Rd instruction 1924-a table of Contents




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57

(Revision 1)

(05-12-87) SPECIAL PN


RD Instruction 1924-A

§1924.13 (e)(1)(v)(H)(3) (Con.)


(ii) The 75 percent rule will apply when division of the sum of the amounts of the three largest subcontracts by the contract sum of the construction contract results in 75 percent or more.
(I) Qualified contracting entities. Contractors, subcontractors, material suppliers, and any other individual or organization sharing an identity of interest and providing materials or services for the project must certify that it is a viable, ongoing trade or business qualified and properly licensed to undertake the work for which it intends to contract. Form RD 1944-31 will be prepared and executed by the contracting entities. The form provides notification to the entities of the penalty, under law, for erroneously certifying to the statements contained therein. Debarment actions will be instituted against entities who fail to disclose an identity of interest in accordance with the provisions of RD Instruction 1940-M (available in any Rural Development office).
(vi) Method of payments. Partial payments may be requested in accordance with the terms of the construction contract on Form RD 1924-18, "Partial Payment Estimate," or other professionally recognized form that contains the architect's certification, approval of the owner, and conditional acceptable of Rural Development as shown in Form RD 1924-18.
(A) If interim financing is available at reasonable rates and terms for the construction period, such financing shall be obtained. Exhibit B of Subpart E of Part 1944 of this chapter shall be used to inform the interim lender that Rural Development will not close its loan until the project is substantially complete, ready for occupancy, evidence is furnished indicating that all bills have been paid or will be paid at loan closing for work completed on the project, all inspections have been completed and all required approvals have been obtained from municipal and governmental authorities having jurisdiction over the project. Upon presentation of proper partial payment estimates approved by the applicant and accepted by Rural Development, the interim lender may advance construction funds in accordance with the payment terms of the contract. It is suggested that partial payments not exceed 90 percent of the value of work in place and materials suitably stored on site. (Revised 2-25-88, SPECIAL PN.)

58

(Revision 1)


RD Instruction 1924-A

§1924.13 (e)(1)(vi) (Con.)

(B) When interim financing is not available, payments will be made in accordance with §1924.6(a)(12) of this subpart.
(vii) Exception to competitive bidding.
(A) For all applicants. An applicant may negotiate a construction contract provided the State Director grants an exception and documentation shows that:
(1) The contract price is competitive with other projects similar in construction and design being built in the area.
(2) The proposed contractor is experienced in construction of projects of similar size, scope, and complexity, and is recognized as a reliable builder.
(3) The proposed development work meets all requirements of this subpart.
(4) If appropriate for nonprofit organizations and public bodies, the application provides a copy of a duly authorized resolution by its governing body requesting Rural Development to permit awarding the construction contract without formal bidding.
(5) The applicant is permitted by state law, local law and/or organizational by-laws to negotiate a construction contract.
(6) The requirements of paragraphs (e)(1)(ii), (iii), (iv) and (v) of this section are met.
(B) In considering an exception to competitive bidding, the following additional steps will be taken in all cases.
(1) If, after a full review of the case documents by the appropriate members of the State Office staff, the State Director determines that the requirements have been met and the costs are reasonable, an exception to competitive bidding may be granted. Written documentation of the State Office review results will be placed in the application file.
(Revised 03-16-94, SPECIAL PN.)


59

(Revision 1)


(05-12-87) SPECIAL PN

RD Instruction 1924-A

§1924.13 (e)(1)(vii)(B) (Con.)

(2) If after the full review by the State Office staff, the State Director determines that the negotiated contract price is not competitive with other similar projects in construction and design being built in the area, the applicant will be requested to competitively bid the construction of the project in accordance with paragraph (e)(1)(i) of this section.


(3) If there is no agreement by Rural Development and the applicant as to the construction cost, the State Director will cease any further action on the preapplication and inform the applicant of the right to appeal in accordance with Subpart B of Part 1900 of this chapter.
(C) Any requests for exceptions to competitive bidding that are not covered in this section may be submitted to the National Office for consideration.
(viii) Exception to contract method - public body. With the approval of the National Office, the State Director may grant to a public body an exception to the requirement for using contract method construction under the following circumstances:
(A) The loan or grant is for repair or rehabilitation of existing facilities and it is not practicable to perform all work by the contract method.
(B) The applicant has the managerial ability and qualified employees necessary to complete the work successfully.
(C) The applicant submits a written request to the District Director indicating:
(1) The scope of work and construction timetable;
(2) What phases of work can be contracted and what cannot;
(3) Why is it not practicable to contract all phases;
(4) Management ability and employee qualifications for performing the work;

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