[Code of Federal Regulations]
[Title 7 Volume 11]
[Revised as of January 1, 2007]
From the U.S. Government Printing Office via GPO Access
[CITE: 7CFR1789]
[Page 1182-1188]
TITLE 7--AGRICULTURE
CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
PART 1789_USE OF CONSULTANTS FUNDED BY BORROWERS--Table of Contents
Subpart A_Policy and Procedures With Respect to Consultant Services
Funded by Borrowers_General
Sec.
1789.150 Purpose.
1789.151 Definitions.
1789.152 Policy.
1789.153 Borrower funding.
1789.154 Eligible borrowers.
1789.155 Approval criteria.
1789.156 Proposal procedure.
1789.157 Consultant contract.
1789.158 Implementation.
1789.159 Contract administration.
1789.160 Access to information.
1789.161 Conflicts of interest.
[[Page 1183]]
1789.162 Indemnification agreement.
1789.163 Waiver.
1789.164-1789.165 [Reserved]
Subpart B_Escrow Account Funding and Payments
1789.166 Terms and conditions of funding agreement.
1789.167 Terms and conditions of escrow agreement.
1789.168-1789.175 [Reserved]
Authority: 7 U.S.C. 901-950b; Pub. L. 103-354, 108 Stat. 3178 (7
U.S.C. 6941 et seq.).
Source: 61 FR 48606, Sept. 16, 1996, unless otherwise noted.
Subpart A_Policy and Procedures With Respect to Consultant Services
Funded by Borrowers_General
Sec. 1789.150 Purpose.
This part sets forth policies and the procedures for implementing
subsection (c) of section 18 of the Rural Electrification Act of 1936,
as amended (7 U.S.C. 901 et seq.)(RE Act) which authorizes the Rural
Utilities Service (RUS) to use the services of Consultants funded by the
Borrowers to facilitate timely action on Applications by Borrowers for
financial assistance and other approvals.
Sec. 1789.151 Definitions.
As used in this part:
Administrator means the Administrator of the Rural Utilities Service
(RUS).
Application means a request for financial assistance under the RE
Act or such other approvals as may be required of the RUS pursuant to
the terms of outstanding loan or security instruments or otherwise.
Borrower means any organization which has an outstanding loan(s)
made or guaranteed by RUS or its predecessor agency, the Rural
Electrification Administration (REA) under the RE Act or any
organization which has submitted or submits an Application before RUS.
Consultant means a person or firm which has been retained pursuant
to this subpart under a contract to provide financial, legal,
engineering, environmental, or other technical advice and services.
Consultant Contract means a contract for the performance of
consulting services for RUS, to be paid using funds provided by a
Borrower, which may be in the form of a Retainer Contract, purchase
order, or other form as may be appropriate.
Escrow Account means an account established pursuant to Sec.
1789.158.
Escrow Agreement means an agreement, between a Borrower, a
Consultant and a Third-party Commercial Institution, meeting the
requirements of Sec. 1789.167.
Final Invoice means the closing Invoice prepared for a given Task
Order.
Financial Consultant means a Consultant retained pursuant to this
part to provide financial advisory services.
Funding Agreement means an agreement, between a Borrower and a
Consultant, providing for the Borrower to fund the costs of a Task Order
and otherwise meeting the requirements of Sec. 1789.166.
Indemnification Agreement means an agreement by a Borrower meeting
the requirements of Sec. 1789.162.
Invoice means an invoice prepared by a Consultant pursuant to the
terms of a Consultant Contract.
Legal Consultant means any Consultant retained pursuant to this part
to provide legal services to RUS.
Notice of Proposal to Fund means a notice meeting the requirements
of Sec. 1789.156 provided to RUS by the Borrower.
Organizational conflict of interest means that because of other
activities or relationships with other persons, a person is unable or
potentially unable to render impartial assistance or advice to the
Government, or the person's objectivity in performing the contract work
is or might be otherwise impaired, or a person has an unfair competitive
advantage.
Retainer Contract means a Consultant Contract providing for a
minimum required payment to a Consultant irrespective of whether
services are utilized by RUS thereunder.
Task Order means a written request for consultant services pursuant
to the terms of a Consultant Contract.
[[Page 1184]]
Third-party Commercial Institution means a commercial financial
institution mutually acceptable to the Borrower and the Consultant.
Sec. 1789.152 Policy.
(a) As provided in this subpart, RUS may, at its discretion, use the
services of Consultants funded by a Borrower where such services will
facilitate timely action on an Application by such Borrower for
financial assistance or other approvals. Such Consultants may provide
financial, legal, engineering, environmental or other technical advice
and services in connection with the review of an Application.
(b) With the approval of RUS, a Borrower may fund the cost of
consulting services in connection with the review by RUS of an
Application by such Borrower. Such funding shall be provided pursuant to
the terms of a Funding Agreement between the Borrower and the Consultant
designated by RUS.
(c) RUS may not, without the consent of the Borrower, require, as a
condition of processing any Application for approval, that the Borrower
agree to pay the costs of a Consultant hired to provide services to RUS.
(d) The government shall retain sole discretion in the selection of
Consultants to provide services to RUS and the form of contract
utilized. RUS may either use the services of one or more Consultants
retained under Retainer Contracts or the government may elect to retain
a Consultant not otherwise on retainer. The government shall have sole
discretion to prescribe terms and conditions of Consultant Contracts.
The Borrower may bring considerations to the attention of the government
which the Borrower deems pertinent to the selection process.
(e) RUS shall retain sole discretion as to whether to further pursue
use of an outside consultant for the relevant application in the event
the Borrower does not enter into the agreements referenced in Sec.
1789.158(c)(3)(iii) within 60 days of the government providing to the
Borrower the information set forth in Sec. 1789.158(c)(3).
Sec. 1789.153 Borrower funding.
Borrowers shall use their general funds for the purposes of funding
consultant services hereunder. Borrowers may not use the proceeds of
loans made or guaranteed under the RE Act for costs incurred by
Borrowers pursuant to the funding of consultant services for RUS.
Sec. 1789.154 Eligible borrowers.
All Borrowers are eligible to fund consultant services under this
part.
Sec. 1789.155 Approval criteria.
RUS will consider approving the use of consultant services funded by
a Borrower on a case by case basis taking into account, among other
matters, the following:
(a) Whether such services are required to facilitate timely action
on a Borrower's Application. RUS shall determine what represents timely
action with respect to each Application considering, among other
matters, the review period normally required for such projects by RUS
and other lenders and the consequences to the Borrower of adjusting the
review period.
(b) The availability of staff resources, the priorities of other
projects then before RUS, and the efficiencies to be realized from the
use of consultant services.
(c) Whether it is in the best interest of RUS to use Borrower-funded
Consultants. Certain types of projects, such as those involving issues
of program-wide significance, may not be well suited for the use of
Borrower funded Consultants.
Sec. 1789.156 Proposal procedure.
(a) In the event RUS determines that consideration should be given
to the use of a Borrower-funded consultant in connection with the review
of an Application, the RUS Regional Director or the Director of the
Power Supply Division, as appropriate, will discuss with the Borrower
the nature of the Application and the projected review period required
of RUS. If RUS concludes that the projected review period will not
result in timely action on the Application, and after being so notified
in writing by RUS the Borrower wishes to fund consultant services to
facilitate RUS review, the Borrower shall submit
[[Page 1185]]
to the same Director a funding proposal. The proposal shall set forth
the following:
(1) Identification in the heading or caption as a Notice of Proposal
to Fund Consulting Services;
(2) Borrower's REA/RUS designation;
(3) Borrower's legal name and address;
(4) A description of the Application, critical issues and concerns
relating to the Application, time deadlines, and the consequences of any
delays in RUS review;
(5) A description of the consulting service(s) that would facilitate
timely RUS review of the Application; and
(6) Such additional documents and information as RUS may request.
(b) RUS will review the Notice of Proposal to Fund and any
additional information RUS deems relevant in determining whether to
proceed with procuring Borrower funded Consultants. If RUS proposes to
utilize Legal Consultants, RUS must obtain the concurrence of the Office
of General Counsel (OGC) of the Department of Agriculture. RUS will
notify the Borrower in writing of its determination.
Sec. 1789.157 Consultant contract.
(a) The Federal Acquisition Regulation (FAR), 48 CFR Ch. 1, and the
Agriculture Acquisition Regulation (AGAR), 48 CFR Ch. 4, shall apply to
all Consultant Contracts entered into pursuant to this part except as
provided in this section.
(1) Contracts for Legal Consultants shall provide for a technical
representative from OGC.
(2) All Consultant Contracts shall provide for an escrow account
funding mechanism pursuant to this part and for the government's sole
discretion in determining whether payments are to be made from the
Escrow Account to the Consultant.
(3) All Consultant Contracts shall provide that payment of all
obligations for work performed thereunder must be satisfied by amounts
available in the Escrow Account; with the exception of the annual
retainer fee, if any, Consultants shall not be entitled to any payments
from the government.
(b) The provisions of paragraph (a) of this section shall be given
prominent emphasis in requests for proposals issued under this part.
Sec. 1789.158 Implementation.
(a) Upon making a determination to go forward with Borrower funding
for consulting services, RUS shall initiate a procurement request for a
Consultant to provide the services. The government may either contract
with a Consultant on a case by case basis or elect to use a Consultant
pursuant to an outstanding Retainer Contract. The Borrower will not be
informed of the Consultant selected until such time as the government
provides the information set forth in paragraph (c)(3) of this section.
(b) If the government determines to contract with a Consultant on a
case by case basis, the government shall notify the Borrower of the
applicable procedures.
(c) If the government determines to contract with a Consultant under
an outstanding Retainer Contract, the following procedures will normally
apply:
(1) Pursuant to the terms of the contract, the government will
prepare a draft Task Order requesting consultant services in connection
with the review of the Borrower's Application. The draft Task Order
shall set forth for the Consultant's review and acceptance, a
description of the services to be provided and applicable time frames
for the provision of such services.
(2) The government will request that the Consultant:
(i) Notify the government as to the acceptability of the form and
substance of the draft Task Order;
(ii) Notify the government as to its ability to provide a
satisfactory conflict of interest certification consistent with the
requirements of the FAR (48 CFR ch. 1); and
(iii) Provide a cost estimate for the draft Task Order.
(3) When the government is satisfied with the response(s) received
pursuant to paragraph (c)(2) of this section, the government shall
promptly provide to the Borrower:
(i) A copy of the draft Task Order identifying the Consultant;
(ii) The Consultant's cost estimate for the draft Task Order; and
[[Page 1186]]
(iii) Contract information required to enable the Borrower to
develop a Funding Agreement, an Escrow Agreement and an Indemnification
Agreement (the ``agreements'').
(4) The Borrower shall develop and submit to the government for
approval executed originals of:
(i) The agreements; and
(ii) A certified copy of a resolution of the board of directors
authorizing the Borrower to enter into the agreements and to take such
other action as is necessary to effect the purposes of the agreements.
(5) Upon receiving written RUS approval of the agreements and the
form and substance of the board resolution, the Borrower shall:
(i) Establish and fund the Escrow Account; and
(ii) Provide written notice to the government of the Escrow Account
number, the funding thereof, and such other information as required
pursuant to the agreements.
(6) After the Borrower has funded the Escrow Account, the government
shall issue Task Order(s) for consultant services in accordance with the
terms and conditions of the applicable Retainer Contract.
Sec. 1789.159 Contract administration.
The government shall be solely responsible for the administration of
a Consulting Contract and shall have complete control over the scope of
the Consultant's work, the timetable for performance, the standards to
be applied in determining the acceptability of deliverables and the
approval of payment of Invoices.
Sec. 1789.160 Access to information.
The Borrower shall not have rights in nor right of access to the
work product of the Consultant. All analyses, studies, opinions,
memoranda, and other documents and information provided by the
Consultant pursuant to a Consulting Contract may be released and made
available to the Borrower only with the approval of RUS. This section
does not restrict release of information by RUS pursuant to the Freedom
of Information Act (5 U.S.C. 552(a)(2)) or other legal process.
Sec. 1789.161 Conflicts of interest.
The standard for determining organizational conflicts of interest
shall be as set forth in the FAR subpart 9.5 (48 CFR part 9, subpart
9.5); however, the identification of the existence of an organizational
conflict of interest may be made by either the Administrator or the
cognizant Contracting Officer. In the event an organizational conflict
of interest is determined to exist, the cognizant Contracting Officer
shall take the actions prescribed at FAR 9.504 (48 CFR 9.504) to attempt
to avoid, neutralize or mitigate the conflict. Should these actions be
deemed by the Administrator and the Contracting Officer to adequately
resolve the conflict, the contracting action with the offeror/contractor
may proceed. Should the Administrator or the Contracting Officer
determine that an organizational conflict of interest still exists such
that contract award or other contracting action cannot be taken (award
of task/delivery order, etc.) the offeror/contractor shall be so
informed by the Contracting Officer and be provided a reasonable
opportunity to respond in accordance with FAR 9.504(e) (48 CFR
9.504(e)). After considering the contractor's response, if it is found
by both the Administrator and Contracting Officer to remedy the conflict
of interest, the contracting action may proceed. If the Administrator
and Contracting Officer determine that the contractor's response does
not resolve the conflict of interest, yet continuing with the
contracting action with the offeror/contractor in question is considered
in the best interest of the United States, a waiver in accordance with
FAR 9.503 (48 CFR 9.503) may be executed. This waiver shall be submitted
under the Contracting Officer's signature and approved by the
Administrator. The Administrator has been delegated Head of Contracting
Activity authority by the USDA Senior Procurement Executive solely for
the purpose of waiver approval.
Sec. 1789.162 Indemnification agreement.
As a condition of approving Borrower funding, the government will
require the Borrower to enter into an Indemnification Agreement, in form
and substance satisfactory to RUS, providing
[[Page 1187]]
that the Borrower will indemnify and hold harmless the government and
any officers, agents or employees of the government from any and all
liability, including costs, fees, and settlements arising out of, or in
any way connected with the payment of the Consultant's fee pursuant to
the Consultant Contract. The Indemnification Agreement may recognize, as
a condition of liability thereunder, the rights of the borrower to
prompt notice, to use of counsel of its own choosing, and to
participation in any settlement of a claim against which indemnification
is sought.
Sec. 1789.163 Waiver.
RUS may waive any requirement or procedure of this subpart by
determining that its application in a particular situation would not be
in the government's interest, except that certain provision that the
subject contracts are subject to the provisions of the FAR (48 CFR ch.
1) and AGAR (48 CFR ch. 4).
Sec. Sec. 1789.164-1789.165 [Reserved]
Subpart B_Escrow Account Funding and Payments
Sec. 1789.166 Terms and conditions of funding agreement.
Funding Agreements between the Borrower and a Consultant shall be in
form and substance satisfactory to RUS and provide for, among other
matters, the following:
(a) Specific reference by number to the applicable Consulting
Contract entered into between the government and the Consultant;
(b) Specific reference by number to the applicable Task Order (where
applicable);
(c) A brief description of the Application;
(d) A requirement that Invoices make specific reference to:
(1) The applicable contract and Task Order(s); and
(2) The Escrow Account from which payment is to be made;
(e) A requirement that the Final Invoice for a Task Order be clearly
identified as such;
(f) A description of the services to be provided by the Consultant
to RUS and the applicable time frames for the provision of such
services;
(g) Agreement that the Borrower shall pay for the Consultant
services provided to RUS under the applicable contract through an Escrow
Account established pursuant to an Escrow Agreement, the Consultant
shall not provide services to RUS under the applicable contract unless
there are sufficient funds in the Escrow Account to pay for such
services, the Consultant shall seek compensation for services provided
under the applicable contract from, and only from, funds made available
through the Escrow Account, and the Consultant must submit all Invoices
to the government for approval.
(h) A form of Escrow Agreement satisfactory to the Borrower,
Consultant and the designated Third-party Commercial Institution;
(i) A schedule setting forth when and in what amounts the Borrower
shall fund the Escrow Account;
(j) Acknowledgment by the Consultant of the Indemnification
Agreement provided by the Borrower to the government; and
(k) The Funding Agreement shall not be effective unless and until
approved in writing by RUS.
Sec. 1789.167 Terms and conditions of escrow agreement.
Escrow Agreements between and among the Borrower, Consultant and
Third-party Commercial Institution shall be in form and substance
satisfactory to RUS and provide for, among other matters, the following:
(a) Specific reference by number to the applicable contract for
services;
(b) Specific reference by number to the applicable Task Order;
(c) Specific reference by number to the Escrow Account into which
funds are to be deposited;
(d) Invoices to specifically identify the applicable contract and
Task Order(s);
(e) Funds to be held in the Escrow Account by the escrow agent until
paid to the Consultant pursuant to the government's authorization;
(f) The Escrow Account to be closed and all remaining funds remitted
to
[[Page 1188]]
the Borrower after payment of the Final Invoice, unless otherwise
directed by the government;
(g) The government, the Consultant and the Borrower to have the
right to be informed, in a timely manner and in such form as they may
reasonably request, as to the status of and activity in the Escrow
Account; and
(h) The Escrow Agreement shall not be effective unless and until
approved in writing by RUS.
Sec. Sec. 1789.168-1789.175 [Reserved]