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RUS Form 397, Special Equipment Contract (Including Installation)

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Rural Utilities Service, USDA.


Final rule.


The Rural Utilities Service (RUS) is amending its regulation on RUS Telecommunications Standards and Specifications for Material, Equipment and Construction to revise RUS Form 397, Special Equipment Contract (including installation). This contract incorporates amendments currently attached to the RUS Form 397, Special Equipment Contract, and updates contract terms and format.


September 25, 2000.

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John J. Schell, Chief, Inside Plant Branch, Telecommunications Standards Division, Rural Utilities Service, U.S. Department of Agriculture, STOP 1598, 1400 Independence Ave., SW, Washington, DC 20250-1598, telephone number (202) 720-0671.

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Executive Order 12866

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

Executive Order 12372

This final rule is excluded from the scope of Executive Order 12372, Intergovernmental Consultation, which may require a consultation with State and local officials. See the final rule related notice entitled, “Department Programs and Activities Excluded from Executive Order 12372” (50 FR 47034).

Executive Order 12988

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. RUS has determined that this rule meets the applicable standards provided in section 3 of the Executive Order. In accordance with the Executive Order and the rule: (1) All state and local laws and regulations that are in conflict with this rule will be preempted; (2) no retroactive effort will be given to this rule; and, (3) in accordance with § 212(c) of the Department of Agriculture Reorganization Act of 1994 (7 U.S.C. 6912(c)), administrative appeal procedures, if any, must be exhausted prior to initiating litigaton against the Department or its agencies.

Regulatory Flexibility Act Certification

RUS has determined that this final rule will not have a significant economic impact on a substantial number of small entities, as defined by the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The RUS telecommunications program provides loans to borrowers at interest rates and terms that are more favorable than those generally available from the private sector. RUS borrowers, as a result of obtaining federal financing, receive economic benefits that exceed any direct economic costs associated with complying with RUS regulations and requirements.

Information Collection and Recordkeeping Requirements

This rule contains no new reporting or recordkeeping burdens under OMB control number 0572-0059 that would require approval under the Paperwork Reduction Act of 1995 (44 U.S.C., Chapter 35).

National Environmental Policy Act Certification

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

Catalog of Federal Domestic Assistance

The program described by this proposed rule is listed in the Catalog of Federal Domestic Assistance programs under number 10.851, Rural Telephone Loans and Loan Guarantees, and number 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. Telephone: (202) 512-1800.

Unfunded Mandates

This rule contains no Federal mandates (under the regulatory provisions of Title II of the Unfunded Mandates Reform Act of 1995) for State, local, and tribal governments for the private sector. Thus, this rule is not Start Printed Page 51750subject to the requirements of section 202 and 205 of the Unfunded Mandates Reform Act of 1995.


The last revision to the RUS Form 397 was December 1967. Since that date, divestiture, competition, legislation and regulation have changed business practices in the telecommunications industry. Contract terms and obligations in RUS Form 397 have been modified and updated to reflect present business practices as well as changes in technology, services and equipment. Notable advances in fiber optics, digital subscriber line (DSL) and radio technology have made many new services available. Consequently, significant changes have been made in the way business is conducted in the telecommunications industry.

The RUS Form 397 incorporates those changes into the Special Equipment Contract. The main changes to the contract include but are not limited to the following: (1) Format for listing bid prices and alternatives; (2) delivery and installation requirements; (3) payments and releases of lien requirements; (4) particular undertakings of the bidder requirements; (5) Equal Employment requirements; (6) payments to the contractor; (7) insurance; (8) liquidated damages; and (9) completion of the project. The above actions will make it possible for RUS telecommunications borrowers to continue to provide their subscribers with the most modern and efficient telecommunications service.

A proposed rule was issued in the Federal Register on February 20, 1998, at 63 FR 8582, requesting comments on these changes. The comment period closed April 21, 1998. Public comments were received from Hart Engineers, Martin and Associates, Hicks & Ragland Engineering Company and Associated Communications & Research Services. The comments with responses are presented as follows:

Although not a requirement in the current RUS Form 397, Special Equipment Contract, competitive bidding procedures with sealed bid requirements were added to the proposed contract. All four commenters stated the competitive bidding process would increase the time and costs associated with the purchase of transmission equipment. As part of RUS efforts in governmental streamlining and empowering the recipients of RUS loans, RUS will place more responsibility with the borrowers to ensure a more cost effective review process while maintaining the required loan security. Hence, the procurement of special equipment will follow the procedures outlined in 7 CFR Part 1753, Telecommunication Systems Construction Policies and Procedures, § 1753.68, giving the borrower the option to use the full competitive bidding process.

The proposed contract added the requirement that a contract amendment needed to be prepared and approved by RUS to revise delivery or completion of project scheduled dates. A commenter stated this change would increase the time and engineering costs associated with granting the manufacturer a time extension. RUS will remove the added requirement and continue using the procedure whereby the owner can grant a time extension by letter to the vendor without issuing a contract amendment.

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List of Subjects in 7 CFR Part 1755

  • Loan programs-communications
  • Reporting and recordkeeping requirements
  • Rural areas
  • Telephone
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For the reasons set forth in the preamble, Chapter XVII of Title 7 of the Code of Federal Regulations is amended as follows:

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

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Authority: 7 U.S.C. 901 et seq., 1921 et seq., 7941 et seq.

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2. Section 1755.30(c)(27) is revised to read as follows:

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List of telecommunications standard contract forms.
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(c) * * *

(27) RUS Form 397, issued September 25, 2000, Special Equipment Contract (Including Installation).

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Dated: August 17, 2000.

Jill Long Thompson,

Under Secretary, Rural Development.

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[FR Doc. 00-21774 Filed 8-24-00; 8:45 am]