Rd instruction 1924-a table of Contents




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19


(5-12-87) SPECIAL PN

RD Instruction 1924-A

§1924.6 (a) (3) (iii) (C) (Con.)

(1) The contractor provides a surety bond, a letter of credit, or deposits in the greatest amount possible, and provides documentation indicating the reasons why amounts exceeding the proposed amount cannot be provided.


(2) The applicant agrees to the amount of the surety bond, letter of credit, or deposits proposed, and the State Director determines that the applicant has the financial capability to withstand any financial loss due to default of the contractor.
(3) In the opinion of the State Director, the proposed amount and the method of payment will provide adequate protection for the borrower and the Government against default of the contractor.
(4) The contract provides for partial payments not to exceed 90 percent of the value of the work in place for that portion of the total contract which is guaranteed by an acceptable surety bond, letter of credit, or deposits, and partial payments not to exceed 60 percent of the value of the work in place for that portion of the total contract which is not guaranteed by surety, letter of credit, or deposits.
Example:
Contractor has a surety bond which guarantees payment and performance in an amount of $150,000 which represents 75 percent of the total contract amount of $200,000. The contractor's first request for payment appears thus:
- value of work in place is $10,000.
- payment for work guaranteed by surety=
75 percent x $10,000 x 90 percent = $6,750
- Payment for work not guaranteed by surety=
25 percent x $10,000 x 60 percent = $1,500
- Authorized payment = $8,250

20

§1924.6(a)(3)(iii)(C)(4) (Con.) RD Instruction 1924-A

(Each partial payment shall reflect values for work guaranteed by surety, letter of credit, or deposits, and work not so guaranteed).
(iv) In cases where the contractor does not obtain payment and performance bonds in accordance with the surety requirements of paragraph (a)(3)(ii) of this section, or where an exception to the surety requirements is granted by the State Director, the following steps will be taken to protect the borrower and the government against latent obligations or defects in connection with the construction: (Revised
10-30-96, PN 267.)
(A) The contractor will furnish a properly executed corporate latent defects bond or a maintenance bond in the amount of 10 percent of the construction contract; or
(B) An unconditional and irrevocable letter of credit in the amount of 10 percent of the construction contract issued by a lending institution which has been reviewed and approved by OGC; or
(C) A cash deposit into an interest or non-interest bearing supervised bank account in the amount of 10 percent of the construction contract;
(D) The period of protection against latent obligations and/or defects shall be one year from the date of final acceptance of work by the owner and RHS;
(E) Final payment shall not be rendered to the contractor until the provisions of paragraphs (a)(3)(iv)(A), (B) or (C) of this section have been met;
(F) The contract will contain a clause indicating that the contractor agrees to provide surety or guarantee acceptable to the owner and RHS against latent obligations and/or defects in connection with the construction.
(4) Equal Opportunity. Section 1901.205 of subpart E of part 1901 of this chapter applies to all loans or grants involving construction contracts and subcontracts in excess of $10,000.
(5) Labor Standards Provisions. The provisions of the Davis-Bacon and other related Acts, which are published in the Department of Labor regulations (29 CFR, parts 1, 3 and 5), will apply when the contract involves either LH grant assistance, or 9 or more units in a project being assisted under the HUD Section 8 housing assistance

payment program for new construction. (Revised 10-30-96, PN 267.)


21

(Revision 1)


(5-12-87) SPECIAL PN

RD Instruction 1924-A

§1924.6(a) (Con.)

(6) Historical and archaeological preservation. The provisions of subpart F of part 1901 of this chapter concerning the protection of historical and archaeological properties will apply to all construction financed, in whole or in part, by RHS loans and grants. These provisions have special applicability to development in areas designated by NRCS as Resource Conservation and Development (RC&D) areas. (See part 1942, subpart I of this chapter)


(Revised 10-30-96, PN 267.)
(7) Air and water acts. Under Executive Order 11738, all loans or grants involving construction contracts for more than $100,000 must meet all the requirements of Section 114 of the Clean Air Act (42 U.S.C. 7414) and section 308 of the Water Pollution Control Act (33 U.S.C., section 1813). The contract should contain provisions obligating the contractor as a condition for the award of the contract as follows:
(i) To notify the owner of the receipt of any communication from Environmental Protection Agency (EPA) indicating that a facility to be utilized in the performance of the contract is under consideration to be listed on the EPA list of Violating Facilities. Prompt notification is required prior to contract award.
(ii) To certify that any facility to be utilized in the performance of any nonexempt contractor subcontract is not listed on the EPA list of Violating Facilities as of the date of contract award.
(iii) To include or cause to be included the above criteria and requirements of paragraphs (a)(7)(i) and (ii) of this section in every nonexempt subcontract, and that the contractor will take such action as the Government may direct as a means of enforcing such provisions.
(8) Architectural barriers. In accordance with the Architectural Barriers Act of 1968, (Pub. L. 90-480) as implemented by the General Services Administration regulations (41 CFR 101-19.6) and section 504 of the Rehabilitation Act of 1973 (Pub. L. 93-112) as implemented by 7 CFR, parts 15 and 15b, all facilities financed with RHS loans and grants and which are accessible to the public or in which people with disabilities may be employed or reside must be developed in compliance with this Act. Copies of the Act and Federal accessibility design standards may be obtained from the Executive Director, Architectural and Transportation Barriers Compliance Board, Washington, D.C. 20201. (Revised 10-30-96, PN 267.)

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