96-23512. Use of Consultants Funded by Borrowers  

  • [Federal Register Volume 61, Number 180 (Monday, September 16, 1996)]
    [Rules and Regulations]
    [Pages 48605-48609]
    From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
    [FR Doc No: 96-23512]
    
    
    
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    Rules and Regulations
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    Federal Register / Vol. 61, No. 180 / Monday, September 16, 1996 / 
    Rules and Regulations
    
    [[Page 48605]]
    
    
    
    DEPARTMENT OF AGRICULTURE
    
    Rural Utilities Service
    
    7 CFR Part 1789
    
    RIN 0572-AB17
    
    
    Use of Consultants Funded by Borrowers
    
    AGENCY: Rural Utilities Service, USDA.
    
    ACTION: Final rule.
    
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    SUMMARY: The Rural Utilities Service (RUS) hereby establishes 
    procedures and policies pursuant to which a borrower under the RE Act 
    may fund consultants used by the Administrator for financial, legal, 
    engineering, environmental and other technical advice and services. The 
    use of the consultants will assist RUS in the expeditious review of 
    applications for financial assistance or other approvals sought by 
    borrowers.
    
    EFFECTIVE DATE: This rule is effective October 16, 1996.
    
    FOR FURTHER INFORMATION CONTACT: F. Lamont Heppe, Jr., Director, 
    Program Support and Regulatory Analysis, U.S. Department of 
    Agriculture, Rural Utilities Service, STOP 1522, Washington, D.C. 
    20250-1522. Telephone: (202) 720-0736.
    
    SUPPLEMENTARY INFORMATION: This final rule has been determined to be 
    not significant for purposes of Executive Order 12866, Regulatory 
    Planning and Review, and therefore has not been reviewed by the Office 
    of Management and Budget (OMB). The Administrator of RUS has determined 
    that a rule relating to the RUS electric loan program is not a rule as 
    defined in the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), and, 
    therefore, the Regulatory Flexibility Act does not apply to this rule. 
    The Administrator of RUS has determined that this rule will not 
    significantly affect the quality of the human environment as defined by 
    the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.). 
    Therefore, this action does not require an environmental impact 
    statement or assessment. This rule is excluded from the scope of 
    Executive Order 12372, Intergovernmental Consultation, which may 
    require consultation with State and local officials. A Notice of Final 
    Rule titled Department Programs and Activities Excluded from Executive 
    Order 12372 (50 FR 47034) exempts RUS electric loans and loan 
    guarantees from coverage under this Order. This rule has been reviewed 
    in accordance with Executive Order 12988 , Civil Justice Reform. RUS as 
    determined that this rule meets the applicable standards provided in 
    Section 3 of the Executive Order.
        The programs covered by this rule are listed in the Catalog of 
    Federal Domestic Assistance Programs under numbers 10.850, Rural 
    Electrification Loans and Loan Guarantees, 10.851, Rural Telephone 
    Loans and Loan Guarantees, and 10.852, Rural Telephone Bank Loans. This 
    catalog is available on a subscription basis from the Superintendent of 
    Documents, the United States Government Printing Office, Washington, DC 
    20402-9325.
    
    Information Collection and Recordkeeping Requirements
    
        The recordkeeping and reporting burden contained in this rule will 
    be submitted to the Office of Management and Budget (OMB) for approval 
    under control number 0572-0108. The paperwork contained in this rule 
    will not be effective until approved by OMB.
        Send questions or comments regarding any other aspect of this 
    collection of information, including suggestions for reducing the 
    burden, to F. Lamont Heppe, Jr., Director, Program Support and 
    Regulatory Analysis, U.S. Department of Agriculture, Rural Utilities 
    Service, STOP 1522, Washington, D.C. 20250-1522.
    
    Background
    
        On January 2, 1996, at 61 FR 21, the Rural Utilities Service (RUS) 
    published a proposed rule, 7 CFR Part 1789, Use of Consultants Funded 
    by Borrowers, which proposed the agency's policies and procedures 
    pursuant to which a borrower may fund consultants used by the 
    Administrator for financial, legal, engineering, environmental and 
    other technical advice and services.
        A total of eleven different organizations commented on the proposed 
    rule. Comments were received from the National Rural Electric 
    Cooperative Association (NRECA), the National Telephone Cooperative 
    Association, CoBank, the National Rural Utilities Cooperative Finance 
    Corporation (CFC), four borrowers, an engineering services firm, a law 
    firm and the U.S. Department of Treasury.
        Comments by the NRECA asserted that staffing constraints at RUS and 
    the Office of General Counsel (OGC) have often caused burdensome and 
    costly delays for RUS borrowers in their applications and approval 
    requests. NRECA recommended allowing the borrower to initiate RUS' 
    consideration of use of a borrower-funded consultant. NRECA observed 
    that following the lengthy full and open competition provisions of the 
    Federal Acquisition Regulation (FAR) would, in many cases, negate the 
    usefulness of hiring a third party consultant, and urged that RUS 
    consider authorized exceptions to FAR's full competition requirements.
        RUS is of the view that the rule does not prohibit a borrower from 
    initiating a discussion with the applicable regional director; however 
    a requirement that obligates RUS program officials to extensive 
    justification for turning down requests, is unnecessary and takes time 
    away from the administration of RUS programs.
        RUS agrees that the application of the FAR may diminish the 
    usefulness of hiring a third party consultant and will consider 
    authorized exceptions to FAR's full competition requirements. RUS will 
    continue to investigate ways in which the procurement process can be 
    streamlined.
        NRECA and two other commentators protested that the conflict of 
    interest provisions were too restrictive. They argue that timely 
    response to borrower approval requests required, in many cases, that 
    the consultant have extensive, ready knowledge of RUS programs. NRECA 
    stated that there is a relatively small cadre of lawyers, accountants, 
    and other professionals who are versed in the unique aspects of RUS 
    programs. RUS is of the view that the agency has sufficient internal 
    expertise with respect to specific attributes of the cooperative 
    industry. However, the definition of organizational conflict of 
    interest has
    
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    been modified to conform with the definition found in the FAR. The 
    determination of whether or not a conflict exists, using the FAR 
    definition, may be made by either the Administrator or the responsible 
    contracting officer.
        NRECA, CoBank and CFC commented that RUS should consider a letter 
    of credit payment mechanism as an alternative to the proposed escrow 
    account arrangement. CFC and Oglethorpe supported direct payment from 
    borrowers to consultants. The use of a letter of credit payment 
    mechanism was one of the first inquiries made by RUS as the agency 
    sought to implement this law. RUS is of the view that direct payment by 
    borrowers to consultants can undermine the integrity of the client-
    consultant relationship. The final rule is unchanged from the proposed 
    rule with respect to the payment mechanism, but RUS will continue to 
    explore whether a letter of credit mechanism may be substituted for the 
    escrow account mechanism.
        One commenter argued that borrowers should be able to select the 
    consultant used by RUS. Alternatively, the commenter said that a 
    borrower should be able to veto RUS' selection of a consultant. Nothing 
    in the proposed rule prohibits borrowers from making recommendations or 
    suggestions to RUS regarding the choice of consultant. Under the final 
    rule, the government retains the authority to select the consultant to 
    be used.
        Oglethorpe proffered the third party contracting process set up by 
    the Federal Energy Regulatory Commission (FERC) for preparing 
    environmental impact statements as a model for RUS consultant 
    procurements. RUS followed the FERC developments with great interest 
    and actively explored the possibility of emulating it, with some 
    modifications. The agency was particularly interested in adopting the 
    ``pre-qualified list'' approach. The statutory authorizations are 
    sufficiently different so as to preclude the agency from emulating the 
    FERC third party contracting process. Among other examples of how the 
    FERC process differs from RUS, the guidance documents issued by FERC in 
    this regard emphasize that those are not federal procurements.
        The only law firm which commented urged that the use of legal 
    consultants should be kept to an absolute minimum. The firm voiced the 
    concern that the proposed rule will create a class of ``professional 
    consultants'' with a vested interest in promoting their participation 
    in RUS transactions. From this, the firm projects the possibility of a 
    proliferation in the use of legal consultants by RUS and its borrowers, 
    thereby resulting in significantly increased time consumption and 
    transaction costs for matters involving RUS approval.
        RUS believes that many aspects of this final rule will be self-
    policing. The use of borrower funded consultants is a joint decision on 
    the part of RUS and the borrower. If borrowers elect to incur the costs 
    associated with funding third party consultants, it will be because it 
    is to their advantage to do so. Proliferation under those circumstances 
    is not necessarily undesirable.
    
    List of Subjects in 7 CFR Part 1789
    
        Administrative practice and procedure, Electric power, Electric 
    utilities, Legal services, Loan programs--energy, Loan programs--
    telecommunications, Reporting and recordkeeping requirements.
    
        For the reasons stated, RUS amends 7 CFR Chapter XVII to add a new 
    part 1789 to read as follows:
    
    PART 1789--USE OF CONSULTANTS FUNDED BY BORROWERS
    
    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.
    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.).
    
    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.
    
    [[Page 48607]]
    
        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.
        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 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
    
    [[Page 48608]]
    
    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
        (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 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).
    
    
    Secs. 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;
    
    [[Page 48609]]
    
        (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 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.
    
    
    Secs. 1789.168-1789.175  [Reserved]
    
        Dated: September 6, 1996.
    Jill Long Thompson,
    Under Secretary, Rural Development.
    [FR Doc. 96-23512 Filed 9-13-96; 8:45 am]
    BILLING CODE 3410-15-P
    
    
    

Document Information

Effective Date:
10/16/1996
Published:
09/16/1996
Department:
Rural Utilities Service
Entry Type:
Rule
Action:
Final rule.
Document Number:
96-23512
Dates:
This rule is effective October 16, 1996.
Pages:
48605-48609 (5 pages)
RINs:
0572-AB17: Use of Consultants Funded by Borrowers
RIN Links:
https://www.federalregister.gov/regulations/0572-AB17/use-of-consultants-funded-by-borrowers
PDF File:
96-23512.pdf
CFR: (21)
7 CFR 9.5)
7 CFR 1789.158(c)(3)(iii)
7 CFR 9.504(e)
7 CFR 1789.150
7 CFR 1789.151
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