Rd instruction 1924-a table of Contents

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(Revision 1)

RD Instruction 1924-A

§1924.6 (a) (9)

(9) National Environmental Policy Act. Loans and grants, including those being assisted under the HUD section 8 housing assistance payment program for new construction, must comply with the environmental review requirements in accordance with 7 CFR part 1970. (Revised 04-01-2016, SPECIAL PN.)
(10) Obtaining bids and selecting a contractor.
(i) The applicant may select a contractor and negotiate a contract or contact several contractors and request each to submit a bid. For complex construction projects, refer also to §1924.13 (e) of this subpart.
(ii) When a price has already been negotiated or an applicant and a contractor, the County Supervisor, District Director or other appropriate Rural Development official will review the proposed contract. If the contractor is qualified to perform the development and provide a warranty of the work and the price compares favorably with the cost of similar construction in the area, further negotiation is unnecessary. If the Rural Development official determines the price is too high or otherwise unreasonable, the applicant will be requested to negotiate further with the contractor. If a reasonable price cannot be negotiated or if the contractor is not qualified, the applicant will be requested to obtain competitive bids.
(iii) When an applicant has a proposed development plan and no contractor in mind, competitive bidding will be encouraged. The applicant should obtain bids from as many qualified contractors, dealers or tradespeople as feasible depending on the method and type of construction.
(iv) If the award of the contract is by competitive bidding, Form RD 1924-5, "Invitation for Bid (Construction Contract)," or another similar invitation bid form containing the requirements of Subpart E of Part 1901 of this chapter, may be used. All contractors from whom bids are requested should be informed of all conditions of the contract including the time and place of opening bids. Conditions shall not be established which would give preference to a specific bidder or type of bidder. When applicable, copies of Forms RD 1924-6 and RD 400-6, "Compliance Statement," also should be provided to the prospective bidders.
(11) Awarding the contract. The borrower, with the assistance of the County Supervisor or District Director, will consider the amount of the bids or proposals, and all conditions which were listed in the "Invitation for Bid." On the basis of these considerations, the borrower will select and notify the lowest responsible bidder.


(Revision 1)

(5-12-87) SPECIAL PN

RD instruction 1924-A

§1924.6 (a) (11) (Con.)

(i) Before work commences, the County Supervisor, District Director or other Rural Development employee having knowledge of contracts and construction practices will hold a preconstruction conference with the borrower(s), contractor and architect/engineer (if applicable). The purpose of the conference is to reach a mutual understanding of each party's responsibilities under the terms and conditions of the contract documents and the loan agreement during the construction and warranty periods. Form RD 1924-16, "Record of Preconstruction Conference," may be used as a guide for an agenda.

(ii) A summary of the items covered will be entered in the running case record.
(iii) The contract will then be prepared, signed and copies distributed in accordance with the FMI for Form RD 1924-6.
(iv) After a borrower/contractor's contract or subcontract in excess of $10.000 is received in the Rural Development County or District Office, the responsible Rural Development official will send within 10 calendar days of the date of the contract or subcontract, a report similar in form and content to Exhibit C of Subpart E of Part 1901 of this chapter to the Area Director, Office of Federal Contract Compliance Programs, U. S. Department of labor, at the applicable address listed in Exhibit E, Subpart E of Part 1901 of this chapter. The report must contain, at least, the following information: Contractor's name, address and telephone number; employer's identification number; amount, starting date and planned completion date of the contract; contract number; and city and DOL region of the contract site. The information for this report should be obtained from the contractor when the contract is awarded.
(12) Payments for work done by the contract method.
(i) Payments will be made in accordance with one of the following methods unless prohibited by state statute, in which case the State Director shall issue a State Supplement to this section:
(A) The "One Lump-Sum" payment method will be used when the payment will be made in one lump-sum for the whole contract.


(Revision 1)

RD Instruction 1924-A

§1924.6 (a) (12) (i) (Con.)

(B) The "Partial payments not to exceed 60 percent of the value of the work in place" payment method will be used when the contractor does not provide surety bond, a letter of credit, or deposits.

(C) The "Partial payments in the amount of 90 percent of the value of the work in place and of the value of the materials suitably stored at the site" payment method will be used when the contractor provides a surety bond equal to the total contract amount.
(D) The "Partial payments which reflect the portions of the contract amount which is guaranteed" method will be used when the contractor provides surety bonds, a letter of credit, or deposits less than the total amount of the contract in accordance with the provisions of paragraph (a)(3)(iii)(C) of this section.
(ii) When Form RD 1924-6 is used, the appropriate payment clause will be checked and the other payment clauses not used will be effectively crossed out.
(iii) When a contract form other than Form RD 1924-6 is used, the payment clause must conform with paragraph (a) (12)(i) of this section and the appropriate clause as set forth in Form RD 1924-6.
(iv) The borrower and Rural Development must take precautionary measures to see that all payments made to the contractor are properly applied against bills for materials and labor procured under the contract. Prior to making any partial payment on any contract where a surety bond is not used, the contractor will be required to furnish the borrower and the Rural Development with a statement showing the total amount owed to date for materials and labor procured under the contract. The contractor also may be required to submit evidence showing that previous partial payments were applied properly. When the borrower and the County supervisor or District Director have reason to believe that partial payments may not be applied properly, checks may be made jointly to the contractor and persons who furnished materials and labor in connection with the contract.
(v) When partial payments are requested of the contractor and approved by the owner, the amount of the partial payment will be determined by one of the following methods:
(A) Based upon the percentage completed as shown on a recently completed and properly executed Form RD 1924-12, "Inspection Report."
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