1. (a) Work performed by the department. The department may, in its discretion and consistent with state law, provide all or part of the work connected with the project in the department's normal course of business. For work performed by the department, the following provisions will apply.

   1. (1) The department will account for all costs of the project in the normal course of business in accordance with applicable law.
   2. (2) The department will make progress payments or set aside funds from the bank on behalf of the applicant as the department deems necessary. Such actions shall bind the applicant to repayment according to the terms of the agreement(s). Interest shall accrue from the date of the payment or setting aside of funds.
   3. (3) The department's actions and decisions regarding the project shall not be contestable by the applicant.
   4. (4) The applicant shall provide the department, and if applicable, the Federal Highway Administration, and the Federal Transit Administration, or their authorized representatives as applicable, with right of entry or access to all properties or locations necessary to perform activities required to execute the work, inspect the work or aid otherwise in the prompt pursuit of the work.

2. (b) Work performed by applicant. The department may, in its discretion and consistent with state law, provide that the applicant conduct all or part of the work connected with the project. For work performed by the applicant, the following provisions apply.

   1. (1) The applicant shall comply with applicable requirements of the federal act, Title 23, United States Code, Title 49, United States Code, other applicable state and federal law, and all terms and conditions of any agreements. Where approval or concurrence of the Federal Highway Administration, the Federal Transit Administration, or other federal agency is required, the applicant shall seek such action through the department. The applicant shall reimburse the department for any loss of federal funds to the department resulting from the applicant's failure to comply.
   2. (2) The applicant shall maintain project records and accounts in accordance with generally accepted accounting principles, and all applicable federal and state requirements.
   3. (3) The applicant shall, at the applicant's cost, have a full audit performed annually of the project records and accounts by an independent certified public accountant. The applicant shall cause the auditor to provide a full copy of the audit report and any other management letters or auditor's comments directly to the department.
   4. (4) The applicant shall hold all project records, accounts, and supporting documents open for state or federal audits until project completion.
   5. (5) Upon completion of the project, the applicant shall forward to the department all project files as prescribed by the department. The department shall retain these files until all financial assistance has been repaid and necessary audits have been performed.

Source Note:The provisions of this §6.42 adopted to be effective January 8, 1998, 23 TexReg 151; amended to be effective January 5, 2006, 30 TexReg 8990.