The repayment interest rate and the frequency of interest compounding will be as

The repayment interest rate and the frequency of interest compounding will be as established in the IUP under which the project is funded. Source: Miss. Code Ann. § 41-3-16(3)(b) APPENDIX A Determination of Eligible and Allowable Costs CONTENTS Page General A. Construction 1. Allowable 2. Unallowable B. Equipment, Materials and Supplies 1. Allowable 2. Unallowable D Change Orders E Professional Services 1. Allowable 2. Unallowable F. Claims 1. Allowable 2. Unallowable G. Mitigation 1. Allowable 2. Unallowable H. Real Property 1. Allowable 2. Unallowable I. Miscellaneous Costs 1. Allowable 2. Unallowable J. Project Income A. General Eligible costs are those costs in which DWSIRLF loan participation is authorized pursuant to applicable statute. Allowable costs are eligible costs that meet the following general criteria in addition to any specific identification as an allowable cost within Appendix A: (1) Are necessary and reasonable for the proper and efficient administration and construction of the project, are allocable to and within the defined scope of the project, and are not a general expense required to carry out the overall responsibilities of the loan recipient. (2) Are authorized or not prohibited under state or local laws or regulations. (3) Conform to any limitations or exclusions set forth in state laws or other governing limitations as to types or amounts of cost items. (4) Are consistent with policies, regulations, and procedures that apply uniformly to both state assisted and other activities of the loan recipient. (5) Are accorded consistent treatment through the application of generally accepted accounting principles appropriate to the circumstances. (6) Are not allocable to, or included as, a cost of any other Federal or State financed program in either the current, prior, or future period. (7) Are approved as allowable by the Department. (8) Are within the scope and budget period of the project as per the loan agreement. However, the budget period does not apply to the planning and design allowance. (9) Notwithstanding this Appendix, are eligible and allowable under the SDWA and any implementing federal regulations. (10) Are determined without regard to any previous DWSELF or DWSIRLF loan funding provided for facilities to be replaced, upgraded, or rehabilitated, except as described in Rule 2.9.1 (6) of these regulations. (11) Are procured in accordance with Appendix D of these regulations. B. Construction (1) Allowable costs include the costs for/of: (a) The following types of projects, and as further described or limited in the Intended Use Plan under which the project is funded: (i) projects that will facilitate compliance with national primary drinking water regulations; (ii) projects that will facilitate consolidation of public water systems or the use of an alternative water supply; (iii) projects that will upgrade a drinking water system; or (iv) development of a public water system to replace private drinking water supplies if the water poses a significant threat to human health. (b) Subagreements for construction work on drinking water systems improvements. These subagreements are the prime contracts (including any subcontracts) for such construction work and any necessary contracts for purchase of equipment, materials and supplies by the loan recipient. Should any costs for such contracts be incurred prior to loan offer, said costs will be allowable provided that the loan recipient has requested and obtained Department approval of said costs and provided that the loan agreement budget period includes the time period these costs are incurred. (c) Drinking water distribution lines on drinking water distribution projects which provide drinking water to previously unserved areas, and the service lines between the public water main and the water meter. (d) Drinking water distribution system rehabilitation and replacement (including rehabilitation and replacement of eligible service lines) necessary to eliminate water loss or to preserve/restore the safety or integrity of the system, as determined by the Department based on submitted project planning documentation. (e) Water system capacity equal to all water distribution system leaks that will remain in the system, as determined by the Department based on submitted project planning documentation. (f) Drinking water systems which include service to industrial or commercial users when such works are owned by an eligible applicant. (g) Buildings that house or protect water production, treatment or distribution facilities. (h) Replacement of existing service lines from a water main up to a building (which includes any privately owned portion) if an identified public health threat exists (such as lead in the drinking water) that can be reduced by the replacement of the existing service line.(2) Unallowable costs include: (a) Costs for the following types of projects: (i) Projects primarily for growth, development, or fire protection; (ii) Projects that can be consolidated (except for projects to implement such consolidation); (iii) Projects for systems without adequate financial or managerial support necessary to comply with SDWA requirements and all requirements of the loan agreement; and (iv) Projects for drinking water systems which serve federal users exclusively, or almost exclusively. (b) Construction and construction related costs which are incurred after the Department approved eligible contract completion date (including approved time extension change orders), unless approved by the Department pursuant to Rule 3.7.5.4 of these regulations. (c) Bonus payments that are part of the construction contract for completion of building before a contractual completion date, unless required by state law. (d) Administration buildings. C. Equipment, Materials and Supplies (1) Allowable costs include the costs of: (a) A reasonable inventory of chemicals and supplies necessary to initiate plant operations and laboratory items necessary to conduct tests required for plant operation. (b) Necessary and reasonable safety equipment, provided the equipment meets applicable federal, state, local or industry safety requirements. (c) Constructing or installing water flow metering devices for the primary purpose of monitoring and/or billing inter-municipal or other flows or serving and billing individual residential, commercial or industrial users. (d) Backflow preventers. (e) Computers, display monitors, and computer software which are designed into the control system for the daily operation of the water system, used for the operational control and analysis of the water system, or specifically designed for the operation and maintenance (including the cost of developing unique operating programs for the specific loan funded project) of the treatment works. (f) Specialized mobile equipment for the operation of the water system, or for the maintenance of equipment. These items include, but are not limited to: (i) Portable stand-by generators. (ii) Portable emergency pumps to provide "pump-around" capability in the event of booster station failure or pipeline breaks. (2) Unallowable costs include the costs of: (a) Vehicles for the transportation of the loan recipient's employees, including buses, trucks, cars, motorcycles, ATVs, golf carts, bicycles, etc. (b) Items of routine "programmed" maintenance such as filters, couplings, hoses, belts, etc. (c) Radios, televisions, VCRs, camcorders, and other items of a similar nature. (d) Shop equipment installed at the treatment works or elsewhere. (e) Distribution system maintenance equipment. (f) Replacement parts. (g) Furnishings, office equipment, and maintenance equipment, including chairs, desks, file cabinets, typewriters, coffee tables, telephones, office supplies, calculators, copiers, book cases, shelves and lamps, etc. (h) Ordinary site and building maintenance equipment such as lawn mowers, rakes, shovels, brooms, picks, hedge trimmers, and other such equipment. (i) Hand tools such as screw drivers, pliers, socket wrenches, electric drills or saws, etc. (j) Computers for non-operational purposes, such as for the scheduling of equipment maintenance and replacement and for accounting and billing services. D. Change Orders (1) Change orders are allowable provided the costs are: (a) Necessary and reasonable. (b) Within the scope of the project. (c) Not caused by the loan recipient's mismanagement. d) Not caused by the loan recipient's vicarious liability for the improper actions of others. (e) In conformance with the DWSIRLF regulations. (2) Provided the above requirements are met, the following are examples of allowable change orders. (a) Construction costs resulting from defects in the plans, design drawings and specifications, or other contract documents only to the extent that the costs would have been incurred if the contract documents on which the bids were based had been free of the defects, and excluding the costs of any rework, delay, acceleration or disruption caused by such defects. If the defect is realized after substantial construction work has been completed, and therefore requires rework, delay, or additional work beyond that which would have been required by defect-free drawings, the cost would still be allowable, but the additional cost of rework or delay is unallowable. The additional cost is measured as the difference between the cost which would have been included in the bid based on defect free drawings and the actual cost of the change order. (b) Equitable adjustments for differing site conditions. E. Professional Services The term professional services refers to engineering, legal, administrative, and similar services. (1) Allowable costs include the costs of/for: (a) Planning, application, and design. These costs include all engineering and other costs that are incurred in planning and designing the project, as well as applying for the loan. These costs include but are not necessarily limited to the following services, as determined allowable in Appendix B of these regulations. (i) Preparing the Part 1 and 2 Loan Application. (ii) Public notification and public hearings. (iii) Preparing the plans, specifications, and contract documents. (iv) Value engineering. (v) Preparing the draft user charge ordinance/corporate resolution and draft user charge system. (vi) Preparing interlocal agreements necessary for the project. (vii) Surveys and all other work needed to obtain clearance or permits from all intergovernmental review agencies. (viii) Preparing the loan application, preparing applications for permits required by federal, state or local regulations or procedures. (ix) Compliance with the requirements of the Uniform Relocation Assistance and Real Property Acquisition Policies Act as implemented by federal regulation 49CFR Part 24.101(a)(1) and (2), as applicable. (b) Construction Phase Professional Services (i) Services incurred during the advertisement, award and construction of a project to insure compliance with state purchasing laws and to insure that the project is built in conformance with the design plans and specifications. These services are primarily engineering and construction management services provided during the advertisement, award and building of the project, including observation services, materials testing (e.g., concrete strength, soil compaction, etc.) required by the specifications, inspecting and expediting the delivery of equipment and material purchased directly by the loan recipient, reviewing shop drawings and full scale record drawings, preparing change orders, payment processing, etc. (ii) Legal, engineering, and other services incurred by the loan recipient in deciding procurement protests and defending their decisions in protest appeals under Appendix L are allowable regardless of the outcome of the protest, provided there was not an attempt by the loan recipient to violate or circumvent state purchase laws. (iii) Development of an operation and maintenance manual. (iv) Start-up services for onsite training of operating personnel in operation and control of specific treatment processes, laboratory procedures, and maintenance and records management, provided these costs are incurred prior to the end of the 30 day period established in Rule 3.7.7 (11) of these regulations. (v) Professional liability or other insurance premiums for a provider of professional services only for insurance which the provider maintains in connection with the general conduct of its business. The types and extent of coverage must be in accordance with sound business practice, and the rates and premiums must be reasonable under the circumstances but only as part of an indirect cost agreement. (vi) Administrative services associated with the construction project and administering the DWSIRLF loan. (vii) Services, other than engineering services during construction/repairs, such as railway or highway flagmen or utility or highway inspectors, required during the building of the project, provided that (1) The entity responsible for the affected railway, highway, or utility requires such services for all parties conducting similar types of work, regardless of the source of construction funding for the project, or the services are required by law. (2) The cost of such services has not been included in the construction contractor's bid price. (viii) Engineering or other services necessary to correct defects in the project planning documents, design drawings and specifications or other documents to the extent that such costs would have been allowable for preparing defect free documents. (2) Unallowable costs include the costs of: (a) Public liaison services. (b) Local travel (i.e., commuting expenses) between living quarters and the construction site for persons working at the site. F. Claims (1) Allowable costs, provided the costs are properly documented, incurred and requested prior to the end of the 30 day period established Rule 3.7.7 (11) of these regulations, include: (a) Change orders to the construction contract as a result of settlements, arbitration awards, or court judgements, to the extent that they would have been allowable had there not been a claim. (b) The costs of assessing the merits of, negotiating, or defending a claim against the loan recipient are allowable, regardless of the outcome, provided that the matter under dispute is not the result of fraudulent or illegal actions or mismanagement on the part of the loan recipient. (c) Alterations in engineering, legal, contracts etc. as a result of settlements, arbitration awards, or court judgements are allowable to the same extent that they would have been allowable had there not been a claim. (2) Unallowable costs include the costs of: (a) Claims arising from work outside the scope of the loan. (b) Claims resulting from fraudulent or illegal activities. (c) Claims resulting from mismanagement by the loan recipient. (d) Claims resulting from the loan recipient's vicarious liability for the improper action of others. (e) Settlements, arbitration awards or court judgements over the allowable costs as established in these regulations. G. Mitigation (1) Allowable costs include the costs of: (a) Mitigation of only direct adverse physical impacts resulting from construction of the project. (b) Reasonable site screening necessary to support project planning, environmental review, or evaluation of potential impacts to adjacent properties. (c) Groundwater monitoring facilities necessary to determine the possibility of groundwater deterioration, depletion or modification resulting from construction of the project. The extent of the allowable costs for groundwater monitoring facilities is decided on a case-by-case basis and depends on the size and complexity of the project and the present and potential future use of the groundwater. (2) Unallowable costs include the costs of: (a) Solutions to aesthetic problems, including design details which require expensive building techniques and architectural features and hardware, that are unreasonable or substantially higher in cost than approvable alternatives and that neither enhance the function or appearance of the treatment works nor reflect regional architectural tradition. (b) Land acquired for the mitigation of adverse environmental effects identified pursuant to an environmental review. H. Real Property (1) Allowable costs include the costs of: (a) Land acquired in fee simple title or by easement, from a willing seller, for: (i) Water supply and/or storage purposes; (ii) A consolidation project; and (iii) Protection of the source water of the system from contamination. (b) Preparation of the treatment works site before, during and, to the extent agreed on in the loan agreement, after building. These include the cost of: (i) Demolition of existing structures on the treatment works site (including rights-of-way) if building cannot be undertaken without such demolition. Demolition of existing structures on the treatment works site (including rights-of-way), when not required for building the project, will be considered to be an allowable cost only if the existing structures constitute a real and present hazard to safety, public health, or water quality and when the hazard can best be abated by the removal of the existing structures. (ii) Removal, relocation or replacement of utilities, provided the loan recipient is legally obligated to pay for such as a result of the DWSIRLF project under state or local law. (iii) Restoration of streets and rights-of-way to their original condition. The need for such restoration must result directly from the construction of the DWSIRLF project and is generally limited to repaving the width of trench. (2) Unallowable costs include the costs of: (a) Any amount paid by the loan recipient for eligible land in excess of the appraised value or the loan recipient's record of negotiation. An amount higher than the appraised value may be found allowable if the loan recipient provides sufficient written documentation to the Department and receives allowability approval prior to the actual acquisition. (b) Removal, relocation or replacement of utilities located on land by privilege, such as a franchise, unless the loan recipient is required to pay such costs under state or local law. (c) Land acquired in fee simple title or by easements for land other than that described under H.(1)(a) above, such as easements for the purpose of water distribution system expansion or improvement. (d) Acquiring all or part of an existing publicly or privately owned drinking water treatment works. (e) The demolition of an existing structure for the convenience of the owner as a means of increasing property value or property use. I. Miscellaneous Costs (1) Allowable costs include the costs of: (a) Equipment rental and material costs necessary for the construction project. (b) Meeting specific legal requirements directly related to the project unless otherwise specified in these regulations. (c) Royalties associated with the procurement of the right to use, or the rights in, a patented product, apparatus, or process, provided that they are based on a published fee schedule or on reasonable fees charged to other users under similar conditions. (d) Training workshops/seminars for loan recipient employees that are necessary to provide instruction in operational, administrative, fiscal or contracting procedures required to complete the construction of the project. Attendance at such training workshops or seminars must occur after loan offer but before the end of the loan agreement budget period. (e) A reasonable project sign. (2) Unallowable costs include the costs of: (a) Salaries and benefits for the loan recipient’s employees. (b) Ordinary operating expenses of the loan recipient, including salaries and expenses of elected and appointed officials and preparation of routine financial reports and studies. (c) Administrative, engineering and legal activities associated with the creation of special departments, agencies, commissions, regions, districts, associations, or other entities. (d) Approval, preparation, issuance and sale of bonds or other forms of indebtedness required to finance any portion of the project and the interest on them. (e) Personal injury compensation or damages arising out of the project. (f) Fines and penalties due to violations of or failure to comply with federal, state or local laws, regulations or procedures, and related legal expenses. (g) Operation and maintenance of the water system, which include but are not limited to, labor, utilities, chemicals, materials and supplies, monitoring, testing, equipment replacement, periodic payment of royalties for the right to operate under a patent, etc. (h) Lease payments. (i) Travel, by the loan recipient, unless included under an indirect cost agreement, and except as allowed under I.(1)(d) above. J. Project Income: (1) Bid bond forfeitures will have no effect on the determination of allowable and unallowable costs. The loan recipient must make the determination of whether or not a bid bond will be forfeited. (2) The amount of liquidated damages collected will have no effect on the determination of allowable and unallowable costs, except as described by Rule 3.7.5.4 of these regulations. (3) Interest income on DWSIRLF payments to loan recipients will have no effect on the determination of allowable and unallowable costs. (4) The loan recipient must receive all income generated from use of the project facilities. APPENDIX B Recommended Allowances for Project Planning, Design and Construction Phase Professional Services A. Recommended Allowances for Project Planning and Design. The recommended allowance for facilities project and design will be determined using Table 1 of this Appendix. This table is not intended to be used to determine the consulting engineer's actual compensation for facilities planning and design services. Compensation for these services should be based upon the nature, scope, and complexity of the services required for the project. Table 1 includes a recommended range for engineering costs during project planning and design, which the loan applicant/recipient should consider while evaluating the engineer's proposal. If the engineer's proposal exceeds the normal range the loan applicant/recipient should consider requiring the engineer to justify why the project is more difficult than normal. The actual compensation justified for a particular project may be more or less than the suggested range of the allowance for these services shown in Table 1. If the consulting engineer and loan applicant/recipient determine that the maximum recommended allowance calculated using Table 1 of this Appendix does not adequately reflect the nature, scope, and complexity of the services required for the project, the consulting engineer may submit a detailed cost proposal, in such format as required by the Department, justifying a compensation amount greater than Table 1 recommends. If, in the Department's opinion the detailed cost proposal justifies such, the Department will approve an allowance for planning and design greater than those recommended in Table 1. The decision of the Department in this matter will be final. Projects for which the loan applicant/recipient must acquire easements or real property in accordance with the Uniform Relocation Assistance and Real Property Acquisition Policies Act may receive an additional 1% above the recommended maximum percentages shown in Table 1 for planning and design allowances. Also, projects for which a value engineering study is conducted may receive an additional 3% above the recommended maximum percentages shown in Table 1 for the planning and design allowance. B. Recommended Allowance for Construction Phase Professional Services. The Allowance for Construction Phase Professional Services includes costs for engineering services during bidding, construction, and post-construction phases, observation during construction, loan administration (payment processing, MBE/WBE DBE compliance, etc.), and other services (i.e. legal, audit, etc.) that are associated with the construction of the DWSIRLF project. The recommended allowance for construction phase professional services will be determined using Table 2 of this Appendix. This table is not intended to be used to determine the actual compensation for construction phase professional services. Compensation for these professional services should be based upon the nature, scope, and complexity of the services required for the project. Table 2 separates the Total Recommended Allowance for Construction Phase Professional Services shown in the far right hand column into three types of services: engineering, loan administration, and other services and provides suggested ranges for each of these services depending upon the complexity of the project. The loan applicant/recipient should consider these recommended ranges when evaluating proposals for these services. If the proposals exceed the normal ranges for any of these services the loan applicant/recipient should consider requiring the professional to justify why the project is more difficult than normal. The actual compensation justified for a particular project may be more or less than the suggested range of the allowance for these services shown in Table 2. If the consulting engineer and loan applicant/recipient determine that the maximum recommended allowance calculated using Table 2 of this Appendix does not adequately reflect the nature, scope, and complexity of the services required for the project, the consulting engineer may submit a detailed cost proposal, in such format as required by the Department, justifying a compensation amount greater than Table 2 recommends. If in the Department's opinion the detailed cost proposal justifies such, the Department will approve an allowance for construction phase professional services greater than those recommended in Table 2. The decision of the Department in this matter will be final. Although Table 2 shows engineering and loan administration as separate costs, the loan applicant/recipient is not required by these regulations to contract for these services separately. The loan applicant/recipient may wish to have the consulting engineer provide both scopes of services, and under such an arrangement, the engineer's contract should not exceed the total of the suggested ranges for both services. C. General Guidance for Use of the Allowance Tables in this Appendix. The estimated and final allowances will be determined in accordance with this Appendix. All allowance percentages will be calculated to four decimal places using linear interpolation. The allowance amount is computed by applying the resulting total allowance percentage to the initial allowable building cost, which is the initial award amount of all prime contracts for construction, equipment, supplies, and testing of the project. The estimated allowances are to be based on the estimate of the initial allowable building cost from the Part 1 Loan Application. The final allowances will be determined one time only for each project, based on the initial allowable as-bid cost, and will not be adjusted for subsequent cost increases or decreases. Following execution of the loan agreement, the loan recipient may request and receive payment for the planning and design allowance and the allowance for construction phase professional services, in accordance with the procedures described in Rule 3.9.1.5 (1), (3) and (4) of these regulations. Advances of allowances will not be provided. D. Additional Planning and Design Phase Services Additional planning and design phase services may be eligible for DWSIRLF loan participation when such services are necessary for completion of the project but are not included within the recommended allowance percentages established in Table 1 of this Appendix. These services are project-specific and will vary depending on project complexity, site conditions, regulatory requirements, and other factors. When approved by the Department, the cost of these services may be funded in addition to the calculated planning and design allowance. Examples of additional planning and design phase services may include, but are not limited to: • Geotechnical investigations and testing • Environmental studies, permitting, and coordination (e.g., wetlands, cultural resources, stormwater, USACE permits) • Easement or right-of-way surveys and acquisition support services • Hydraulic modeling or advanced system analysis beyond standard design requirements • Pilot testing or treatability studies • Other specialized engineering services required due to unique project conditions Eligibility and Documentation Requirements To be considered allowable, additional planning and design phase services must: 1. Be necessary for the planning, design, or permitting of the project and not duplicative of services included in the base allowance; 2. Be clearly identified and described in the Loan Application (Part 2) or subsequent submittals; 3. Include a detailed scope of work and cost breakdown; and 4. Be supported by documentation demonstrating reasonableness of cost. Documentation of reasonableness may include, as applicable: • Detailed cost proposals with labor categories, hours, and rates; • Comparison to similar projects or historical costs; • Independent cost estimates; or • Justification of project-specific conditions requiring the additional services. The Department will review all proposed additional services and determine eligibility and allowability on a case-by-case basis. Costs determined to be unreasonable, unnecessary, or insufficiently justified may be reduced or deemed unallowable. Table 1 Recommended Allowances for Project Planning and Design Allowable Building Cost Allowances as a Percentage of Building Cost Based Upon the Difficulty of the Project Normal to Difficult $50,000 or less 11.7500% to 13.2000% $100,000 10.7500% to 12.2000% $150,000 10.0700% to 11.2519% $200,000 9.4000% to 10.5000% $300,000 8.7000% to 9.8042% $400,000 8.3000% to 9.6312% $500,000 8.0000% to 9.4417% $600,000 7.8000% to 9.1467% $700,000 7.7000% to 9.0297% $800,000 7.5000% to 8.8089% $900,000 7.4000% to 8.7472% $1,000,000 7.2500% to 8.5673% $1,100,000 7.1030% to 8.3911% $1,200,000 6.9600% to 8.2185% $1,300,000 6.8200% to 8.0495% $1,400,000 6.6800% to 7.8840% $1,500,000 or greater 6.5400% to 7.7219% Table 2 Recommended Allowances for Construction Phase Professional Services Allowances as a Percentage of Building Cost Based Upon the Difficulty of the Project Estimated Building Cost Engineering Services Normal to Difficult Loan Administration Normal to Difficult Other Services Normal to Difficult Total Allowance for Professional Services Normal to Difficult $50,000 or less 6.4400% to 11.7250% 2.0700% to 3.7688% 0.6900% to 1.2563% 9.2000% to 16.7500% $100,000 5.7400% to 11.725% 1.8450% to 3.7688% 0.6150% to 1.2563% 8.2000% to 16.7500% $150,000 5.2850% to 11.725% 1.6988% to 3.7688% 0.5663% to 1.2563% 7.5500% to 16.7500% $200,000 4.8300% to 9.9400% 1.5525% to 3.1950% 0.5175% to 1.0650% 6.9000% to 14.2000% $300,000 4.4100% to 8.1690% 1.4175% to 2.6258% 0.4725% to 0.8753% 6.3000% to 11.6700% $400,000 4.0600% to 7.2800% 1.3050% to 2.3400% 0.4350% to 0.7800% 5.8000% to 10.4000% $500,000 3.8150% to 6.5800% 1.2263% to 2.1150% 0.4088% to 0.7050% 5.4500% to 09.4000% $600,000 3.5700% to 5.9500% 1.1475% to 1.9125% 0.3825% to 0.6375% 5.1000% to 08.5000% $700,000 3.4300% to 5.4600% 1.1025% to 1.7550% 0.3675% to 0.5850% 4.9000% to 07.8000% $800,000 3.2900% to 5.0400% 1.0575% to 1.6200% 0.3525% to 0.5400% 4.7000% to 07.2000% $900,000 3.2200% to 4.6690% 1.0350% to 1.5008% 0.3450% to 0.5003% 4.6000% to 06.6700% $1,000,000 3.1500% to 4.4800% 1.0125% to 1.4400% 0.3375% to 0.4800% 4.5000% to 06.4000% $1,100,000 3.0815% to 4.2986% 0.9905% to 1.3817% 0.3302% to 0.4606% 4.4022% to 06.1409% Table 2 (Continued) Recommended Allowances for Construction Phase Professional Services Allowances as a Percentage of Building Cost Based Upon the Difficulty of the Project Estimated Building Cost Engineering Services Normal to Difficult Loan Administration Normal to Difficult Other Services Normal to Difficult Total Allowance for Professional Services Normal to Difficult $1,200,000 3.0146% to 4.1246% 0.9690% to 1.3258% 0.3230% to 0.4419% 4.3066% to 5.8923% $1,300,000 2.9492% to 3.9577% 0.9479% to 1.2721% 0.3160% to 0.4240% 4.2131% to 5.6538% $1,400,000 2.8852% to 3.7975% 0.9274% to 1.2206% 0.3091% to 0.4069% 4.1217% to 5.4250% $1,500,000 or greater 2.8226% to 3.6438% 0.9073% to 1.1712% 0.3024% to 0.3904% 4.0323% to 5.2054% APPENDIX C Environmental Review Process A. Project Planning Documentation Description of Environmental Impacts Project planning documentation submitted in accordance with these regulations must contain sufficient information to allow the Department to evaluate the environmental impacts of the proposed project and any corresponding mitigative measures, including but not necessarily limited to the following: (1) Surface and groundwater resources; (2) Archaeological/historical/cultural resources; (3) Vegetative/wildlife resources; (4) Wetlands and navigable waterways; (5) Floodplains; (6) Prime or important farmlands; (7) Coastal zones; (8) Wild and scenic rivers; and (9) Air Quality. B. Environmental Review. The Department may issue a State Categorical Exclusion (CE) for projects that do not individually or cumulatively have a significant effect on the human environment. Projects eligible for a State Categorical Exclusion may include, but are not limited to: (a) Minor rehabilitation of existing facilities; (b) Functional replacement of equipment or infrastructure; (c) Ancillary facilities adjacent or appurtenant to existing structures; (d) Onsite treatment systems; (e) Actions conducted entirely within an existing permanent facility; (f) Repair, maintenance, permitting, or minor alterations to existing facilities; (g) Replacement or reconstruction of existing utility systems and/or facilities involving no expansion of capacity; (h) Small hydropower projects at existing facilities; (i) Planning and design only, inventories, potholing, water meters, SCADA systems, rehabilitation of wells, tanks, and treatment plants, and replacement of water lines with the same size and capacity. A State Categorical Exclusion shall be issued only when the Department determines that: (j) The project will not have a significant adverse effect on the environment, or any such effects have been resolved to the satisfaction of the Department; (k) The project will not adversely affect cultural resources, habitats of endangered or threatened species, or environmentally important natural resource areas, or any such effects have been resolved to the satisfaction of the Department; and (l) The project is not expected to cause significant public controversy. Projects approved under a State Categorical Exclusion are not subject to Intergovernmental Review (IGR) correspondence when the Department determines that the project does not involve impacts to resources protected under applicable cross-cutting federal authorities. The Department may also issue a State Categorical Exclusion for projects that have undergone coordination or review with appropriate agencies and for which all environmental concerns have been resolved, and no significant impacts remain. A State Categorical Exclusion shall not be issued for projects that: (a) Involve impacts subject to federal cross-cutting authorities, unless such impacts have been evaluated and resolved to the satisfaction of the Department; (b) Involve expansion of system capacity or service area, or construction of new facilities beyond the existing footprint, excluding rehabilitation, repair, or replacement of existing facilities that do not increase capacity; (c) Are located in or may affect floodplains, wetlands, important farmland, aquifer recharge zones, or other environmentally important natural resource areas, unless all impacts have been evaluated and resolved to the satisfaction of the Department; (d) Are not cost-effective or may cause significant public controversy; or (e) May negatively impact cultural resources or endangered or threatened species and their critical habitats, unless all impacts have been resolved to the satisfaction of the Department. The Department may revoke a State Categorical Exclusion at any time if significant adverse information becomes available. (2) Finding of No Significant Impact (FONSI) on the Environment The Department will issue a Finding Of No Significant Impact (FONSI) and an Environmental Assessment (EA) when, based upon review of the environmental information submitted for the project… it appears that a project will not have a significant adverse environmental impact, but does not qualify for a CE. The environmental assessment EA will describe the existing environment, the purpose and need for the project, the project to be built, the alternatives analyzed including no action, the references consulted, the expected environmental impacts of the project, the actions necessary to minimize expected adverse impacts, and the cost to build and operate the project. (3) Amendment to a Finding of No Significant Impact FONSI to the Environment FONSI amendments are occasionally needed to describe changes to proposed facilities that have already been described in a FONSI. The environmental assessment EA that accompanies the amendment will describe the changes and any expected new impacts on the environment due to the changes. The original environmental assessment EA will be reissued with the environmental assessment EA amendment in those cases where it is deemed to be necessary to assure clarity. (4) Environmental Impact Statement (EIS) If the Department determines that an environmental impact statement (EIS) is needed, the document will be prepared in general conformance with EPA Regulation 40 CFR Part 6, or as deemed appropriate by the Department. (5) Reaffirmation of an Environmental Action If five years will pass between the issuance of a CE, FONSI, Amendment to a FONSI, or an EIS and the offer of DWSIRLF funding, the environmental impact of the project will be re-evaluated. However, a re-evaluation may not be required when the most recent Amendment to a FONSI or EIS is less than five years old. If there have been no significant changes, the Department will issue a reaffirmation of the environmental action. If the original environmental action cannot be reaffirmed, the Department will issue a new environmental action, as appropriate. (6) No Further Action The Department will issue a CE, FONSI, or EIS on all DWSIRLF projects. If there are significant changes in the project after the issuance of the environmental documents, those changes will be described in an Amendment to a FONSI. Some changes are minor, however, and the Department may determine that a separate Amendment need not be issued. Such minor changes may include but are not limited to: (a) Adding work that would otherwise qualify for a categorical exclusion. (b) Changes in the size of pump stations, storage facilities, wells, distribution lines, etc. (c) Minor changes in the size of water treatment unit processes. (d) Minor rerouting of distribution lines when the new route i) will be mostly on public property and ii) will not adversely affect cultural resources, habitats of endangered or threatened species, or environmentally important natural resource areas. All affected property owners must be notified by the loan recipient. (e) Changes in the cost of the project, the average monthly user charge, or the method of financing. C. Issuance of the Environmental Action. Copies of all environmental actions will be issued to the appropriate intergovernmental review agencies listed in Appendix K; other agencies must be contacted as needed. Copies must also be sent to any individuals or groups requesting them. All environmental actions will also be published in an appropriate local newspaper. All environmental actions will provide for at least a 30 day period from the day of issuance to receive comments from agencies, groups, or individuals. All such comments will be evaluated by the Department before finalizing any environmental action. Immediately after issuing an environmental action and before the comment period has expired, the Department may conditionally determine that project planning documentation is sufficient to proceed, and a loan agreement may be conditionally offered. In such a case, no funds will be transferred to the loan recipient, and authority to award construction contracts will not be given until the comment period has expired and all substantial adverse comments have been addressed. D. Resolution of Adverse Comments. Adverse comments received as a result of the environmental review process will be addressed in the following manner: (1) The Department will first require the loan recipient to resolve the adverse comments, subject to Department approval. (2) If the loan recipient is unable to resolve the adverse comments and secure approval, the Department will render a decision concerning the adverse comments. (3) Should the loan recipient or the party which originally made the adverse comments desire to appeal the above decision, a request for an informal hearing must be received by the Department within 30 days after the date of such decision. Upon receipt of such a request, an informal hearing will be held with staff members, as designated by the Board Chairman, and the affected parties. The Board Chairman, or his designee, will render a decision on the appeal as a result of the informal hearing. (4) Should the loan recipient or the party which originally made the adverse comments desire to appeal the above informal hearing decision, a request for a formal hearing by the Board must be received by the Department within 30 days after the date of such decision. Upon receipt of such a request, the Local Governments and Rural Water Systems Improvements Board will hold a formal hearing to consider the matter and will render a decision. (5) Appeals of the above formal hearing decision may be made to the Chancery Court in accordance with state law. APPENDIX D Procurement Requirements for DWSIRLF Loan Recipients In the procurement of all construction, equipment, materials, supplies, professional services and non-professional services and all other costs related to the DWSIRLF project, all loan recipients must comply with state purchasing laws as they apply to local governments. The procurement and conduct of all professional engineering and land surveying services must also be in accordance with the Code of Conduct and other guidance and interpretations established by the Mississippi State Board of Registration for Professional Engineers and Land Surveyors. The procurement of all construction contracts must also be in accordance with the rules and regulations of the State Board of Contractors and other guidance and interpretations established by the Mississippi State Board of Contractors. All loan recipients must submit a procurement certification, as required by the Department, indicating that all of the above referenced requirements have been met. Should it be determined that any of the above procurement requirements are violated, the Department may determine that the related costs are unallowable and may require repayment of all DWSIRLF Loan funds paid for such costs, in accordance with Rule 3.9.1.6 of these regulations. APPENDIX E DWSIRLF Disadvantaged Business Enterprise (DBE) Requirements (formerly referred to as Minority and Women's Business Enterprise) (MBE/WBE) Requirements The Department will establish "fair share" objectives for participation by minority and women's disadvantaged business enterprises (DBE) in DWSIRLF funded projects. The loan recipient must undertake the following steps in the procurement of non-professional services, equipment, supplies, and construction: (1) Include qualified minority and women's disadvantaged businesses on solicitation lists. (2) Assure that minority and women's disadvantaged businesses are solicited whenever they are potential sources. (3) Divide total requirements, when economically feasible, into small tasks or quantities to permit maximum participation by disadvantaged minority and women's businesses. (4) Establish delivery schedules when practical which will encourage participation by disadvantaged minority and women's businesses. (5) Use the services and assistance of the Office of Minority Business Enterprise of the Mississippi Department of Economic and Community Development and the Minority Business Development Centers of the U. S. Department of Commerce, as appropriate. (6) Require the contractor to take the steps listed above, if the contractor awards subagreements. The loan recipient, registered engineer, and prime contractor(s) must also follow MBE/WBE DBE guidance documents provided by the Department, unless otherwise approved by the Department. DBE’s Minority and women's business enterprises must be certified by the Mississippi Office of Minority Business Enterprises, the Mississippi Department of Transportation, or other agencies recognized by these Departments. APPENDIX F Debarment and Suspension The Board is prohibited from entering into loan agreements with loan applicants that have been debarred or suspended by any state or federal agency. Loan recipients are prohibited from entering into contractual agreements with individuals, businesses, organizations, or any other entities that have been debarred or suspended by any state or federal agency. Loan recipients are responsible for ensuring that prime contractors utilized on the project are not debarred or suspended. Likewise, prime contractors are responsible for ensuring that subcontractors utilized on the project are not debarred or suspended. Anyone may contact the Board concerning the existence of a cause for debarment or suspension. The Board may refer the matter to the State Attorney General or other appropriate office for further investigation. If, after review or investigation, the Board reasonably believes that a cause for debarment exists, the Board may propose debarment or suspension and may initiate procedures similar to, but not necessarily identical to, federal regulation 40 CFR Part 32: Debarment and Suspension Under EPA Assistance Programs. Such above described debarment or suspension actions will not affect existing executed contractual agreements, unless such agreements have been terminated or suspended under the terms of the agreement by the loan recipient. APPENDIX G DWSIRLF Disputes Procedures Only DWSIRLF loan recipients may submit a notice of dispute (disagreement) with a decision made by the Department, with the exception of decisions regarding Appendix C, Environmental Review Process, of these regulations. The following procedures will be used to resolve disputes between the loan recipient and the Department. (1) The loan recipient must submit a written notice of dispute with a Department decision, including a summary of the dispute and reasons the loan recipient believes the Department decision should be reversed. (2) The Department will then render a written decision on the dispute and will include reasons for the decision. (3) Should the loan recipient desire to appeal the second Department decision, a request for an informal hearing must be received by the Department within 30 days after the date of that decision. Upon receipt of such a request, an informal hearing will be held with staff members, as designated by the Board Chairman, and the affected parties. The Board Chairman, or his designee, will render a decision on the appeal as a result of the informal hearing. (4) Should the loan recipient desire to appeal the above informal hearing decision, a request for a formal hearing before the Local Governments and Rural Water Systems Improvements Board must be received by the Department within 30 days after the date of such decision. Upon receipt of such a request, the Board will hold a formal hearing to consider the matter and will render a decision. (5) Appeals of the above formal hearing decision may be made to the Chancery Court in accordance with state law. APPENDIX H Cross-Cutting Federal Laws and Authorities A number of other federal laws and authorities also apply to projects and activities funded by the DWSIRLF. These apply by virtue of their own authority, are referred to as cross-cutting federal laws and authorities, and are listed below: Environmental: Archeological and Historical Preservation Act of 1974, PL 93-291 Clean Air Act, 42 U.S.C. 7506(c) Coastal Barrier Resources Act, 16 U.S.C. 3501 et seq. Coastal Zone Management Act of 1972, PL 92-583, as amended Endangered Species Act 16 U.S.C. 1531, et seq. Executive Order 11593, Protection and Enhancement of the Cultural Environment Executive Order 11988, Floodplain Management Executive Order 11990, Protection of Wetlands Farmland Protection Policy Act, 7 U.S.C. 4201 et seq. Fish and Wildlife Coordination Act, PL 85-624, as amended National Environmental Policies Act of 1969, 42 U.S.C. 4321 et seq. National Historic Preservation Act of 1966, PL 89-665, as amended Safe Drinking Water Act, 42 U.S.C. 300 et seq., Public Law 93-523, as amended Wild and Scenic Rivers Act, PL 90-542, as amended Historic Sites Act of 1935, PL 74-292 "National Interim Primary Drinking Water Regulations", Environmental Protection Agency, Water Programs, Federal Register 40, No. 246, December 24, 1975, 59566 - 59574. "Secondary Maximum Contaminant Levels", Environmental Protection Agency, Water Programs, Federal Register 42, March 31,1977, 17144 - 17146. Economic: Demonstration Cities and Metropolitan Development Act of 1966, PL 89-754, as amended Social Legislation: Age Discrimination Act, PL 94-135 Civil Rights Act of 1964, PL 88-352 Executive Order 11246, Equal Employment Opportunity Executive Orders 11625 and 12138, Women's and Minority Business Enterprise Rehabilitation Act of 1973, PL 93-112 (including Executive Orders 11914 and 11250) Executive Order 12898, Environmental Justice Miscellaneous Authority: Uniform Relocation and Real Property Acquisition Policies Act of 1970, as amended, PL 91-646, as implemented by Federal Regulation 49 CFR Part 24.101(a)(1) and (2) as applicable. Executive Order 12549 - Debarment and Suspension Tax Reform Act of 1986 APPENDIX I Waste, Fraud and Abuse The loan recipient is responsible for preventing, detecting, and prosecuting waste, fraud, abuse, and all other corrupt practices which occur in relation to the DWSIRLF loan project. If the loan recipient becomes aware of allegations, evidence, or the appearance of corrupt practices, the loan recipient must: (1) Immediately inform the Department in writing. (2) Promptly pursue available state and local legal, administrative, and contractual remedies. The Department may disallow costs under the loan agreement where it is determined that such costs are related to waste, fraud, abuse or other corrupt practices. The Department may also require repayment of DWSIRLF loan funds paid for such costs in accordance with Rule 3.9.1.6 of these regulations. APPENDIX J DWSIRLF Loan Recipient Accounting and Auditing Requirements All DWSIRLF loan recipients must maintain project accounts in accordance with generally accepted government accounting standards, as defined by the Guidelines of the Municipal Accounting and Audit Manual, as prescribed by the State Auditor's Office. Charges to the project account must be properly supported, related to eligible construction costs, and documented by appropriate records. These project accounts must be maintained as separate accounts. All contracts for professional services, construction, equipment, and supplies must include an access to audit clause which gives the Department and its representatives access to and the right to audit, inspect, copy and examine books, financial records and other documents relating directly to the receipt and disbursement of DWSIRLF funds. APPENDIX K Intergovernmental Review Process During preparation of project planning documentation, the loan applicant shall consult the appropriate intergovernmental review agencies regarding potential impacts to archaeological, cultural, natural, and other protected resources. The applicant is responsible for submitting project information to the appropriate intergovernmental review agencies and obtaining written comments, determinations, permits, approvals, or documentation indicating that such actions are not required. A. Intergovernmental Review Agencies: (1) Mississippi Department of Archives and History (for archaeological/cultural review) (2) Mississippi Natural Heritage Program (for vegetative/wildlife review) (3) U.S. Army Corps of Engineers, Regulatory Functions Branch [for Section 404 (wetlands), Section 10 (navigable waterways), and floodplain impact review] (4) Mississippi Department of Marine Resources (Jackson, Harrison, and Hancock County Projects Only; for shellfish review and Mississippi Coastal Program review) (5) U. S. Fish and Wildlife Service (Jackson, Harrison, and Hancock County projects only; for Coastal Barriers Resources Act review) (6) U. S. Forest Service (projects located in a designated Wild and Scenic River Basin only; for Wild and Scenic Rivers review) B. Project Planning and Intergovernmental Review Coordination During preparation of the project planning documentation, the appropriate intergovernmental review agencies should be consulted about the proposed project area concerning the existence of any known or possible archaeological/cultural sites, endangered vegetation/wildlife, wetlands, floodplain impacts, wild/scenic river impacts, shellfish/coastal program impacts, or coastal barriers resources impact. If feasible, the project should avoid negative impacts on areas for which a concern has been expressed by an intergovernmental review agency. If it is not feasible to avoid negative impacts on these areas, the appropriate intergovernmental review agency should be consulted concerning the probability of obtaining clearance to construct the selected plan. Where an agency expresses substantial concern that clearance of the selected plan may not be obtained, appropriate modification, mitigation, and/or other sites must be pursued in coordination with the Department and the appropriate agency prior to submission of the project planning documentation. This effort should avoid completion of a project planning documentation which may not later receive intergovernmental review clearance. However, the loan recipient should recognize that subsequent surveys, applications, or other information may result in further intergovernmental review agency concerns which must be addressed prior to clearance. Project planning documentation, or a project information package sufficient to describe the proposed construction and potential impacts, must be submitted to the appropriate intergovernmental review agencies with a request for written comments and a determination on the need for archaeological/cultural resource surveys, vegetative/wildlife surveys, Section 404/Section 10 permits, U. S. Forest Service permits, Mississippi Department of Marine Resources permits, and U.S. Fish and Wildlife approval or other actions. The project planning documentation must include a map showing the proposed construction and the land use (i. e. residential, commercial, industrial, farmland, pasture, wooded, wetlands, or other) in the areas of construction. The Department strongly suggests that photographs of the areas of construction also be included in order to expedite these determinations. The Department must be copied on the transmittal letters (including all attached maps, photographs, etc.) to all intergovernmental review agencies. These agencies should provide written comments and a determination on the need for surveys, permits, or other actions. All applicable intergovernmental review agency comment letters must be included and addressed in the project file and addressed in the environmental review documentation. C. Loan Application If the appropriate intergovernmental review agency has determined these actions are necessary, completed archaeological/cultural surveys must be submitted to the Mississippi Department of Archives and History for approval; completed vegetative/wildlife surveys must be submitted to the Mississippi Natural Heritage Program for approval; and completed Section 404/Section 10 permit applications must be submitted to the U.S. Army Corps of Engineers (and the Mississippi Department of Marine Resources for Jackson, Harrison, and Hancock County projects). The Department must be copied on the transmittal letters to the intergovernmental review agencies. A completed Standard Form 424 (Application For Federal Assistance), a brief narrative describing the project, a map showing the location of all proposed construction, the archaeological/cultural and vegetative/wildlife survey approval letters, and copies of the issued Section 404/Section 10 Permits and Mississippi Department of Marine Resources Permits (or letters stating that surveys or permits are not required) must be submitted to the Department, the Mississippi Department of Finance & Administration, Office of Policy Development and New Initiatives, and the local Planning and Development District. The Office of Policy and New Initiatives will solicit comments from agencies and other interested parties and will provide the applicant with a clearance form, as appropriate. The clearance form from the Office of Policy Development and New Initiatives, along with any comments received, must be submitted to the Department with the loan application. APPENDIX L DWSIRLF Procurement Protest Procedures This Appendix sets forth the process for the resolution of procurement protests filed with the loan recipient by an adversely affected party. The Loan Recipient's protest procedures must include the requirements of this Appendix. (1) Prior to advertisement for bids, the loan recipient must establish its own procedures for prompt consideration of initial protests concerning solicitations or contract awards. A "protest" is a written complaint concerning the loan recipient's solicitation or award of a contract. The protest must be filed with the loan recipient by a party with a direct financial interest adversely affected by a loan recipient's procurement action and must be filed in accordance with and within the time frame established by the loan recipient's protest procedures. (2) Any party who transmits any document concerning the protest during the course of a protest and protest resolution must simultaneously furnish all other affected parties and the Department with a copy of all documents in the transmittal. (3) Upon receipt of a protest, the loan recipient must make a determination on the protest in accordance with the loan recipient's protest procedures within thirty (30) calendar days after such protest, or sooner if so required by the loan recipient's procurement protest procedures. (4) The party with a direct financial interest adversely affected by a loan recipient's determination of the protest may appeal such a determination only through the appropriate court of competent jurisdiction, provided such appeal is initiated within seven (7) calendar days after receipt of the determination. (5) Any delay due to a protest or protest resolution will not relieve the loan recipient of the requirement to meet the project schedule established in the loan agreement, nor will such delays prevent the Department from pursuing the remedies for default established in the loan agreement. APPENDIX M Related State Laws and Regulations The loan recipient must comply with the following related state laws and regulations during the planning, design, construction, and operation of the project. The listing below does not relieve the loan recipient from the responsibility of compliance with all applicable laws and regulations, whether listed or not. - "Mississippi Safe Drinking Water Law of 1976", Section 41-26-1 through 41-26- 21, Mississippi Code of 1972, annotated. - "Primary Drinking Water Regulations", latest edition, Mississippi State Board of Health Environmental Regulations, Division 300 - Water Supply, Part 301, Public Water Systems. - "Municipal and Domestic Water and Wastewater System Operator's Certification Act of 1986", Section 21-27-201 through 21-27-221, Mississippi Code of 1972, annotated. - Regulations Governing the Certification of Municipal and Domestic Water System Operators", latest edition, Mississippi State Board of Health Environmental Regulations, Division 300 - Water Supply, Part 302. APPENDIX N National Pollutant Discharge Elimination System (NPDES) and Siting Criteria Regulations The following requirements apply to those drinking water treatment facilities that have or will construct wastewater treatment facilities necessary to treat waste generated by their drinking water treatment facilities. The loan recipient must insure that all current regulations of the Commission on Environmental Quality and the Environmental Quality Permit Board are complied with during the planning, design, and construction of any wastewater treatment facilities associated with this DWSIRLF loan project. These regulations include "Wastewater Permit Regulations for National Pollutant Discharge Elimination System (NPDES), Underground and Injection Control (UIC) and State Operating Permits" and "Guidelines for Review of Siting Criteria in Applications for Air and Water Pollution Control Permits". It is the loan recipient's responsibility to insure that the project is in compliance with these regulations and all future amendments. Also, the loan recipient must comply with the following requirements: (1) All planning documents submitted to the Department for review must clearly indicate that a 150 foot buffer zone between the wastewater treatment facility and the nearest adjoining property line is provided. This must be shown on a plan view of the drinking water treatment facility site. If it is not possible to provide a 150 foot buffer zone, the planning document must indicate that a written waiver from the adjoining property owner(s) will be necessary. (2) All design plans submitted to the Department for review must clearly display the 150 foot buffer zone for the wastewater treatment facility. If it is not possible to provide a 150 foot buffer zone, a written waiver from the adjoining property owner(s) must also accompany the design plans. When a waiver is necessary, it is strongly suggested that this be obtained prior to substantial work on the treatment facility design. An NPDES permit application must accompany all design plans for wastewater treatment facilities, if a permit or permit modification is required. (3) All appraisals, negotiations, purchase agreements, and site certificates must include the required buffer zones, unless a waiver was previously submitted along with the design plans. APPENDIX O Contract Claims The Loan Recipient acknowledges and agrees that the Department is not a party, in any manner whatsoever, to any contract between the DWSIRLF Loan Recipient and the construction contractor(s), the consulting engineer(s), the attorney(s), the equipment supplier(s), the subcontractor(s) or any other parties of any kind whatsoever (hereinafter collectively referred to as “vendor”). The Loan Recipient also acknowledges and agrees that any benefit to vendors contracting with the Loan Recipient arising from, or associated with this contract is strictly incidental and all such vendors are not, and are not intended to be considered as third party beneficiaries under any agreement between the Department and the Loan Recipient. Upon execution of any contract between the Loan Recipient and any other party in regard to a DWSIRLF funded project, the Department does not assume any authority, duties, responsibility, or liability in contract claims identification, negotiation, resolution, or any other actions regarding contract claims under the contract(s) between the Loan Recipient and any other party. No actions taken by the Department, either directly or indirectly, in regard to the DWSIRLF loan funded project constitute or establish any determinations, authority, duty, responsibility, or liability under the contract(s) between the Loan Recipient and any other party. The Loan Recipient agrees and warrants that it shall include language, approved by the Department, in its contracts with its vendors requiring the Loan Recipient and its vendors to acknowledge and agree that the Department is not a party, in anyway whatsoever, to the contract between the Loan Recipient and its vendors. Such language shall require the Loan Recipient and vendors to acknowledge and agree that the role of the Department is strictly that of a lender, that the vendors are not and are not intended to be considered a third party beneficiary under any agreement between the Department and the Loan Recipient. Additionally, such language shall also require the Loan Recipient and its vendors to acknowledge and agree that any action taken by the Department in its role as administrator for the revolving loan programs, or in its separate and distinct role as regulator, shall not in any way change or alter its position as that of lender. The Loan Recipient and the contracting party must resolve all claims and contract disputes by negotiation, arbitration, litigation, or other means as provided in the contract documents and state law, prior to submission of any change order to the Department for review and approval in order to obtain a DWSIRLF loan eligibility/allowability determination.