect or engineer. (2) For awards made under the informal competitive bidding procedure or the multiparty negotiation procedure, a written recommendation of the contracting committee (See §§ 1726.202 and 1726.203). (3) One copy of an executed contractor's bond on RUS approved bond forms as required in the contract form and one copy of the bid bond or copy of the certified check. (4) A certification by the borrower or chairperson of the contracting committee, as applicable, that the appropriate bidding procedures were followed as required by this part. (5) Evidence of clear title to the site for substations and headquarters construction contracts, if not previously submitted. (6) Documentation that all reasonable measures were taken to assure competition if fewer than three bids were received. (d) Contract amendments requiring RUS approval. (e) Encumbrance of loan or loan guarantee funds. (2) For contracts not subject to RUS approval (except for generation projects), loan or loan guarantee funds will normally be encumbered using RUS Form 219, Inventory of Work Orders, after closeout of the contracts. In cases where the borrower can show good cause for a need for immediate cash, the borrower may request encumbrance of loan or loan guarantee funds based on submittal of a copy of the executed contract, provided it meets all applicable RUS requirements. (3) For generation project contracts not subject to RUS approval, the borrower must submit to RUS the following documentation: (i) A brief description of the scope of the contract, including contract identification (name, number, etc.); (ii) Contract date; (iii) Contractor's name; (iv) Contract amount; (v) Bidding procedure used; (vi) Borrower certification that: (A) The bidding procedures and contract award for each contract were in conformance with the requirements of Part 1726, Electric System Construction Policies and Procedures; (B) If a RUS approved form of contract is required by this part, the terms and conditions of the RUS approved form of contract have not been altered; (C) If RUS has approved plans and specifications for the contract, the contract was awarded on the basis of those plans and specifications; and (D) No restriction has been placed on the borrower's right to assign the contract to RUS or its successors. (4) Contract amendments. (ii) For amendments not subject to RUS approval (except generation projects), loan or loan guarantee funds will normally be encumbered using RUS Form 219, Inventory of Work Orders, after closeout of the contracts. In cases where the borrower can justify a need for immediate cash, the borrower may request encumbrance of loan or loan guarantee funds based on submittal of a copy of the executed amendment, providing it meets all applicable RUS requirements. (iii) For each generation project contract amendment not subject to RUS approval, the borrower must submit to RUS the following information and documentation: (A) The contract name and number; (B) The amendment number; (C) The amendment date; (D) The dollar amount of the increase or the decrease of the amendment; (E) Borrower certification that: ( 1 ( 2 ( 3 [60 FR 10155, Feb. 23, 1995, as amended at 84 FR 32617, July 9, 2019; 86 FR 36197, July 9, 2021] § 1726.36 Documents subject to RUS approval. Unless otherwise indicated, the borrower shall make all contracts and amendments that are subject to RUS approval effective only upon RUS approval. § 1726.37 OMB control number. The collection of information requirements in this part have been approved by the Office of Management and Budget and assigned OMB control number 0572-0107. §§ 1726.38-1726.49 [Reserved] Subpart B—Distribution Facilities § 1726.50 Distribution line materials and equipment. (a) Contract forms. (2) The borrower may, in its discretion, use RUS Form 198, Equipment Contract, or a written purchase order equal to $1,000,000 or less for purchases of equipment, and for all materials. (b) Standards and specifications. (c) Procurement procedures. (d) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 FR 3072, Jan. 23, 2012] § 1726.51 Distribution line construction. (a) Contract forms. (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 $500,000 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. (b) Procurement procedures. (2) The borrower shall use formal competitive bidding for all other distribution line contract construction unless the RUS specifically approves an alternative method. The dollar amounts of contracts bid using the formal competitive bidding procedure do not apply to the cumulative total stipulated in paragraph (b)(1) of this section. (3) An amendment which increases the scope of the contract by adding a project is not considered competitively bid, therefore, the dollar amount of that amendment does apply to the cumulative total stipulated in paragraph (b)(1) of this section. (c) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 FR 3072, Jan. 23, 2012; 86 FR 36198, July 9, 2021; 89 FR 17275, Mar. 11, 2024] §§ 1726.52-1726.74 [Reserved] Subpart C—Substation and Transmission Facilities § 1726.75 General. As used in this part, “substations” includes substations, switching stations, metering points, and similar facilities. § 1726.76 Substation and transmission line materials and equipment. (a) Contract forms. (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 $1,000,000 and for all materials. (b) Standards and specifications. (c) Procurement procedures. (d) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 FR 3072, Jan. 23, 2012] § 1726.77 Substation and transmission line construction. (a) Contract forms. (b) Procurement procedures. (2) The borrower shall use formal competitive bidding for all other contract construction unless RUS specifically approves an alternative method. The dollar amount of contracts bid using the formal competitive bidding procedure do not apply to the cumulative total stipulated in paragraph (b)(1) of this section. (3) An amendment which increases the scope of the contract by adding a project is not considered competitively bid, therefore, the dollar amount of that amendment does apply to the cumulative total stipulated in paragraph (b)(1) of this section. (c) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 FR 3072, Jan. 23, 2012; 86 FR 36198, July 9, 2021; 89 FR 17275, Mar. 11, 2024] §§ 1726.78-1726.124 [Reserved] Subpart D—Generation Facilities § 1726.125 Generating plant facilities. This section covers the construction of all portions of a generating plant, including plant buildings and the generator step-up transformer. Generally, the transmission switchyard will be covered under this section during initial construction of the plant. Subpart C of this part covers subsequent modifications to transmission switchyards. Warehouses and equipment service type buildings are covered under subpart E of this part. (a) Contract forms. (2) The borrower shall use RUS Form 200, Construction Contract—Generating, for generating project construction contracts in the amount of $5,000,000 or more and for any generating project construction contract requiring RUS approval. (3) The borrower may, in its discretion, use other contract forms or written purchase order forms for those contracts in amounts of less than $5,000,000 and that do not require RUS approval. (b) Procurement procedures. (2) If the amount of the contract is $5,000,000 or more or if the contract requires RUS approval, the borrower must use formal or informal competitive bidding to award the contract. (3) Where formal or informal competitive bidding is not applicable, or does not result in a responsive bid, multiparty negotiation may be used only after RUS approval is obtained. (c) Contract approval. (1) Fossil generating stations. (2) Diesel and combustion turbine plants. (3) Hydro installations. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004; 77 FR 3072, Jan. 23, 2012; 89 FR 17275, Mar. 11, 2024] §§ 1726.126-1726.149 [Reserved] Subpart E—Buildings § 1726.150 Headquarters buildings. This section includes headquarters buildings such as warehouses and equipment service type buildings. Generating plant buildings are covered under subpart D of this part. (a) Contract forms. (b) Procurement procedures. (c) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 77 FR 3072, Jan. 23, 2012; 86 FR 36198, July 9, 2021; 89 FR 17275, Mar. 11, 2024] §§ 1726.151-1726.174 [Reserved] Subpart F—General Plant § 1726.175 General plant materials. This section covers items such as office furniture and equipment; transportation equipment and accessories, including mobile radio systems, stores and shop equipment, laboratory equipment, tools and test equipment. (a) Contract forms. (b) Procurement procedures. (c) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004] § 1726.176 Communications and control facilities. This section covers the purchase of microwave, fiber, power line carrier, and other communications technologies or systems, including load control and supervisory control and data acquisition (SCADA) systems, automated meter reading/automated metering infrastructure (AMR/AMI), or other smart grid technologies. Mobile radio systems are covered as general plant materials in § 1726.175. (a) Power line carrier systems. (b) Load control systems, communications systems, and SCADA systems Contract forms. (2) Procurement procedures. (ii) The borrower must use multiparty negotiation for all other communications and control facilities contract construction, including all contracts requiring RUS approval. The amount of contracts bid using the multiparty negotiation procedure do not apply to the cumulative total stipulated in paragraph (b)(2)(i) of this section. (iii) An amendment which increases the scope by adding a project is not considered competitively bid, therefore, the amount of that amendment does apply to the cumulative total stipulated in paragraph (b)(2)(i) of this section. (3) Contract approval. [60 FR 10155, Feb. 23, 1995, as amended at 77 FR 3072, Jan. 23, 2012; 86 FR 36198, July 9, 2021; 89 FR 17275, Mar. 11, 2024] §§ 1726.177-1726.199 [Reserved] Subpart G—Procurement Procedures § 1726.200 General requirements. The borrower must use the procedures described in this subpart where such procedures are required under subparts B through F of this part. The borrower must ensure that arrangements prior to announcement of the award of the contract are such that all bidders are treated fairly and no bidder is given an unfair advantage over other bidders. § 1726.201 Formal competitive bidding. Formal competitive bidding is used for distribution, transmission, and headquarters facilities, and may be used for generation facilities. The borrower must use the following procedure for formal competitive bidding: (a) Selection of qualified bidders. (b) Invitations to bid. (c) Evaluation basis. (d) Handling of bids received. (e) Bid openings. (f) Conditions affecting acceptability of bids. (1) Fewer than three bona fide bids received. (2) Significant error or ambiguity in the specification. (3) Minor errors or omissions in the specification. (4) Minor errors or irregularities in bid. (5) Non-minor error or irregularity in bid. (6) Unbalanced bid. (7) No acceptable price quoted. (g) Evaluating bids. (h) Announcement of bids. (i) Award of contract. (1) Resolve to award the contract to the lowest evaluated responsive bidder; or (2) Reject all bids. (j) Certification by the borrower and its engineer. § 1726.202 Informal competitive bidding. Informal competitive bidding may be used for equipment purchases and generation construction. The borrower must use the following procedure for informal competitive bidding: (a) Selection of qualified bidders. (b) Invitations to bid. (c) Notice and instructions to bidders. (d) Evaluation basis. (e) Handling of bids received. (f) Bid opening. (g) Conditions affecting acceptability of bids. (1) Fewer than three bona fide bids received. (2) Significant error or ambiguity in the specification. (h) Clarification of proposals. (i) Award of the contract. (1) Resolve to award the contract to the lowest evaluated responsive bidder; or (2) Reject all bids. (j) Certifications by the contracting committee. § 1726.203 Multiparty negotiation. Multiparty negotiation may only be used where permitted under subpart F of this part or where prior RUS approval has been obtained. The borrower must use the following procedure for multiparty negotiation: (a) Selection of qualified bidders. (b) Invitations to bid. (c) Notice and instructions to bidders. (d) Evaluation basis. (e) Handling of bids received. (f) Bid opening. (g) Conditions affecting acceptability of bids. (1) Fewer than three bona fide bids received. (2) Significant error or ambiguity in the specification. (h) Negotiations. (i) Award of the contract. (1) Resolve to award the contract to the selected bidder; or (2) Reject all bids. (j) Certifications by the contracting committee. § 1726.204 [Reserved] § 1726.205 Multiparty lump sum quotations. The borrower or its engineer must contact a sufficient number of suppliers or contractors to assure competition and so that at least three bids will be received. On the basis of written lump sum quotations, the borrower will select the supplier or contractor based on the lowest evaluated cost. §§ 1726.206-1726.249 [Reserved] Subpart H—Modifications to RUS Standard Contract Forms § 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 § 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. [69 FR 7109, Feb. 13, 2004] § 1726.251 Prior approved contract modification related to price escalation on transmission equipment, generation equipment, and generation construction contracts. (a) General. (b) Material and equipment contracts. (1) Insert new paragraphs in the Notice and Instructions to Bidders as follows: “Proposals are invited on the basis of firm prices (or prices with a stated maximum percentage escalation) or on the basis of nonfirm prices to be adjusted as provided for below or on both bases. The owner may award the contract on either basis. Nonfirm prices. A proportion of ____ percent [the borrower will enter the appropriate percentage amount] of the contract price shall be deemed to represent labor cost and shall be adjusted based on changes in the Bureau of Labor Statistics, Average Hourly Earnings Rate____ [the borrower will enter the appropriate BLS index] from the month in which the bids are opened to the month in which the labor is incorporated in the equipment or materials. The adjustment for labor costs shall be obtained by applying the percentage of increase or decrease in such index, calculated to the nearest one-tenth of one percent, to the percentage of the contract prices deemed to represent labor costs. A portion of ____ percent [the borrower will enter the appropriate percentage amount] of the contract price shall be deemed to represent material costs and shall be adjusted based on changes in the Bureau of Labor Statistics, material index ____ [the borrower will enter the appropriate BLS index] for the period and in a manner similar to the labor cost adjustment.” (2) Insert the following in the contract documents under the “Proposal” section: “Firm Price $________ Nonfirm Price $________” (3) For equipment that uses a large quantity of insulating oil, the borrower may insert the following in the contract documents under the “Proposal” section: “The price for insulating oil shall be adjusted upward or downward based on the change in the Bureau of Labor Statistics Refined Petroleum Rate (057) from the month in which the bids are opened to the month in which the oil is purchased by the equipment supplier. Contracts shall be evaluated based on an estimated cost of ____ cents per gallon [the borrower will enter the appropriate cost] for oil. Such adjustment, if any, shall not change the contract amount for purpose of applying any other adjustments to the contract prices.” (c) Construction contracts. (1) Insert new paragraphs in the “Notice and Instructions” to Bidders as follows: “Proposals are invited on the basis of firm prices (or prices with a stated maximum percentage escalation) or on the basis of nonfirm prices to be adjusted as provided for below or on both bases. The owner may award the contract on either basis. Nonfirm Prices A proportion of ____ percent [the borrower will enter the appropriate percentage amount] of the contract price shall be deemed to represent shop labor costs and shall be adjusted based on changes in the Bureau of Labor Statistics, Average Hourly Earnings Rate ____ [the borrower will enter the appropriate BLS index] from the month in which bids are opened to the month in which the work is accomplished. The adjustment for shop labor costs shall be obtained by applying the percentage increase or decrease in such index, to the percentage of each partial payment deemed to represent shop labor costs. A portion of ____ percent [the borrower will enter the appropriate percentage amount] of the contract prices shall be deemed to represent material costs and shall be adjusted based on changes in the Bureau of Labor Statistics, Producer Price Index, ____ [the borrower will enter the appropriate BLS index] for the period and in a manner similar to the shop labor costs adjustment. A portion of ____ percent [the borrower will enter the appropriate percentage amount] of the contract price shall be deemed to represent field labor costs and shall be adjusted based on changes in the Bureau of Labor Statistics, Average Hourly Earnings Rate ____ [the borrower will enter the appropriate BLS index], for the period and in a manner similar to the shop labor costs adjustment.” (2) Insert the following in the contract documents under the “Proposal” section: “Firm Price $________ Nonfirm Price $________” § 1726.252 Prior approved contract modification related to liability for special and consequential damages. This section applies only to transmission equipment purchases and generation contracts. Where the borrower anticipates difficulty in obtaining responsive bids on RUS standard contract forms due to a lack of limitation with respect to special and consequential damages, and where the borrower believes that such a modification will encourage competition through the receipt of an alternative bid which limits the bidder's liability for special and consequential damages, the borrower may make the following approved phrase modifications in the RUS standard contract form on which the borrower solicits bids: (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. Liability Clause Number 2. “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.” (b) Insert the following in the contract documents under the “Proposal” section: “Price $ (Based on Liability Clause 1)________ Price $ (Based on Liability Clause 2)________” (c) Insert the following in the acceptance section of the standard contract form: “This contract is based on Liability Clause Number________.” [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7109, Feb. 13, 2004] § 1726.253 Prior approved contract modification related to alternative bid provision for payment to contractor for bulk purchase of materials. When construction is to be performed over an extended period of time, but large quantities of material are to be purchased by the contractor at the beginning of the project (e.g., cable for URD installations), the borrower may allow alternative bids providing for payment to the contractor of 90 percent of the cost of such materials within 30 days of delivery of those materials at the job site. The borrower will retain the right to award the contract with or without the alternative payment provision, however, the contract still must be awarded on the basis of the lowest evaluated responsive bid for the alternative accepted. § 1726.254 [Reserved] § 1726.255 Prior approved contract modifications related to indemnification. (a) As an alternative to the indemnification provision required in RUS standard construction contract forms in those jurisdictions requiring specific language concerning the requirement that the indemnitor indemnify the indemnitee for the indemnitee's own negligence, the borrower may add the words “otherwise this provision shall apply to any alleged negligence or condition caused by the Owner” so that the first paragraph reads as follows: “i. To the maximum extent permitted by law, Bidder shall defend, indemnify, and hold harmless Owner and Owner's directors, officers, and employees from all claims, causes of action, losses, liabilities, and expenses (including reasonable attorney's fees) for personal loss, injury, or death to persons (including but not limited to Bidder's employees) and loss, damage to or destruction of Owner's property or the property of any other person or entity (including but not limited to Bidder's property) in any manner arising out of or connected with the Contract, or the materials or equipment supplied or services performed by Bidder, its subcontractors and suppliers of any tier. But nothing herein shall be construed as making Bidder liable for any injury, death, loss, damage, or destruction caused by the sole negligence of Owner, otherwise this provision shall apply to any negligence or condition caused by the Owner.” (b) As an alternative to the indemnification provision required in RUS standard construction contract forms in those jurisdictions that have a legal prohibition against one party indemnifying another for the other's negligence, the borrower may replace the words “defend, indemnify, and hold harmless” with the words “ shall pay on behalf of” so that the first paragraph reads as follows: “i. To the maximum extent permitted by law, Bidder shall pay on behalf of Owner and Owner's directors, officers, and employees from all claims, causes of action, losses, liabilities, and expenses (including reasonable attorney's fees) for personal loss, injury, or death to persons (including but not limited to Bidder's employees) and loss, damage to or destruction of Owner's property or the property of any other person or entity (including but not limited to Bidder's property) in any manner arising out of or connected with the Contract, or the materials or equipment supplied or services performed by Bidder, its subcontractors and suppliers of any tier. But nothing herein shall be construed as making Bidder liable for any injury, death, loss, damage, or destruction caused by the sole negligence of Owner, otherwise this provision shall apply to any negligence or condition caused by the Owner.” (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). [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004] §§ 1726.256-1726.299 [Reserved] Subpart I—RUS Standard Forms § 1726.300 Standard forms of contracts for borrowers. (a) General. (b) Contract forms. [63 FR 58286, Oct. 30, 1998] § 1726.301 Borrower contractual obligations. (a) Loan agreement. (b) Compliance. (c) Amendment. (d) Waiver. (e) Violations. [63 FR 58286, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004] § 1726.302 Notice and publication of listed contract forms. (a) Notice. (b) Availability. http://www.usda.gov/rus/electric/forms/index.htm. [63 FR 58287, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004] § 1726.303 Promulgation of new or revised contract forms. RUS may, from time to time, undertake to promulgate new contract forms or revise or eliminate existing contract forms. In so doing, RUS shall publish notice of rulemaking in the Federal Register Federal Register [63 FR 58287, Oct. 30, 1998] § 1726.304 List of electric program standard contract forms. (a) General. i.e., (b) Issuance date. (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. 4-04, 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. [63 FR 58287, Oct. 30, 1998, as amended at 69 FR 7110, Feb. 13, 2004; 69 FR 52595, Aug. 27, 2004] §§ 1726.305-1726.399 [Reserved] Subpart J—Contract Closeout § 1726.400 Final contract amendment. As needed, a final contract amendment will be prepared and processed in accordance with § 1726.24(b) prior to or in conjunction with the closeout of the contract. § 1726.401 Material contract closeout. (a) Delivery inspection. (b) Closeout documents. (c) Final payment. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004] § 1726.402 Equipment contract closeout. This section is applicable to contracts executed on RUS Form 198. (a) Final inspection and testing of equipment. (b) Closeout documents. (i) Certification by the project engineer in accordance with paragraph (a) of this section. (ii) All guarantees or warranties. (iii) A “Buy American” certificate, RUS Form 213, from the supplier or manufacturer. (2) Closeout documents for materials contracts need not be submitted to RUS unless specifically requested by RUS. (c) Final payment. § 1726.403 Project construction contract closeout. This section is applicable to contracts executed on RUS Forms 200, 257, 786, and 830. (a) Final test of equipment supplied under a construction contract. (b) Final inspection of construction. (c) Closeout 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 § 1726.403(a), if applicable. (vii) Final design documents, as outlined in part 1724 of this chapter. (2) Distribution of closeout documents. (ii) For contracts subject to RUS approval, the borrower will submit either a certification or the following closeout documents for RUS approval: (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. (d) Final payment. (2)(i) Upon receipt of final payment by the contractor, the borrower will obtain from the contractor a certification of receipt of final payment in the following form: “The undersigned acknowledges receipt of the final contract payment of $____ as satisfaction in full of all claims of the undersigned under the construction contract between the undersigned and ____ (borrower), dated as amended, and as complete performance by the latter of all obligations to be performed by it pursuant thereto. The total amount received under this contract is shown above.” (ii) The certification in paragraph (d)(2)(i) of this section is to be executed for the contractor by: The sole owner, a partner, or an officer of the corporation. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7110, Feb. 13, 2004; 84 FR 32618, July 9, 2019; 86 FR 36198, July 9, 2021] § 1726.404 Non-site specific construction contract closeout. This section is applicable to contracts executed on RUS Form 790. (a) Final test of equipment supplied under a construction contract. (b) Final inspection of construction. (c) Closeout documents. (i) RUS Form 792b, Certificate of Contractor and Indemnity Agreement (ii) RUS Form 213, “Buy American” certificate. (iii) Certification by the project engineer in accordance with paragraph (a) of this section, if applicable. (iv) Final design documents, as outlined in part 1724 of this chapter. (2) Distribution of closeout documents. (ii) For contracts not subject to RUS approval, the closeout is not subject to RUS approval and the closeout documents need not be sent to RUS unless specifically requested by RUS. [60 FR 10155, Feb. 23, 1995, as amended at 69 FR 7111, Feb. 13, 2004] § 1726.405 Inventory of work orders (RUS Form 219). Upon completion of the contract closeout, the borrower shall complete RUS Form 219, Inventory of Work Orders, in accordance with part 1717, Post-Loan Policies and Procedures Common to Insured and Guaranteed Electric Loans, of this chapter.