Bid Process And Construction Contracts

Bid Process and Construction Contracts Bid Process Competitive Bidding Methods (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 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 1924.13 (e)(1)(vii) Exception to Competitive Bidding are met Obtaining Bids and Selecting A Contractor 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 1924-5, "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 1924-6 “Construction Contract” and RD 400- 6, "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 SELECTING THE RIGHT SUBCONTRACTOR 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 1924-6 “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 (cont.) 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 Contract Documents Contract documents will conform with recognized professional practices Such contract documents will contain substantially the following: Invitation for Bid Form RD 1924-5 Information for Bidders Bid Notice of Award Agreement (Construction Contract Form RD 1924-6) General Conditions Supplemental General Conditions Drawings and Specifications Contract Change Order (Form RD 1924-7) Partial Payment Estimate (Form RD 1924-18) Builder's Warranty (Form RD 1924-19) Notice “A” (Setup for Family Accounts with Vendors/Suppliers) Notice “B” (Close family accounts with Vendors/Suppliers) Summary of Contract Language 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 1924-13, "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 (cont.) December 31, 1970, who will provide an opinion as to whether the Form RD 1924-13 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 1924-6 must contain the language of clause (D) of Form RD 1924-6, which is available in all Rural Development offices The language of clause (D) of Form RD 1924-6 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 60-1.4 (a) and (b), and the Standard Federal Equal Employment Opportunity Construction Contract Specifications required by Executive Order 11246 For contract forms other than Form RD 1924-6, 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: _ ∗ Mutual Self Help Sub-Contractor Selection Questionnaire General Information Contractor Name: _ Business Address: Business Phone/Fax/Email Owners Name: _ Is this company a: Corporation Operator Partnership Joint Venture Owner Other Organization Are you a general contractor? or Sub-Trade contractor? How many years have you been in the construction business? How long under the present name? years Have you worked under a different name? If so, please list name, dates and places where business was conducted? How many full time employees you have on staff? Licensing & Bonding Contractors License # What Trade Categories is your company legally qualified to work under: Trade License # Years of experience A. _ B. _ C. _ D. _ 10 EQUAL OPPORTUNITY CLAUSE (41 CFR 60-1.4 (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 11246 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 (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 1924-6 21 Form RD 400-1 FORM APPROVED (Rev 5-00) UNITED STATES DEPARTMENT OF AGRICULTURE OMB No 0575-0018 EQUAL OPPORTUNITY AGREEMENT This agreement, dated between _(he rein 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 11246 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 11246 of September 24, 1965 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 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 11246 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 11246 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 11246 of September 24, 1965, and such other sanctions may be imposed and remedies invoked as provided in Executive Order No 11246 of September 24, 1965, or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by Law (g) The contractor will include the provisions of paragraph 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 11246 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 0575-0018 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 RD 400-1 (Rev 5-00) 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 To notify all prospective contractors to file the required 'Compliance Statement', Form RD 400-6, with their bids 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 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 To refrain from entering into any contract or contract modification subject to such Executive Order 11246 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 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 Recipient (CORPORATE SEAL) _ Name of Corporate Recipient Attest: _ _ Secretary 25 By President Form RD 400-3 (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) not exceed $10,000 ($100,000 if for standard commercial supplies or raw materials) or (2) are below the second tier and 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 26 Position RD 400-3 (Rev 2-98) USDA Form Approved Form RD 400-6 OMB No 0575-0018 (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: I have, have not, participated in a previous contract or subcontract subject to Executive Order 11246 (regarding equal employment opportunity) or a preceding similar Executive Order 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: I have/have not previously had contracts subject to the written affirmative action programs requirements of the Secretary of Labor 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 I also certify that I not maintain or provide for my employees any segregated facilities at any of my establishments, and that I 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 0575-0018 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 RD 400-6 (Rev 12-09) USDA Form Approved Form RD 1924-10 OMB No 0575-0042 (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 _, (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 Claimant Work 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 0575-0042 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 RD 1924-10 (Rev 1-98) 29 USDA Form RD 1924-9 Form Approved (Rev 1-98) OMB No 0575-0042 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 1924-10, ''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 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 0575-0042 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 1924-9 (Rev 1-98) 30 USDA FORM APPROVED Form RD 1924-19 OMB NO 0575-0042 (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 31 warranty is executed, in part, for the purpose of inducing the United 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 0575-0042 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 RD 1924-19 (Rev 1-00) 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 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