[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: 7CFR1780.76]

[Page 1063-1064]
 
                          TITLE 7--AGRICULTURE
 
    CHAPTER XVII--RURAL UTILITIES SERVICE, DEPARTMENT OF AGRICULTURE
 
PART 1780--WATER AND WASTE LOANS AND GRANTS--Table of Contents
 
 Subpart C--Planning, Designing, Bidding, Contracting, Constructing and 
                               Inspections
 
Sec. 1780.76  Contract administration.

    Owners shall be responsible for maintaining a contract 
administration system to monitor the contractors' performance and 
compliance with the terms, conditions, and specifications of the 
contracts.
    (a) Preconstruction conference. Prior to beginning construction, the 
owner will schedule a preconstruction conference where the consulting 
engineer will review the planned development with the Agency, owner, 
resident inspector, attorney, contractor, and other interested parties. 
The conference will thoroughly cover applicable items included in Form 
RD 1924-16, ``Record of Pre-construction Conference,'' and the 
discussions and agreements will be documented.
    (b) Monitoring reports. The owner is required to monitor 
construction and provide a report to the Agency giving a full 
explanation under the following circumstances:
    (1) Reasons why approved construction schedules were not met;
    (2) Analysis and explanation of cost overruns and how payment is to 
be made for the same; and
    (3) If events occur which have a significant impact upon the 
project.
    (c) Inspection. Full-time resident inspection is required for all 
construction unless a written exception is made by the Agency upon 
written request of the owner. Unless otherwise agreed, the resident 
inspector will be provided by the consulting engineer. Prior to the 
preconstruction conference, the consulting engineer will submit a resume 
of qualifications of the resident inspector to the owner and to the 
Agency for acceptance in writing. If the owner provides the resident 
inspector, it must submit a resume of the inspector's qualifications to 
the project engineer for comments and the Agency for acceptance in 
writing prior to the preconstruction conference. The resident inspector 
will work under the technical supervision of the project engineer and 
the role and responsibilities will be defined in writing.
    (d) Inspector's daily diary. The resident inspector will maintain a 
record of the daily construction progress in the form of a daily diary 
and daily inspection reports. The daily entries shall be made available 
to the Agency personnel and will be reviewed during project inspections. 
The original complete set will be furnished to the owner

[[Page 1064]]

upon completion of construction. RUS Bulletin 1780-18 is available from 
the Agency for preparing daily inspection reports or the reports can be 
provided in other formats approved by the State staff engineer.
    (e) Payment for Construction. Form RD 1924-18, ``Partial Payment 
Estimate,'' or other similar form may be used for construction payments. 
If Form 1924-18 is not used, prior concurrence by the State staff 
engineer must be obtained.
    (1) Payment of contract retainage will not be made until such 
retainage is due and payable under the terms of the contact.
    (2) Invoices for the payment of construction costs must be approved 
by the owner, project engineer and concurred in by the Agency.
    (3) The review and acceptance of project costs, including 
construction payment estimates by the Agency shall not attest to the 
correctness of the amounts, the quantities shown, or that the work has 
been performed under the terms of agreements or contracts.
    (f) Prefinal inspections. A prefinal inspection will be made by the 
owner, resident inspector, project engineer, contractor, representatives 
of other agencies involved, and Agency representative (preferably the 
State staff engineer or designee). The inspection results will be 
recorded by the project engineer and a copy provided to all interested 
parties.
    (g) Final inspection. A final inspection will be made by the Agency 
before final payment is made.
    (h) Changes in development plans. (1) Changes in development plans 
shall be reviewed and approved by the Agency provided:
    (i) Funds are available to cover any additional costs; and
    (ii) The change is for an authorized loan or grant purpose; and
    (iii) It will not adversely affect the soundness of the facility 
operation or the Agency's security; and
    (iv) The change is within the scope of the contract,
    (2) Changes will be recorded on Form RD 1924-7, ``Contract Change 
Order,'' or other similar form if approved by the State program official 
or designee. Regardless of the form, change orders must be approved by 
the State program official or designee.
    (3) Changes should be accomplished only after Agency approval and 
shall be authorized only by means of contract change order. The change 
order will include items such as:
    (i) Any changes in labor and material;
    (ii) Changes in facility design;
    (iii) Any decrease or increase in quantities based on final 
measurements that are different from those shown in the bidding 
schedule; and
    (iv) Any increase or decrease in the time to complete the project.
    (4) All changes shall be recorded on chronologically numbered 
contract change orders as they occur. Change orders will not be included 
in payment estimates until approved by all parties.