[Federal Register Volume 76, Number 78 (Friday, April 22, 2011)]
[Proposed Rules]
[Pages 22631-22633]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-9630]
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Proposed Rules
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains notices to the public of
the proposed issuance of rules and regulations. The purpose of these
notices is to give interested persons an opportunity to participate in
the rule making prior to the adoption of the final rules.
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Federal Register / Vol. 76, No. 78 / Friday, April 22, 2011 /
Proposed Rules
[[Page 22631]]
DEPARTMENT OF AGRICULTURE
Rural Housing Service
Rural Business-Cooperative Service
Rural Utilities Service
Farm Services Agency
7 CFR Part 1942
RIN 0575-AC78
Community Facility Loans
AGENCY: Rural Housing Service, Rural Business-Cooperative Service,
Rural Utilities Service, Farm Services Agency, USDA.
ACTION: Proposed rule.
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SUMMARY: The U.S. Department of Agriculture proposes to amend its
regulations to maintain consistency with standard industry contracts
and to make minor revisions to streamline processing applications.
These revisions are needed to conform with market and industry changes
by updating, clarifying, and modifying the regulatory requirements for
community facility construction and development. The amendments to the
regulation will streamline current processes and provide for faster
reviews of alternate construction contract methods (such as Design/
Build and Construction Management) by the Agency's National Office.
This rule can also apply to applications under the Rural Business-
Cooperative Service Programs.
DATES: Written comments on the proposed rule must be received on or
before June 21, 2011 to be assured of consideration.
ADDRESSES: You may submit comments on this rule by any of the following
methods:
Federal eRulemaking Portal: http://www.regulations.gov.
Follow the instructions for submitting comments.
Mail: Submit written comments via the U.S. Postal Service
to the Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, STOP 0742, 1400 Independence Avenue, SW.,
Washington, DC 20250-0742.
Hand Delivery/Courier: Submit written comments via Federal
Express Mail or another mail courier service requiring a street address
to the Branch Chief, Regulations and Paperwork Management Branch, U.S.
Department of Agriculture, 300 7th Street, SW., 7th Floor, Suite 701,
Washington, DC 20024.
All written comments will be available for public inspection during
regular work hours at the 300 7th Street, SW., address listed above.
FOR FURTHER INFORMATION CONTACT: William Downs, Technical Support
Branch, Program Support Staff, Rural Housing Service, U.S. Department
of Agriculture, STOP 0761, 1400 Independence Avenue, SW., Washington,
DC 20250-0761; Telephone: 202-720-1499; FAX: 202-690-4335; E-mail:
[email protected].
SUPPLEMENTARY INFORMATION:
Classification
This 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).
Civil Justice Reform
This rule has been reviewed in accordance with Executive Order
12988, Civil Justice Reform. Except where specified, all State and
local laws and regulations that are in direct conflict with this rule
will be preempted. Federal funds carry Federal requirements. No person
is required to apply for funding under this program, but if they do
apply and are selected for funding, they must comply with the
requirements applicable to the Federal program funds. This rule is not
retroactive. It will not affect agreements entered into prior to the
effective date of this rule. Before any judicial action may be brought
regarding the provisions of this rule, the administrative appeal
provisions of 7 CFR parts 11 and 780 must be exhausted.
Regulatory Flexibility Act
The Administrator of the Agency has determined that this rule will
not have a significant economic impact on a substantial number of small
entities as defined in the Regulatory Flexibility Act (5 U.S.C. 601 et
seq.). New provisions included in this rule will not impact a
substantial number of small entities to a greater extent than large
entities. The construction requirements and policies being revised will
apply equally to all applicants, regardless of size of the applicant
organization. Further, these changes will give all applicants greater
flexibility in developing projects. Therefore, a regulatory flexibility
analysis was not performed.
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) Public
Law 104-4 establishes requirements for Federal agencies to assess the
effects of their regulatory actions on State, local, and tribal
governments and the private sector. Under section 202 of the UMRA,
Rural Development must prepare, to the extent practicable, a written
statement including a cost benefit analysis, for proposed and final
rules with ``Federal mandates'' that may result in expenditures to
State, local or tribal governments, in the aggregate, or to the private
sector, of $100 million or more in any one year. With certain
exceptions, section 205 of UMRA requires Rural Development to identify
and consider a reasonable number of regulatory alternatives and adopt
the least costly, most cost effective or least burdensome alternative
that achieves the objectives of the rule. This proposed rule contains
no Federal mandates for State, local, and tribal governments or the
private sector. Thus, this rule is not subject to the requirements of
sections 202 and 205 of the Unfunded Mandates Reform Act of 1995.
Environmental Impact Statement
This document has been reviewed in accordance with 7 CFR part 1940,
subpart G, ``Environmental Program.'' The Agency has determined that
this action does not constitute a major Federal action significantly
affecting the quality of the human environment, and, in accordance with
the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321 et
seq., an Environmental Impact Statement is not required.
Programs Affected
The programs affected are listed in the Catalog of Federal Domestic
Assistance under Numbers 10.769 Rural Business
[[Page 22632]]
Enterprise Grants, 10.773 Rural Business Opportunity Grant, 10.766
Community Facilities Loans and Grants, 10.767 Intermediary Relending
Program, and 10.854 Rural Economic Development Loan and Grant.
Federalism
The policies contained in this rule do not have any substantial
direct effect on States, on the relationship between the National
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Nor does this
rule impose substantial direct compliance costs on State and local
governments. Therefore, consultation with the States is not required.
Intergovernmental Review
The Agency conducts intergovernmental consultation in the manner
delineated in RD Instruction 1940-J, ``Intergovernmental Review of
Rural Development Programs and Activities,'' and in 7 CFR part 3015,
subpart V. The changes being considered are not subject to the
provisions of Executive Order 12372, which requires intergovernmental
consultation with State and local officials. An intergovernmental
review for this revision is not required or applicable.
Paperwork Reduction Act
There are no new reporting and recordkeeping requirements
associated with this rule.
E-Government Act Compliance
The Agency is committed to complying with the E-Government Act, to
promote the use of the Internet and other information technologies to
provide increased opportunities for citizen access to Government
information and services, and for other purposes. For information
pertinent to E-GOV compliance related to this proposed rule, please
contact Larry Fleming, 202-720-8547.
Background
The proposed change will remove restrictive language in 7 CFR part
1942 that limits projects using alternate construction methods to loans
only, and will allow grant funds to be used with design/build and other
alternate construction methods. When the regulation was written in the
1970's design/build and construction management were unique forms of
contracting that were not commonly used. It was determined that the
Agency would not allow grant funds to be used for alternate
construction methods. Over time, design/build and construction
management became more common in the construction industry. The success
or failure rate of such contracting methods has proven to be no greater
than the traditional design/bid/build method. Therefore, the Agency has
determined that the funding source--loans or grants--should have no
determination on the construction method used. Further, these changes
streamline processing by allowing contracts up to $250,000 to be
reviewed by the State Office. The present regulation, which went into
effect in the 1970's, requires all projects over $100,000 be reviewed
by the National Office. Additional language is added to describe
alternate construction methods: Design/build, construction management
constructor, construction management advisor, and fast tracking.
Presently, only a definition is given. The new language will help field
staff and applicants understand when a project qualifies as an
alternate construction method. None of the changes proposed are
statutory requirements, and the Agency has determined that these
changes better reflect current conditions within the construction
industry, and will better streamline processing for applicants.
This change revises the Agency Guide documents used with American
Institute of Architects (AIA) contracts for construction to reflect
their updated contracts. The AIA revises their contract documents every
10 years. Contracts referenced in the present regulation are replaced
with the new updated contracts. New Guides are added for AIA contracts
for design/build and construction management. Providing these Guides
within the Agency regulation eliminates the need for National Office
review of these projects, which reduces review time for the applicant.
A new Guide is added listing the Agency requirements for review of
alternate contract methods, to assist field staff and applicants.
List of Subjects in 7 CFR Part 1942
Community development, Community facilities, Loan programs--Housing
and community development, Loan security, Rural areas.
For the reasons set forth in the preamble, Chapter XVIII, Title 7
of the Code of Federal Regulations is amended as follows:
PART 1942--ASSOCIATIONS
1. The authority citation for part 1942 continues to read as
follows:
Authority: 7 U.S.C. 1926; 7 U.S.C. 1927, 7 U.S.C. 7901, and Pub.
L. 110-246.
Subpart A--Community Facility Loans
2. Section 1942.9 is amended by revising paragraph (b) introductory
text and (b)(1) to read as follows:
Sec. 1942.9 Planning, bidding, contracting, and constructing.
* * * * *
(b) Contract approval. The State Director or designee is
responsible for approving all construction contracts using legal advice
and guidance of OGC as necessary. The use of a contracting method under
Sec. 1942.18(1) of this subpart exceeding $250,000 must be concurred
by the National Office. When an applicant requests such concurrence,
the State Director will submit the following to the National Office.
(1) State Director's and Rural Development engineer/architect's
comments and recommendations, and if noncompetitive negotiation per
1942.18(k)(4) is accepted by the Agency, submit an evaluation of
previous work of the proposed construction firm.
* * * * *
3. Section 1942.18, paragraph (l) is amended to read as follows:
Sec. 1942.18 Community facilities--Planning, bidding, contracting
constructing.
* * * * *
(l) Alternate contracting methods. The services of the consulting
engineer or architect and the general construction contractor shall
normally be procured from unrelated sources in accordance with
paragraph (j)(7) of this section. Alternate contracting methods which
combine or rearrange design, inspection or construction services (such
as design/build or construction management/constructor) may be used
with Rural Development written approval.
(1) The owner will request Rural Development approval by providing
the following information to the State Office for review and approval
by the State Architect:
(i) The owner's written request to use an unconventional
contracting method with a description of the proposed method.
(ii) A proposed scope of work describing in clear, concise terms
the technical requirements for the contract. This would include a
nontechnical statement summarizing the work to be performed by the
contractor and the results expected. Also include the sequence in which
the work is to be performed and a proposed construction schedule.
(iii) A proposed firm-fixed-price contract for the entire project
which provides that the contractor shall be responsible for any extra
cost which
[[Page 22633]]
may result from errors or omissions in the services provided under the
contract and compliance with all Federal, State, and local requirements
effective on the contract execution date.
(iv) An evaluation of the contractor's performance on previous
similar projects in which the contractor acted in a similar capacity.
(v) A detailed listing and cost estimate of equipment and supplies
not included in the construction contract but which are necessary to
properly operate the facility.
(vi) Evidence that a qualified construction inspector who is
independent of the contractor has or will be hired.
(vii) Preliminary plans and outline specifications. However, final
plans and specifications must be completed and reviewed by Rural
Development prior to the start of construction.
(viii) The owner's attorney's opinion and comments regarding the
legal adequacy of the proposed contract documents and evidence that the
owner has the legal authority to enter into and fulfill the contract.
(2) The State Office may approve design/build or construction
management/constructor projects if the contract amount is equal to or
less than $250,000.
(3) If the contract amount exceeds $250,000, National Office prior
concurrence must be obtained in accordance with Sec. 1942.9(b) of this
subpart. Only that information required under Sec. 1942.9(b) of this
subpart must be provided to National Office Program Support Staff for
review. Additional information, such as plans and specifications, may
be submitted by the State Office, if a review of those items is
desired.
(4) The design/build method of construction is one in which the
architectural and engineering services, normally provided by an
independent consultant to the owner, are combined with those of the
General Contractor under a single source contract. These services are
commonly provided by a design/build firm, a joint venture between an
architectural firm and a construction firm, or a company providing pre-
engineered buildings and design services.
(5) The Construction Management/constructor (CMc), acts in the
capacity of a General Contractor and is actually responsible for the
construction. This type of construction management is also referred to
as Construction Manager ``At Risk''. The construction contract is
between the owner and the CMc. The CMc, in turn, may subcontract for
some or all of the work.
(6) The National Office may approve other alternative contact
methods, such as Construction Management/advisor (CMa), with a
recommendation from the State Office. The recommendation shall indicate
the circumstances which prove this method advantageous to the applicant
and the government. A CMa acts in an advisory capacity to the owner,
and the actual contract for construction is between the owner and a
prime contractor or multiple prime contractors. When a contract for an
architect and a CMa are being provided, care must be taken to assure
that separate professionals are not being paid to provide similar
services. Further, paragraph (e)(3) of this section discourages
separate contracts for construction.
(7) All alternate contracting method projects must comply with the
requirements for ``maximum open and free competition'' in paragraph
(j)(2) of this section. Choosing an alternate contracting method is not
a way to avoid competition. Further information on procurement methods,
which must be followed, is provided in paragraph (k) of this section.
* * * * *
Dated: April 1, 2011.
Dallas Tonsager,
Under Secretary, Rural Development.
Dated: April 11, 2011.
Michael Scuse,
Acting Under Secretary, Farm and Foreign Agricultural Services.
[FR Doc. 2011-9630 Filed 4-21-11; 8:45 am]
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