[Code of Federal Regulations] [Title 7, Volume 11] [Revised as of January 1, 2003] From the U.S. Government Printing Office via GPO Access [CITE: 7CFR1753.38] [Page 388-393] TITLE 7--AGRICULTURE CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE PART 1753--TELECOMMUNICATIONS SYSTEM CONSTRUCTION POLICIES AND PROCEDURES--Table of Contents Subpart E--Purchase and Installation of Central Office Equipment Sec. 1753.38 Procurement procedures. (a) Sealed competitive bidding. Sealed competitive bidding of central office equipment shall be in two steps: presentation and evaluation of suppliers' technical proposals, and compliance with the sealed competitive bidding procedure set forth in Sec. 1753.8(a). The procedure is as follows: (1) Solicitation of bids. (i) After RUS approval of the specifications and equipment requirements (required only for projects expected to exceed $500,000 or 25% of the loan, whichever is less), the borrower shall send ``Notice and Instructions to Bidders'' to suppliers with central office equipment included in the current Informational Publication (I.P.) 300-4, ``List of Materials Acceptable for Use on Telecommunications Systems of RUS Borrowers.'' I.P. 300-4 is a subscription item available from the Superintendent of Documents, U.S. Government Printing Office, P.O. Box 371954, Pittsburgh, PA 15250-7954. This ``Notice'' may also be sent to suppliers of non-domestic equipment currently accepted by RUS as meeting RUS technical standards. The ``Notice'' may also be sent to suppliers of central office equipment accepted for field trial. (ii) The ``Notice'' must set forth the method of evaluating bids and must require the submission of equipment lists and traffic calculations with the bids. (iii) RUS Contract Forms 525 or 545 shall be used, except that the ``Notice'' shall state that prior to the bid opening a technical session will be conducted with each supplier to resolve any questions related to the technical proposal submitted by the supplier. The suppliers' technical proposals should be requested for presentation 30 days in advance of the bid opening to enable sufficient time to make the technical evaluation. (iv) The borrower shall solicit bids as set forth in Sec. 1753.8(a)(2). The ``Notice'' shall be sent to at least three prospective bidders. A copy of the ``Notice'' and a list of such bidders shall be sent to RUS. (v) At the request of an invited supplier, the borrower shall provide two copies of the P&S. (2) Technical Sessions. (i) The borrower shall schedule individual technical sessions by the suppliers, notify each supplier of its scheduled date and time, notify the GFR of all scheduled dates and times, and request the following be available at the technical session: (A) Lists of equipment, material and software. (B) Proposed floor plan. (C) Power and heat dissipation calculations. (D) List of exceptions to plans and specifications. (E) Protection and grounding requirements. (F) Description of how office administration, maintenance and traffic collection are handled with step-by-step examples and printouts. (G) Explanation of processor and/or memory expansion required to meet ultimate size. This shall include discussions of software, processor memory, and hardware additions needed for line additions and the introduction of various future services; the relative costs of installing the necessary hardware and software initially as compared with the anticipated cost if installed at [[Page 389]] the time when the future services are to be offered. (H) Description of how special equipment such as loop tests, volunteer fire alarm circuit, line load control, etc., will function. (I) Description of method for translating initial office administration information into machine language, and proposal as to whether it will be done by the borrower or by the supplier. (J) A software license agreement (if required by the manufacturer) in the form indicated in Sec. 1753.38(c). (K) Any other items pertinent to the technical proposal, such as information regarding changes that have been made in hardware and software of the equipment that is of like manufacture to that presently in operation in the borrower's system. This shall include requirements for additional spare parts or training which have developed as a result of significant change in system device technology. (ii) The borrower shall review in detail all exceptions to the P&S. No exceptions will be accepted unless all bidders are notified, in writing, of the change in the specifications and permitted to incorporate the change in their proposal. (iii) If the technical proposal is not responsive, the borrower shall notify the supplier, in writing, that its proposal will not be given further consideration and why. (iv) Changes in the P&S resulting from the technical sessions shall be subject to RUS's review and approval. (v) After evaluation of the technical proposals and RUS approval of the changes to P&S (required only for projects that are expected to exceed $500,000 or 25% of the loan, whichever is less), sealed bids shall be solicited from only those bidders whose technical proposals meet P&S requirements. When fewer than three bidders are adjudged qualified by the borrower to bid, RUS approval must be obtained to proceed. Generally, RUS will grant such approval only if the borrower can demonstrate to the satisfaction of RUS that a good faith effort was made to obtain at least three competitive bids. This would be demonstrated if all suppliers currently listed in I.P. 300-4 were invited to submit technical proposals. (vi) The borrower shall invite the GFR to attend the technical sessions. (3) Bidding and award of contract. (i) All bids must be completed, dated, and signed prior to submission. (ii) The bid opening and award of contract shall be conducted in accordance with the procedure set forth in Sec. 1753.8(a). (iii) The spare parts bid shall always be priced separately and added to the base bid when determining the low bidder. (b) Single source negotiated procurement. If RUS has approved the borrower's request to procure central office equipment through single source negotiation in accordance with requirements contained in Sec. 1753.36(f), the borrower shall proceed in accordance with this subsection. (1) After RUS approval of the P&S and equipment requirements (required only for contracts expected to exceed $500,000 or 25% of the loan, whichever is less), the borrower shall send two complete copies of the approved P&S to the supplier an request that a proposal be submitted. (2) The borrower shall schedule a time and date for a technical session by the supplier and request that the items listed in Sec. 1753.38(a)(2)(i) be available at the technical session. In addition to these items, the supplier shall be requested to provide a description of the exact differences in hardware and software between the borrower's existing equipment and the proposed equipment so that the borrower can determine spare parts interchangeability, need for retraining, and the compatibility of administration of the old and new equipment. (3) If the contract is expected to exceed $500,000 or 25% of the loan, whichever is less, changes in the P&S resulting from the technical session shall be subject to RUS review and approval. (4) The submitted proposal shall be based on the agreed-upon results of the technical evaluation and must be complete, dated, and signed. (5) The borrower shall obtain an award recommendation from its engineer. (6) The following shall be sent to RUS for review and approval: [[Page 390]] (i) A copy of the engineer's recommendation to the borrower, and (ii) Evidence of acceptance of the proposal by the borrower, such as (A) A certified copy of the board resolution, or (B) A letter to RUS signed by an authorized corporate official. (7) RUS approval of the proposal will be conditioned upon the borrower obtaining prices that are consistent with current competitive prices. Upon RUS approval of the proposal, three copies of the contract shall be prepared with all specifications and proposal documents, and performance bonds, to be executed by the supplier and borrower. (8) The three complete, executed contracts shall be sent to the RUS Area Engineering Branch Chief for approval. (9) If RUS approves the contract, one copy will be returned to the borrower and one copy will be sent to the supplier. (10) Installation of the central office equipment and materials provided under RUS Contract Form 545 may be made in accordance with subpart I, if applicable, or by an approved Force Account Proposal (FAP). (c) Software license agreement (Addendum 2). The Addendum in this paragraph to RUS Form 525, Central Office Equipment Contract (Including Installation), and RUS Form 545, Central Office Equipment Contract (Not Including Installation), must be used with any central office equipment contract that requires a software license agreement and for which RUS financial assistance is to be provided. Addendum 2--Software License Agreement (1) Definitions. For the purpose of this Software License Agreement- - Contract means the RUS Form 525 Central Office Equipment Contract (Including Installation) or RUS Form 545 Central Office Equipment Contract (Not Including Installation), dated------------, between ________________________________________________________________________ (the Licensee) and______________________________________________________ (the Licensor). Days means calendar days. Licensed Software means the computer programs, furnished for the operation of the System(s) provided under the Contract, whether contained on a tape, disc, semiconductor device, or other memory device or system memory consisting of logic instructions and instruction sequences in machine-readable object code, which manipulate data in the central processor, control and perform input/output operations, perform error diagnostic and recovery routines, control call processing, and perform peripheral control, administrative and maintenance functions; as well as Licensor's standard customer documentation, excluding source code, used to describe, maintain and use the programs provided under the Contract. Licensee and Licensor, respectively, mean the parties signing the software license agreement as the licensee and licensor. Right-to-Use Fee is defined in section (2). Specifications means the RUS Form 522, General Specification for Digital, Stored Program Controlled Central Office Equipment, which is part of the Contract. System means the stored program controlled central office and associated remote switching terminal or terminals which use the Licensed Software covered by this License. (2) Software License Provisions. The Licensor may charge a fee, herein referred to as a Right-to-Use Fee, for use of the Licensed Software. The Right-to-Use Fee shall be included in the Total Base Bid as defined in the Contract. In consideration of the Right-to-Use Fee, the Licensor hereby grants the Licensee the right to use all Licensed Software, solely in connection with the System provided under this Contract, so that the System performs in accordance with the Contract and the Specifications. (i) The Licensee's right to use the Licensed Software is non- exclusive and limited to use or operation in the United States of America, including its Territories, the Federated States of Micronesia, the Marshall Islands, Palau and the Commonwealth of Puerto Rico, with the System for which the Licensed Software is provided by the Licensor. The Licensee may reuse the equipment and its accompanying Licensed Software at another location within the Licensee's System without obtaining additional approvals from Licensor, provided, however, that the Licensee notify the Licensor, within ten (10) days, of the change in location of the equipment and Licensed Software. (ii) The Licensee and any successor to the Licensee's title in the System may, without further consent of the Licensor, transfer the Licensed Software and all of the Licensee's rights and interests under this Software License to any transferee who acquires legal title to the System, provided that such transferee first agrees in writing to the Licensor to abide by all of the terms and conditions of this License including, without limitation, the territorial limitation stated in section (2)(i) and the restrictions on decompiling or reverse assembly stated in section (2)(iii). Licensee shall give Licensor [[Page 391]] written notice thirty (30) days prior to any transfer. The Licensor shall not place any additional conditions on the transferee's use of the System or the Licensed Software. If the provisions of this section (2)(ii) are satisfied, thereafter the Licensee shall bear no responsibility for transferee's failure to abide by the terms and conditions of this License. (iii) The Licensee shall take reasonable steps to protect the confidentiality of the Licensed Software and shall not decompile or reverse assemble all or any part of the Licensed Software to generate source code. The Licensee shall not make the Licensed Software available to any person except on a need to know basis. The obligations of the Licensee hereunder shall not extend to any information or data relating to the Licensed Software which is now available to the general public or becomes available by reason of the acts of the Licensor or third parties. (iv) The Licensee may reproduce or copy the Licensed Software and related materials solely for the purpose of archival backup, in-house training and operating, maintaining, and administering the System provided under this Contract. In such reproduction, the Licensee shall include, upon all such copies of the Licensed Software, all proprietary notices, including the copyright notice within the Licensed Software program and related documentation in the form in which it is received from the Licensor. (v) The Licensee acknowledges that the Licensed Software program is the property of the Licensor, and shall not do, or cause to be done, anything to activate any of the subsisting nonactivated computer instruction steps therein unless authorized in writing by the Licensor. The Licensor shall have the exclusive right to activate, or authorize the activation of, the subsisting nonactivated program instruction steps in the Licensed Software. In this event Licensee shall pay any additional Right-To-Use Fee(s) agreed to by Licensee and Licensor. (vi) In the event the Licensor develops significant improvements to the Licensed Software, the Licensor may market the improvements as a separate offering requiring payment of an additional Right-to-Use Fee. (vii) The Licensee shall not modify or otherwise change the Licensed Software other than at the direction of the Licensor. This provision shall not apply to: (A) Changes to the Licensed Software which are necessary to preserve or restore service. Licensee shall use all reasonable efforts to contact Licensor before making any such changes. If the Licensor is unable to make the necessary changes promptly to the Licensed Software to preserve or restore service, then the Licensee may make only such changes to the Licensed Software as are necessary to preserve or restore service. In such event, Licensee shall promptly notify Licensor of the changes made by Licensee. (B) Changes made by the Licensee to its own database; and (C) Changes made by the Licensee in connection with the exercise of its rights under section (2)(xi). (viii) Within thirty (30) days after written notice that a program or a release thereof has been discontinued and is no longer required for the operation of the System and the Licensor has furnished the Licensee with a new program that is fully satisfactory to the Licensee, the Licensee agrees to return the original and all copies of the discontinued program and specified related documents. If such return is impossible or impractical, the Licensee shall destroy said program and documents and provide the Licensor with a written notice of such destruction. (ix) The Licensor warrants to the Licensee that any Software licensed under this Software License shall function for a period of five (5) years from the warranty start date defined in the Contract in accordance with the Specifications and any written or printed technical material provided by the Licensor to explain the operation of the Licensed Software and aid in its use. The Licensor shall correct all deficiencies within thirty (30) days from the date of receipt by the Licensor of written notice of such deficiencies from the Licensee. An extension of this thirty (30) day period may be allowed only if agreed upon by the Licensee and RUS. It shall be the Licensor's obligation to insert and thoroughly test, at no charge to the Licensee, any software amendment or alteration provided to satisfy the obligations of this section (2)(ix). If a deficiency is detected or a correction made within the final ninety (90) days of the warranty, the warranty shall be extended to a date ninety (90) days after the deficiency has been corrected. (x) The Licensor shall hold harmless and indemnify the Licensee from any and all claims, suits, and proceedings for the infringement of any patent, copyright, trademark, or violation of trade secrets covering any Licensed Software used with the System, except for items of the Licensee's design or selection. If the Licensee's use of the Licensed Software is enjoined, the Licensor shall promptly, at its own expense, place the Licensee in a position where it is able to use the System in accordance with the Specifications, whether by: (A) Modifying the Licensed Software or portion thereof so that it no longer infringes but remains functionally equivalent, (B) Replacing the Licensed Software with noninfringing equivalent software, (C) Obtaining for the Licensee a license or other right to use, or (D) Such other actions as may be required. This shall be in addition to any other rights or claims which the Licensee may have. The Licensor shall, at its own expense, (and the [[Page 392]] Licensee agrees to permit the Licensor to do so) defend any suits which may be instituted by any party against the Licensee for alleged infringement of patents, copyright, trademark, or violation of trade secrets relative to the Licensor's performance hereunder. Either party shall notify the other promptly of any such claims, and the Licensee shall give to the Licensor full authority and opportunity to settle such claims, and shall reasonably cooperate with the Licensor in obtaining information relative to such claims. (xi) In the event the Licensor becomes unwilling or unable to furnish support required by the Contract for the Licensed Software, the Licensor shall, upon written request of the Licensee, provide with the greatest possible dispatch all Licensed Software back-up documentation including proprietary information other than agreed excluded documentation. In this event, (1) the Licensee shall be permitted full use of all Licensed Software and documentation as long as the System is operational and (2) the Licensee may modify, or have modified, the Licensed Software for feature enhancement or proper equipment operation and becomes the owner of such modifications for all purposes, including patenting, copywriting, sale, or license thereof. Agreed excluded documentation is Licensed Software back-up documentation described in the first sentence of this section (2)(xi) which (A) is proprietary information of a third party, (B) was specifically described at the pre- bid technical session and individually identified in an attachment to the Bid, and (C) RUS and the Licensee agree, before bids are opened, may be excluded from the requirements of this section (2)(xi). In the event the Licensor furnishes agreed excluded documentation and the Licensee exercises its rights under this section (2)(xi), the Licensor shall use its best efforts to provide such agreed excluded information to the Licensee, or obtain continuing support agreements from the parties retaining legal rights to the excluded documentation. Licensor agrees that certain Licensed Software cannot be excluded from the requirements of this section (2)(xi) including, but not limited to, software, the absence or improper operation of which would significantly impair the operation of the System, would significantly impair the ability of the Licensee to generate revenue, or would pose a risk to RUS loan security. (xii) A breach of this License by the Licensor is a breach of the Contract. Therefore, the remedies specified in the Contract shall apply. (xiii) The Licensee shall have thirty (30) days after receipt of written notice from the Licensor to correct any breach of this License. Damages payable by the Licensee for its breach of this License shall not exceed the total Contract price. The Licensor shall not terminate this License unless: (A) The Licensor has given RUS sixty (60) days notice before termination; and (B) RUS agrees with the Licensor that termination is the only method available to prevent significant harm to the Licensor from additional Licensee defaults. (xiv) The obligations of Licensee and Licensor and any successors in title under this Agreement shall survive the termination of this Agreement and continue after any termination of rights granted hereunder. (xv) Licensee and Licensor agree that it will not, without the prior written permission of the other party, use in advertising, publicity, packaging, labeling, or otherwise, any trade name, trademark, trade device, service mark, symbol, or any other identification or any abbreviation, contraction, or simulation thereof owned by the other party or any of its affiliates or used by the other party or any of its affiliates to identify any of their products or services, unless otherwise agreed by the parties. (xvi) This Software License Agreement shall prevail notwithstanding any conflicting terms or legends which may appear on or in the Licensed Software. (xvii) If any Section or part thereof, in this Agreement shall be held to be invalid or unenforceable in any jurisdiction in which this Agreement is being performed, then the meaning of such section or part shall be construed so as to render it enforceable, to the extent feasible; and if no feasible interpretation would save such section or part, it shall be severed from this Agreement and the remainder shall remain in full force and effect. However, in the event such section or part is considered an essential element of this Agreement, the parties shall promptly negotiate a replacement therefor. (xviii) This Software License and any amendments thereto, or revisions thereof, are subject to RUS approval. Licensor Company Name____________________________________________________________________ By______________________________________________________________________ Title___________________________________________________________________ Date____________________________________________________________________ Licensee Company Name____________________________________________________________________ By______________________________________________________________________ Title___________________________________________________________________ Date____________________________________________________________________ [End of clause] (d) Contract amendments. (1) The general requirements for contract amendments are set forth in Sec. 1753.11. [[Page 393]] (2) Equipment contract amendments shall be prepared on RUS Contract Form 238, Construction or Equipment Contract Amendments. (e) Additions. When additions to existing central office equipment are required: (1) A proposal shall be requested from the supplier. (2) The borrower shall prepare a plan containing an outline of the proposed use of the equipment, the proposal from the supplier and an estimate of the installation cost. If the total cost exceeds $500,000, RUS approval of the award of contract is required. The borrower shall in this case submit its plan and the supplier's proposal to GFR. If the cost does not exceed $500,000, the borrower's award of contract is not subject to RUS approval. (3) If RUS approval was required by paragraph (e)(2) of this section, upon RUS approval the purchase may be made using RUS Contract Form 525, or 545, or when applicable, the procedures contained in subpart I of this part. (4) If the purchase is to be made by contract, three executed copies of the contract with attachments are to be submitted to the RUS. (5) Installation of the central office equipment and materials procured by RUS Contract Form 545 may be made in accordance with subpart I, if applicable, or by an approved FAP. (f) Preinstallation conference. RUS recommends, but does not require, that the borrower hold a preinstallation conference, attended by the borrower, its engineer, equipment installers, and if possible the GFR, prior to the beginning of the installation of the central office equipment. [54 FR 39267, Sept. 25, 1989. Redesignated at 55 FR 39397, Sept. 27, 1990, as amended at 59 FR 17679, Apr. 14, 1994; 64 FR 16607, Apr. 6, 1999]