SOW_Engineering_-_Transmission_June_24.docx

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SECTION C - Statement of Work (SOW) Engineering Services – Transmission

C.1 BACKGROUND

The mission of Electric Program within the Rural Utilities Service, an agency within the U.S. Department of Agriculture, is to provide reliable and affordable electricity which is essential to the economic well-being and quality of life for all of the nation’s rural residents. The Electric Program traditionally makes loans for generation, transmission and distribution infrastructure to provide electric service to rural beneficiaries.

Engineering consultant services are necessary to supplement the in house expertise of agency engineers and other program personnel with respect to the analysis of electric transmission project loans and related approval actions.

The Rural Electrification Act of 1936, as amended (RE Act), authorizes the Secretary of Agriculture in carrying out RE Act functions, to contract for outside consultant services funded by a borrower where appropriate to facilitate timely action on applications for financial assistance or other requested approvals. The regulations implementing this may be found at 7 CFR Part 1789, Use of Consultants Funded by Borrowers. USDA may also make consultant services available to any other agencies as it deems appropriate. USDA will retain the option to pay for these services using conventionally appropriated funds.

Most of the RUS Electric Program borrowers are organized as not-for-profit cooperatives. As security for the loans, RUS typically takes a first mortgage lien on all of the Borrower’s property including after-acquired property. The implementing regulations for the RUS loan program are found at 7 CFR Part 1710 et seq. Loans may also be made to corporations, states, territories and subdivision and agencies such as municipalities and people’s utility districts.

C.2 OBJECTIVES

The Electric program seeks to award two contracts for advisory services using an indefinite-quantity-indefinite-period (IDIQ) agreement for a period of a base year plus four (4) renewal option years with firms that are qualified experts in the analysis of the design and construction and permitting risk of electric transmission projects, and in assessing the market environment for transmission. The term market environment is used here to refer to both the assessment of the likely capacity usage for a given project (the need) and the likelihood of achieving full cost recovery and repayment of the loan.

The Electric Program seeks contractors with expertise to review and assess the information submitted to the Electric Program for transmission projects. In most cases, contractors will provide advice that will be used by the Electric Program in its determination of whether or not to approve an application for a long term mortgage loan where construction is financed on a reimbursable basis. In most cases construction risk will be analyzed. The contractor must have the expertise to assist the agency in various aspects of the loan due diligence and underwriting and post loan servicing, as applicable, including:

· Review and assess the information submitted to the Electric Program in the application received for the project

· Assist in the Electric Program’s determination of whether the Agency’s published regulatory requirements have been met

· Independently assess the rate making methodology utilized by the borrower to recover the costs of the project

· Assist the agency in developing appropriate conditions to be met prior to funding

· Monitor, as applicable, conditions precedent to the drawdown of loan funds

· Develop loan covenants to be incorporated in the loan documentation; and

· Monitor, as applicable, the borrower’s compliance with its obligations under the loan documents

C.3 SCOPE

Task orders may or may not be project specific. In some cases a borrower may request an agency approval that is required under the loan contract but which does not relate to new project construction.

The contractor is expected to interact with the agency technical and subject matter experts, provide support to program personnel and legal counsel and any other consultants that may assist with various aspects of a project or requested approval.

During the due diligence phase, the contractor will be asked to review the technical aspects of the project, including the justification or need for the project, engineering design, cost and schedule estimates and the technical provisions of the project’s contracts. This review may also include permitting risk, if applicable.

Additionally, the contractor is required to assess all aspects of project risk including but not limited to environmental permitting, usage, interconnection with all applicable utilities, operations and maintenance.

Prior to the obligation of funds the contractor will be required to provide an independent engineer’s report and to certify a number of items, including but not limited to certification of the following:

· Satisfaction of the conditions precedent to obligation

· The operational completion date is reasonably likely to occur by the date established in the project schedule

· The project cost budget is realistic

Prior to the final draw of loan funds the contractor will be required to certify that the project construction is complete and within budget.

In the Final Independent Engineer’s report the contractor will be expected to:

· Identify key engineering, permitting and operational risks of the project and describe how these risks have been addressed

· Review key project plans and provide an assessment of whether the applicant has sufficient technical and managerial wherewithal to complete the project

· Include an analysis of the revenue needed to recover the costs of the project and the marginal impact on the wholesale rate structure of the borrower of this added revenue requirement

Copy to:

4. Identify Cost: Invoices shall identify the names and value for rates of labor for staff performing Contractor Line Item Numbers (CLINS). Invoices shall include a summary that indicates the CLINS in which the invoice is charged and the total amount charged to each CLIN and the total for all CLIN charges. A travel summary, if appropriate, shall also be included, as well as all Travel Expense Vouchers for the period and receipts in accordance with the FTR. The travel summary shall identify the CLIN, list the name of traveler, departure date and location, arrival dates and locations, total cost per trip, General and Administrative costs, and a total of all travel costs.

C.7 CONTRACT DELIVERABLES

1. Progress Reports:

The contractor will provide bi-weekly status reports outlining activities for the previous week, tasks accomplished and any outstanding issues and plans for the forthcoming two week period. The COTR may request weekly status reports.

2. Final Report:

The contractor will provide a Draft Final Independent Engineer’s Report to be reviewed by the Electric Program Project Leader (or designee) to confirm that the report fully addresses the issues of interest to the Electric Program. The Final Report must address the Electric Program’s concerns raised in its review of the draft report. The Final Report must identify the sources of data it may refer to and should include a discussion of the reasons the data and the source information should be considered reliable. Conclusory statements without supporting data and sources identified for that data will not constitute adequate performance. The Final Report must be accepted by the Electric Program Project Leader (or designee).

3. Records:

The records developed by the contractor, including correspondence with the government and all related parties, may be incorporated by the government as part of the record of decision for a loan or related approval. The contractor shall make copies of these records at available to the government upon request at no incremental cost.

C.8 SPECIAL CONSIDERATIONS

Contractor requirements, scope of consultant duties, contract deliverables and contract closeout terms apply as specified in this contract. The USDA has the sole discretion in the selection of consultants to provide services that are funded by borrowers and to the form of contract utilized pursuant to 7 C.F.R. Part 1789. The Electric Program has the sole discretion to prescribe terms and conditions of consultant contracts.

When a borrower is funding services under this contract, the award of a task order will be subject to the prior funding of an escrow account in an amount satisfactory to USDA and the execution of the following agreements:

1. an Indemnification agreement in favor of the Government that satisfies the requirements of 7 CFR §1789.162;

2. a Funding Agreement that satisfies the requirements of 7 CFR §1789.166; and

3. an Escrow Agreement that satisfies the requirements of 7 CFR §1789.167.

It is the borrower’s responsibility to obtain the Electric Program’s approval of the agreements prior to the award of the task order.

It is the contractor’s responsibility to assure that work performed does not exceed the level of funds available in the escrow account for payment of services rendered pursuant to a task order. The consultant will immediately notify the COTR and CO when the escrow account balance falls below $50,000.00, unless the Government specifies, in writing, a different amount.

C.9 TASK ORDER AWARDS

The first task order for work for a given transmission borrower will be competed between all contractor awardees that are party to a transmission engineering services contract. Task orders will be awarded on the basis of a best value determination. The government is not obligated to compete subsequent task orders for work relating to that borrower but reserves the right to do so throughout the initial and all renewal option periods for the transmission engineering services contract, not to exceed five years total.

In the ordinary course, all subsequent transmission task orders for the same borrower will first be offered to the initial task order awardee for that borrower after the government first solicits a cost estimate for the subsequent task order and determines that the applicant is willing to fund this amount in the escrow account discussed in section C.8. However, if it is determined that a conflict of interest has developed on the part of that contractor, the government may solicit a bid from the remaining awardee(s).

The government also reserves the right to solicit bids from the remaining awardee(s) in the event (1) the borrower in question declines to fund the escrow account for a subsequent task order due to cost or (2) the government has determined there was inadequate performance for one or more earlier task orders relating to that borrower.