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Bid Process and Construction Contracts 1. Bid Process 2.

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Presentation on theme: "Bid Process and Construction Contracts 1. Bid Process 2."— Presentation transcript:

1 Bid Process and Construction Contracts 1

2 Bid Process 2

3 ( A) All construction contracts must be awarded on the basis of competitive bidding unless an exception is granted thereby permitting contract negotiation. The Grantee's architect usually prepares the bidding documents. Public notice must be given inviting all interested bidders to submit a bid. Prospective bidders may be contacted asking for their bids, however, public notice is necessary so that all local contractors have the opportunity to submit bids. (B) A bid bond is required from each bidder in the amount of 5 percent of the bid price as assurance that the bidder will, upon acceptance of the bid, execute the required contract documents within the time specified. (C) The construction contract will be awarded based on the contract cost, and all conditions listed in the "Invitation for Bid." (D) If advertising does not provide a satisfactory bid in the opinion of the Grantee and RD, the Grantee shall reject all bids and will then be free to negotiate with bidders or anyone else to obtain a satisfactory contract. The following conditions must be met: (1) The State Director determines that the original competitive bid process was handled in a satisfactory manner and that there is no advantage to advertising for competitive bid again. (2) The requirements of paragraph (e)(1)(vii) Exception to Competitive Bidding are met. Competitive Bidding Methods 3

4 The grantee will select a contractor and negotiate a contract or contact several contractors and request each to submit a bid. When a price has already been negotiated, the grantee, contractor, local RD Specialist, Area 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 Grantee 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. 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. If the award of the contract is by competitive bidding, Form RD , "Invitation for Bid” or another similar invitation bid form containing the requirements of Subpart E of Part 1901 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 “Construction Contract” and RD , "Compliance Statement," also should be provided to the prospective bidders. The Grantee, with the assistance of the local RD Specialist or Area 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 Grantee will select and notify the lowest responsible bidder. Obtaining Bids and Selecting A Contractor 4

5 The grantee and participant together are responsible for obtaining bids and referrals from subcontractors. In most cases the grantee will coordinate all of the work involved in receiving the bids and referrals and then will relay the information to the participants to determine who is the low bidder and if the bidder is credible. The grantee should not be confused as being a general contractor; their acting role is just as a coordinator, organizer, and advisor to the participants. Before the bidding process can start, the grantee or the participant must provide the subcontractors, that are going to be bidding the job, a complete copy of the blueprints and specifications and any other data involved in the subcontracted task. For competitive bidding to be a valid procedure all competitors must bid under exactly the same conditions for an identical package of work. There are not any laws stating that certain contractors cannot perform specified work other than having the proper license. So be very careful in qualifying a subcontractor by local directories. After obtaining bids from potential subcontractors the grantee should schedule interviews with them to determine their quality of performance and background. Make sure references are acquired from other jobs that similar work was performed. Once a subcontractor is selected each self-help family must sign a construction contract with each subcontractor. Example RD Form “Construction Contract”. The contract should also list the grantee’s requirements that the subcontractor must comply with and specify what conditions under which payment may be withheld or another contractor substituted. After examining the drawings and specifications some subcontractors may want to visit the jobsite. SELECTING THE RIGHT SUBCONTRACTOR 5

6 When submitting a task for bid to subcontractors always tell them the location, availability of electric, water, telephone, local ordinances, storage of equipment, delivery information, topography and drainage, etc. Give subcontractors access to all available information concerning the project. Always make sure that you give the subcontractor a firm date by which you need the bid. All too often subcontractors wait until the last minute before giving an estimate. Make sure the subcontractor is aware of the length of the project so they can guarantee pricing accordingly. The subcontractors’ work should be inspected carefully. Errors or changes can be handled with little trouble and time if dealt with the right away. Subcontractors are sometimes requested by owner/builders to grant extensions of the acceptance time. The subcontractor is generally willing to oblige, but sometimes in its eagerness to get the job they will agree to such an extension without giving the matter sufficient consideration. Such action means that the completion date of the project will be set back by a length of time equal to the extension of the acceptance period. Due to increased wage and material costs a subcontractor may not be willing to extend the original acceptance period. When increased costs are anticipated and the subcontractor does not wish to absorb them, they should quote the required additional amount in exchange for extending the acceptance period. Problems with subcontractors usually evolve from lack of communication. Make sure that contracts and payment schedules have been clearly defined. If the subcontractor is not fulfilling the contract or the work is of poor quality and all attempts to work things out have failed then you have no choice but to release the subcontractor from the job. Hopefully having to terminate a subcontractor is the last resort, particularly since replacing them after work has begun can be even more difficult. Obtaining bids and choosing the right subcontractor can be quite an experience. Good preparation is the answer to a successful project. SELECTING THE RIGHT SUBCONTRACTOR (cont.) 6

7 Contract documents will conform with recognized professional practices. Such contract documents will contain substantially the following: Invitation for Bid Form RD Information for Bidders Bid Notice of Award Agreement (Construction Contract Form RD ) General Conditions Supplemental General Conditions Drawings and Specifications Contract Change Order (Form RD ) Partial Payment Estimate (Form RD ) Builder's Warranty (Form RD ) Notice “A” (Setup for Family Accounts with Vendors/Suppliers) Notice “B” (Close family accounts with Vendors/Suppliers) Contract Documents 7

8 Substitution of term "architect" for "engineer" may be necessary on some of the forms. Other modifications may be necessary in some cases to conform to the nature and extent of the project. All such contract documents and related items will be concurred with by the State Director, with the assistance of OGC prior to the release of invitations to bid. All negotiated contracts shall include a provision to the effect that the Grantee, USDA, the Comptroller General of the United States, or any of their duly authorized representatives, shall have access to any books, documents, papers, and records of the contractor which are directly pertinent to a specific Federal loan program for the purpose of making audit, examination, excerpts, and transcriptions. All contracts shall include a provision for compliance with the Copeland "Anti-Kickback" act (18 U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR Part 3). This Act prohibits anyone from inducing any person in connection with the construction to give up any part of the compensation to which the person is otherwise entitled. All contracts will contain a certification by the applicant indicating that there is not now nor will there be an identity of interest between the applicant and any of the following: Contractor, architect, engineer, attorney, subcontractors, material suppliers, equipment lessors, or any of their members, directors, officers, stockholders, partners, or beneficiaries unless specifically identified to Rural Development in writing prior to the award of the contract. All contracts must also indicate that when any identity of interest exists or comes into being, the contractor agrees to have construction costs as reported to Rural Development on Form , "Estimate and Certificate of Mutual Cost"- audited by a Certified Public Accountant (CPA) or Licensed Public Accountant (LPA) licensed prior to Summary of Contract Language 8

9 December 31, 1970, who will provide an opinion as to whether the Form RD presents fairly the costs of construction in conformity with eligible construction costs as prescribed in Rural Development regulations. All contracts on any form other than Form RD must contain the language of clause (D) of Form RD , which is available in all Rural Development offices. The language of clause (D) of Form RD sets forth the Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity required by Executive Order 11246, the Equal Opportunity clause published at 41 CFR (a) and (b), and the Standard Federal Equal Employment Opportunity Construction Contract Specifications required by Executive Order For contract forms other than Form RD , Form AD 767, "Equal Employment Opportunity Contract Compliance Notices," which can be obtained from the Finance Office, should be attached and made a part of the contract. All contracts will contain a provision that they are not in full force and effect until concurred with by the State Director or the State Director's delegate, in writing. Therefore, before loan closing or before the start of construction, whichever occurs first, the State Director or the State Director's delegate will concur in the contract form, content, and execution if acceptable, by including the following paragraph at the end of the contract: Rural Development, as potential lender or insurer of funds to defray the costs of this contract, are without liability for any payments thereunder, hereby concurs in the form, content, and execution of this contract. Date: ___________ Grantee Authorized Representative: ________________________ Rural Development Official: ________________________________ Title:_________________________ Summary of Contract Language (cont.) 9

10  Mutual Self Help Sub-Contractor Selection Questionnaire General Information Contractor Name: _______________________________________________________________ Business Address: ______________________________________________________________ Business Phone/Fax/ ________________________________________________________ Owners Name:_________________________________________________________________ Is this company a: Corporation Partnership Owner Operator Joint Venture Other Organization 1. Are you a general contractor? or Sub-Trade contractor? 2. How many years have you been in the construction business? 3. How long under the present name? years. 4. Have you worked under a different name? If so, please list name, dates and places where business was conducted? ____________________________________________________________________________________________________________ 5. How many full time employees do you have on staff? Licensing & Bonding 6. Contractors License # __________________. 7. What Trade Categories is your company legally qualified to work under: Trade License # Years of experience A._______________________________________________________________________ B._______________________________________________________________________ C._______________________________________________________________________ D._______________________________________________________________________ 10

11 8. Is your organization in good standing with the Contractors License Board? 9. Does your company have any outstanding or pending citations filed with the Contractors License Board? _______ If so explain: _______________________________________________________________________ 10. Has your organization ever been bonded? _______________________________________ 11. Maximum amount of Performance Bond $ _________________. 12. Name and address of your most recent Bonding Company: __________________________ 13. Insurance Coverage: Company: Type : Limits: 1. Have you been sued in the last five years for breach of contract, default or any other cause of action with regard to your business activities? If so, explain:_______________________________________________________________ 2. What categories of work does your company perform with its own staff? ______________________________________________ 3. Has your organization ever failed to complete any work awarded? 4. Has your organization filed any lawsuits or requested arbitration with regard to construction contracts within the past five years?. 5. Are you familiar with the Mutual Self Help Program? 6. Have you ever worked on a Self Help Housing project? If so, When & Where? ____________________________________ 7. What projects do you currently have under construction? Project Location Type Scheduled Completion Date A._______________________________________________________________________ B._______________________________________________________________________ C._______________________________________________________________________ D. ______________________________________________________________________ 11

12 9. Can you give us three-completed and one in-progress projects that we may visit? A.______________________________________________________________________ B.______________________________________________________________________ C.______________________________________________________________________ D_______________________________________________________________________ General Questions 1. What experience do you have in working with non-profit organizations? _________________________________________________ 2. If selected as a contractor to bid on this project can you promise us with an accurate cost estimate, within 7 days of receipt of bid documents (Plan Specifications)? 3. If you are the selected Sub trade contractor for this project, what percentage of time will you (owner) be onsite supervising the project ___________________________________ Contract Requirements 1. Describe your billing and payment requirements?____________________________________________________________ 2. Will you be able to obtain material and supplies on trade credit? If so, what payment terms are required? _______________________ 3. If selected as the contractor for this development project, describe how and under what conditions you would ensure: A. Adequate supervision of work activity B. Adequate Workforce present on the job C. Timely completion of work activities D. Scheduling of work to be performed, material delivery and inspections 12

13 Construction Contracts 13

14 Reference: RD Instruction 1924-A Paragraph (a) (1) (1) Forms used. Form RD , "Construction Contract," will be used for SFH construction. Other contract documents for more complex construction, acceptable to the loan approval official and containing the requirements of Subpart E of Part 1901 of this chapter, may be used provided they are customarily used in the area and protect the interest of the borrower and the Government with respect to compliance with items such as the drawings, specifications, payments for work, inspections, completion, nondiscrimination in construction work and acceptance of the work. If needed, the Office of the General Counsel (OGC) will be consulted. The United States (including Rural Development) will not become a party to a construction contract or incur any liability under it. Reference: RD Instruction 1924-A Paragraph (a) (2) Contracts will have a listing of attachments and the provisions of the contract will include: (i) The contract sum. (ii) The dates for starting and completing the work. (iii) The amount of liquidated damages to be charged. (iv) The amount, method, and frequency of payment. (v) Whether or not surety bonds will be provided. (vi) The requirement that changes or additions must have prior written approval of RD. 14 Contract Provisions

15 ATTACHMENTS FORMS Construction Contract Form RD Equal Opportunity Agreement Form RD Notice to Contractors and Applicants Form RD Compliance Statement Form RD Release by Claimants Form RD Builder’s Warranty Form RD

16 USDA – RDPosition 6Form APPROVED RD OMB NO (Rev. 8-93)CONSTRUCTION CONTRACT State _____________ County ___________ This Contract, made this ______________day of ____________________, 20, by _______________________ of _____________ (hereinafter called the “Owner”), and ______________________________ (hereinafter called the “Contractor”). WITNESSETH that the parties hereto agree as follows: (A)The Contractor will furnish materials and perform the work for: ____________________for the consideration of _______ dollars ($ ), in accordance with the “General Conditions” shown in this contract and the specifications and the drawings as follows: 16 Form RD “Construction Contract”

17 (B) The Contractor will start work by _____________, 20 and will complete the work by ______________, (See paragraph III of General Conditions). (C) The Owner will make payments as follows: (Check the proper payment clause and effectively cross out (xxxxxxx) all of the clauses not applicable.) 1. ONE LUMP SUM will be made for the whole contract upon acceptance by the owner and Rural Development of all work required hereunder and compliance by contractor with all the terms and conditions of this contract. 2. PARTIAL PAYMENTS NOT TO EXCEED 60 PERCENT of the value of the work in place (less the aggregate of previous payments) will be made at intervals of _________________. The value of work in place shall be as estimated by the contractor and approved by Rural Development. Prior to receiving any partial payment, the contractor must furnish the owner with a statement showing the total amount owed to date for materials and labor procured under this contract and, if required by the owner or Rural Development, must also submit evidence showing that previous partial payments were properly applied and that the current payment will be properly applied. Upon completion of the whole contract and acceptance of the work as required hereunder, by the owner and Rural Development, and compliance by the contractor with all terms and conditions of this contract, the amount due the contractor will be paid. 3. 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 (less the aggregate of previous payments) will be made at intervals of ____________________. The value of the work and materials in place or on site shall be as estimated by the contractor and approved by the owner and Rural Development. Upon acceptance by the owner and Rural Development of all work required hereunder and compliance by the contractor with all terms and conditions of this contract, the amount due the contractor will be paid. The contractor shall, before the owner signs the contract, deliver to the owner a surety bond in the amount of the contract. 17

18 (D) The items described below (the Notice of Requirement for Affirmative Action to Ensure Equal Employment Opportunity required by Executive Order 11246, the Equal Opportunity Clause published at 41 CFR (a) and (b), and the Standard Federal Equal Employment Opportunity Construction Contract Specifications required by Executive Order 11246) apply, during the performance of this contract, if the contract exceeds $10,000 (This also includes subsequent loans and grants, or contract change orders made during the construction period of the original contract, which will cause the total to exceed $10,000.) to the following: (1) All contractors or subcontractors who hold any Federal or Federally assisted construction contract, (2) All grants, contracts and loans (direct, insured or guaranteed) let by Rural Development, and (3) All construction work performed by construction contractors and subcontractors for Federal non-construction contractors and subcontractors if the construction work is necessary in whole or in part to the performance of a non-construction contract or subcontract. The items are applicable to all of a contractor’s or subcontractor’s employees who are engaged in “on site” construction including those construction employees who work on a non-Federal or non-federally assisted construction site. The items, however, will not preempt state or local government regulations of the construction industry, and will no relieve contractors and subcontractors of the obligations they may have under other affirmative action or equal opportunity programs. Public reporting for this collection of information is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Send comments regarding this burden estimate or any other aspect of this collection of information including suggestions for reducing this burden, to Department of Agriculture, clearance Officer, ORIM, AG Box 7630, Washington, D.C : and to the Office of Management and Budget, Paperwork Reduction Project (OMB No ), Washington, D.C Please DO NOT RETURN this form to either of these addresses. Forward to Rural development only 18

19 NOTICE OF REQUIREMENT FOR AFFIRMATIVE ACTION TO ENSURE EQUAL EMPLOYMENT OPPORTUNITY (Executive Order 11246) Date: ____________________ City: ___________________________ DOL Region: _____________ Goals and Timetables for Women (Exhibit D, RD Instruction 1901-E) Goals and Timetables for ALL MINORITIES (Exhibit D, RD Instruction 1901-E) 19

20 EQUAL OPPORTUNITY CLAUSE (41 CFR (a) AND (b)) (1) The contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment without regard to race, color, religion, sex or national origin. Such actions shall include, but not limited, to the following: employment, upgrading, demotion or transfer; recruitment advertising; layoff or termination; rates of pay or other forms of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and ap0plicants for employment, notices to be provided by Rural Development setting forth the provisions of this nondiscrimination clause. (2) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin. (3) The contractor will send to each labor union or representative of workers with which contractor has a collective bargaining agreement or other contract or understanding, a notice, to be provided by Rural Development, advising the said labor union or workers’ representative of the contractor’s commitments under this agreement as required pursuant to Section 301 0f Executive Order of September 24, 1965, and shall post copies of the notice in conspicuous places available to employees and applicants for employment. (4) The contractor will comply with all provisions of such Executive Order and of all relevant rules, regulations, and orders of the Secretary of Labor and of any prior authority which remain n effect. 20

21 (5) The contractor will furnish all information and reports required by such Executive Order, rules, regulations, and orders, or pursuant thereto, and will permit access to books, records, and accounts by Rural Development and the Secretary of labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders. (6) In the event of the contractor’s noncompliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, this contract may be canceled, terminated or suspended in whole or in part and the contractor may be declared ineligible for further contracts in accordance with procedures authorized un such Executive order and such other sanctions may be imposed and remedies invoked as provided in the Executive Order or by any such rules, regulations, or order, or as otherwise provided by law. (7) The contractor will include the provisions of paragraphs (1) through (70 in every subcontract or purchase order, unless exempted by such rules, regulations, or orders, so that such provisions will be binding upon each such subcontractor or vendor. The contractor will take such action as Rural Development may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, however, that in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by Rural Development, the contractor may request the United States to enter into such litigation to protect the interest of the United States. RD

22 Form RD FORM APPROVED (Rev. 5-00)UNITED STATES DEPARTMENT OF AGRICULTURE OMB No EQUAL OPPORTUNITY AGREEMENT This agreement, dated ______________________________ between ________________________________ _________________________________________________________________________________________( herein called ''Recipient'' whether one or more) and United States Department of Agriculture (USDA), pursuant to the rules and regulations of the Secretary of Labor (herein called the 'Secretary') issued under the authority of Executive Order as amended, witnesseth: In consideration of financial assistance (whether by a loan, grant, loan guaranty, or other form of financial assistance) made or to be made by the USDA to Recipient, Recipient hereby agrees, if the cash cost of construction work performed by Recipient or a construction contract financed with such financial assistance exceeds $10,000 - unless exempted by rules, regulations or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order of September 24, To incorporate or cause to be incorporated into any contract for construction work, or modification thereof, subject to the relevant rules, regulations, and orders of the Secretary or of any prior authority that remain in effect, which is paid for in whole or in part with the aid of such financial assistance, the following "Equal Opportunity Clause": During the performance of this contract, the contractor agrees as follows: (a) The contractor will not discriminate against any employee or applicant for employment because of race, color, religion, sex or national origin. The contractor will take affirmative action to ensure that applicants are employed, and that employees are treated during employment, without regard to their race, color, religion, sex or national origin. Such action shall include, but not be limited, to the following: employment, upgrading, demotion or transfer; recruitment or recruitment advertising; layoff or termination; rates of pay or other forms 22

23 of compensation; and selection for training, including apprenticeship. The contractor agrees to post in conspicuous places, available to employees and applicants for employment, notices to be provided by the USDA setting forth the provisions of this nondiscrimination clause. (b) The contractor will, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, color, religion, sex or national origin. (c) The contractor will send to each labor union or representative of workers with which he has a collective bargaining agreement or other contract or understanding, a notice, to be provided by the USDA, advising the said labor union or workers' representative of the contractor's commitments under this agreement and shall post copies of the notice in conspicuous places available to employees and applicants for employment. (d) The contractor will comply with all provisions of Executive Order of September 24,1965, and of all rules, regulations and relevant orders of the Secretary of Labor. (e) The contractor will furnish all information and reports required by Executive Order of September 24, 1965, rules, regulations, and orders, or pursuant thereto, and will permit access to his books, records, and accounts by the USDA Civil Rights Office, and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders. (f) In the event of the contractor's noncompliance with the nondiscrimination clauses of this contract or with any of the said rules, regulations, or orders, this contract may be cancelled, terminated, or suspended in whole or in part and the contractor may be declared ineligible for further Government contracts or federally assisted construction contracts in accordance with procedures authorized in Executive Order No of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No of September 24, 1965, or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by Law.

24 (g) The contractor will include the provisions of paragraph 1 and paragraph (a) through (g) in every subcontract or purchase order, unless exempted by the rules, regulations, or orders of the Secretary of Labor issued pursuant to Section 204 of Executive Order No of September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The contractor will take such action with respect to any subcontract or purchase order as the USDA may direct as a means of enforcing such provisions, including sanctions for noncompliance: Provided, however, that in the event the contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such direction by the USDA, the contractor may request the United States to enter into such litigation to protect the interest of the United States. According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collections is The time required to complete this information collection is estimated to average 10 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Position 6 RD (Rev. 5-00) 2. To be bound by the above equal opportunity clause with respect to its own employment practices when it participates in federally assisted construction work: Provided, that if the organization so participating is a State or local government, the above equal opportunity clause is not applicable to any agency, instrumentality or subdivision of such government which does not participate in work on or under the contract. 3. To notify all prospective contractors to file the required 'Compliance Statement', Form RD 400-6, with their bids.

25 4. Form AD-425, Instructions to Contractors, will accompany the notice of award of the contract. Bid conditions for all nonexempt federal and federally assisted construction contracts require inclusion of the appropriate ''Hometown'' or ''Imposed'' plan affirmative action and equal employment opportunity requirements. All bidders must comply with the bid conditions contained in the invitation to be considered responsible bidders and hence eligible for the award. 5. To assist and cooperate actively with USDA and the Secretary in obtaining the compliance of contractors and subcontractors with the equal opportunity clause and rules, regulations, and relevant orders of the Secretary, that will furnish USDA and the Secretary such information such as, but not limited to, Form AD-560, Certification of Nonsegregated Facilities, to submit the Monthly Employment Utilization Report, Form CC-257, as they may require for the supervision of such compliance, and that it will otherwise assist USDA in the discharge of USDA's primary responsibility for securing compliance. 6. To refrain from entering into any contract or contract modification subject to such Executive Order of September 24, 1965, with a contractor debarred from, or who has not demonstrated eligibility for, Government contracts and Federally assisted construction contracts pursuant to the Executive Order and will carry out such sanctions and penalties for violation of the equal opportunity clause as may be imposed upon contractors and subcontractors by USDA or the Secretary of Labor pursuant to Part II, Subpart D, of the Executive Order. 7. That if the recipient fails or refuses to comply with these undertakings, the USDA may take any or all of the following actions: Cancel, terminate, or suspend in whole or in part this grant (contract, loan, insurance, guarantee); refrain from extending any further assistance to the organization under the program with respect to which the failure or refund occurred until satisfactory assurance of future compliance has been received from such organization; and refer the case to the Department of Justice for appropriate legal proceedings. Signed by the Recipient on the date first written above. ___________________________________________ ___________________________________________________ Recipient (CORPORATE SEAL) _____________________________________________________ Name of Corporate Recipient Attest: _______________________________________________________ By ___________________________________________________ Secretary President 25

26 Form RD (Rev. 2-98) UNITED STATES DEPARTMENT OF AGRICULTURE NOTICE TO CONTRACTORS AND APPLICANTS Attached is a nondiscrimination poster. In accordance with the terms of your construction contract with ________________________; (Name of Borrower or Recipient of Grant) the poster is to be displayed in all employment offices, on bulletin boards, and in other conspicuous places available to employees and applicants for employment. The poster must be displayed in the same manner by your subcontractors who are subject to the equal opportunity provisions of your contract, and you are required to furnish them with such posters. Additional copies of the posters may be obtained from this office. Any reference to Federal Government contract or contractors in the standard forms or posters is to be interpreted to include any contract for construction work financed in whole or in part with a United States Department of Agriculture (USDA) loan or grant. ''Subcontractors'' as used herein means any subcontractor holding a subcontract which calls for supplies or services required for the performance of the prime contract except subcontracts which either (1) do not exceed $10,000 ($100,000 if for standard commercial supplies or raw materials) or (2) are below the second tier and do not call for construction work at the site of construction, including any temporary location or facility established by the subcontractor specifically to meet the demands of his subcontract. A USDA official may conduct compliance reviews of contracts covered by Executive order 11246, as amended. You will be notified if such a review is scheduled. _______________________________________________________________________________ Date USDA Official _________________________________________________________________________________________________ Name of Contractor _________________________________________________________________________________________________ Address of Contractor Position 6 RD (Rev. 2-98) 26

27 USDA Form Approved Form RD OMB No (Rev.12-09)COMPLIANCE STATEMENT This statement relates to a proposed contract with ______________________________________________, (Name of borrower or grantee) who expects to finance the contract with assistance from either the Rural Housing Service (RHS), Rural Business-Cooperative Service (RBS), or the Rural Utilities Service (RUS) or their successor agencies, United States Department of Agriculture (whether by a loan, grant, loan insurance, guarantee, or other form of financial assistance). I am the undersigned bidder or prospective contractor, I represent that: 1. I have, have not, participated in a previous contract or subcontract subject to Executive Order (regarding equal employment opportunity) or a preceding similar Executive Order. 2. If I have participated in such a contract or subcontract, I have/have not, filed all compliance reports that have been required to file in connection with the contract or subcontract. If the proposed contract is for $50,000 or more or If the proposed non-construction contract is for $50,000 or more and I have 50 or more employees, I also represent that: 3. I have/have not previously had contracts subject to the written affirmative action programs requirements of the Secretary of Labor. 4. If I have participated in such a contract or subcontract, I have/have not developed and placed on file at each establishment affirmative action programs as required by the rules and regulations of the Secretary of Labor. I understand that if I have failed to file any compliance reports that have been required of me, I am not eligible and will not be eligible to have my bid considered or to enter into the proposed contract unless and until I make an arrangement regarding such reports that is satisfactory to either the RHS, RBS or RUS, or to the office where the reports are required to be filed. 27

28 I also certify that I do not maintain or provide for my employees any segregated facilities at any of my establishments, and that I do not permit my employees to perform their services at any location, under my control, where segregated facilities are maintained. I certify further that I will not maintain or provide for my employees any segregated facilities at any of my establishments, and that I will not permit my employees to perform their services at any location, under my control, where segregated facilities are maintained. I agree that a breach of this certification is a violation of the Equal Opportunity clause in my contract. As used in this certification, the term ''segregated facilities'' means any waiting rooms, work areas, restrooms and wash rooms, restaurants and other eating areas time clocks, locker rooms and other storage or dressing areas, parking lots, drinking fountains, recreation or entertainment areas, transportation, and housing facilities provided for employees which are segregated by explicit directive or are in fact segregated on the basis of race, creed, color, or national origin, because of habit, local custom, or otherwise. I further agree that (except where I have obtained identical certifications for proposed subcontractors for specific time periods) I will obtain identical certifications from proposed subcontractors prior to the award of subcontracts exceeding $10,000 which are not exempt from the provisions of the Equal Opportunity clause; that I will retain such certifications in my files; and that I will forward the following notice to such proposed subcontractors (except where the proposed subcontractors have submitted identical certifications for specific time periods): According to the Paperwork Reduction Act of 1995, an agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays the valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 10 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. Position 6 RD (Rev )

29 USDA Form Approved Form RD OMB No (Rev. 1-98) RELEASE BY CLAIMANTS The undersigned, having received payment in full for all labor, materials, supplies, or equipment supplied to ___________________________________________, Contractor, or to any subcontractor, in the construction or repair of the improvements upon the property located at: _________________________________________________________________________________________________ ________________________________________________________________________________________________, and furnished in the execution and fulfillment of contract between said Contractor and _______________________________________________ Owner, dated _____________________, do (does) hereby release and waive any and all claims, liens, and lien rights, of any kind, nature, or description whatsoever, against said property and the Owner thereof, and against said Contractor. Lien or ClaimantWork or Materials Amount Date _____________________ _______________________ ____________________ ___________ According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 30 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. POSITION 6 RD (Rev. 1-98) 29

30 USDA Form RD Form Approved (Rev. 1-98) OMB No Date: __________________________ Dear Sir: I hereby acknowledge the receipt of _________ dollars ($ ) in full payment of my contract dated _________ for improvement work which I did for you and which is described in my contract. I certify that I have paid in full for all materials purchased and all labor employed in the performance of this contract, and that there are no claims against me under this contract on account of injuries sustained by workers employed by me or by subcontractors thereunder. I hereby release you from any claims arising by virtue of this contract. I am attaching Form RD , ''Release by Claimants,'' signed by all persons from whom I have purchased materials and by all subcontractors and all persons employed in connection with my contract with the above-named borrower. WARNING The statements and representations made above are made in connection with construction financed in whole or in part by the United States Department of Agriculture (USDA). The statements and representations will be used to determine the release of USDA provided funds. The making of any false statement or misrepresentation herein may be a crime punishable under Title 18 U.S.C. § 1001 which provides in part: ''Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully falsifies, conceals or covers up by any trick, scheme, or device a material fact, or makes any false, fictitious or fraudulent statements or representations, or makes or uses any false writing or statement or entry, shall be fined under [title 18 of the United States code] or imprisoned not more than five years, or both. Sincerely, __________________________________ Contractor Position 6 According to the Paperwork Reduction Act of 1995, no persons are required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. RD (Rev. 1-98) 30

31 USDA FORM APPROVED Form RD OMB NO (Rev. 1-00) BUILDER'S WARRANTY Names and Address of Purchasers or Owners For good and valuable consideration, the undersigned Warrantor hereby warrants to the Purchasers or Owners identified above and to the successors or transferees, all of whom are hereinafter referred to as Owners that: The building, including appurtenances located on the property identified above, is constructed or improved in substantial conformity with the drawings and specifications which have been accepted in writing by the respective USDA Agency. This warranty applies to all workmanship, materials, and the installation of equipment (including, but not limited to, the heating system, water heater, ranges and refrigerator). The Owners shall give written notice to the Warrantor promptly after the discovery of any defective condition. Such written notice must be given to the Warrantor during the period of warranty. The period of warranty shall be (a) in the case of new construction or rehabilitation, one year from the date of initial occupancy of the completed or rehabilitated building, or (b) in the case of improvements made to an existing building owned by the Owners prior to the improvements being made, one year from the date of the completion of the work. It is agreed and understood that this warranty shall apply only to those defective conditions of which the Warrantor has been given written notice during the period of warranty. Warrantor further agrees that warrantor will take any necessary actions to correct such defective conditions within _______ days of receipt of written notice. If such action is not taken within __________days, the Owners may, at their option, contract with another party for the correction of the defects. Warrantor agrees to pay any expenses incurred by the Owners to correct defects covered by this warranty. This warranty shall be in addition to, and in no way reduce, all other rights and privileges which such Owners may have under any other law or instrument, and shall be binding on the Warrantor notwithstanding any provision to the contrary contained in the contract of purchase or any other instrument executed by the Owners. This warranty is executed, in part, for the purpose of inducing the United 31

32 States Department of Agriculture, (USDA) to make, insure, or guarantee a loan on the Property. If this warranty is signed by anyone other than the Warrantor, the person signing for the Warrantor represents and certifies that the person is authorized to execute same by the Warrantor and by the person's signature the Warrantor is bound under the terms and conditions of this warranty. NOTES: A- The warrantor must complete all three copies except dates, meet with owner to agree on notification period, sign and give to the Owner with the final request for payment. Owner must meet with Warrantor to agree on warranty notification period and to date and sign the warranty, owner must retain original, and forward one copy to contractor, and one to the respective USDA Agency with the final request for payment. B. This warranty shall be required in all cases involving new construction or rehabilitation of buildings including those built under contract, those built for sale without the respective USDA Agency's required construction inspections and those under conditional commitment procedures. WARNING Section 100 I of Title 18, United States Code provides: ''Whoever, in any matter within the jurisdiction of any department or agency of the United States knowingly and willfully... makes any false, fictitious or fraudulent statements or representation, or makes or uses any false writing or document knowing the same to contain any false, fictitious or fraudulent statement or entry, shall be fined not more than $250,000 or imprisoned not more than five years, or both.'‘ According to the Paperwork Reduction Act of I 995, an agency may not conductor sponsor and a person is not required to respond to a collection of information unless it displays a valid OMB control number. The valid OMB control number for this information collection is The time required to complete this information collection is estimated to average 15 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. POSITION 6 RD (Rev. 1-00)

33 NOTICE TO ALL SUPPLIERS SUB-CONTRACTORS & MATERIALS PERSONNEL “A” Billing procedures for families building under the Self-Help Housing Program: A 502 Mortgage loan is made by the Rural Development directly to each family. Each family is responsible for their own purchases. Group billing is not permissible under Government regulations. In no instances can ____________be billed for materials and labor used in the construction of a family home. _________________ acts only as a technical advisor, aiding the families in selection of materials and services. Responsibility for payment lies solely with the families, and checks are countersigned by Rural Development. When billing, pleasing set up an individual account for each family and bill accordingly. Mail statements to the family, in care of __________. Delivery invoices must be headed with family name rather than_______________, and each family must be billed separately. No purchase will be valid unless a completed purchase order is presented to the supplier prior to sale. Priced invoices must include P.O. number. Invoices number before payment can be made. This procedure will aid _____________, as the Technical Advisor, in keeping family accounts current and will result in your receiving payment promptly. No purchase is valid unless signed by a ___________________ staff member. The fact that a ________________staffer signed the purchase order does not imply in any way that it is the responsibility of ___________________ to guarantee payment. Rather it is an accounting procedure necessary to guide the family with their housing budget. Thank you for your assistance in this procedure. _______________________________________ Executive Director (A letter, incorporating the above ideas should be placed on 523 Grantees Letterhead and forwarded to all suppliers, sub-contractors and material personnel.) 33

34 NOTICE TO ALL SUPPLIERS SUB-CONTRACTORS & MATERIALS PERSONNEL “B” (Example letter – to notify supplier, family account should be closed.) DATE: Dear: The family of ___________________________has completed construction of their house in cooperation with Insert TA name and Rural Development. We request that you close out their account and send a final bill to the family at the office of (Insert Grantee Name & Address). This will facilitate prompt payment of the outstanding amount the family may owe you at this time. This letter serves also to notify you that no further charges should be made to this family by any employee of (Insert Grantee Name) or any member of the family from the present date of this letter. The family will accept no responsibility for charges made to this account past this date unless separate and independent credit arrangement have been made between you and the family named above. In no case will (Insert Grantee name) be responsible for charges made to this account after the date of this letter. I thank you for your cooperation with our program. Sincerely, Self-Help Housing Director 34


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