1. (a) Purpose. It is the policy of the State Highway and Public Transportation Commission to protect the interest of the citizens of Texas by ensuring that contracts for highway improvements be awarded only to firms or individuals who, for each contract, qualify as the lowest responsible bidder, and to further ensure the use of responsible subcontractors. The commission will consider debarring a contractor under the circumstances and procedures outlined as follows.

2. (b) Definitions. The following words and terms, when used in this section, shall have the following meanings unless the context clearly indicates otherwise.

   1. (1) Affiliates--Two business entities are affiliates if they are so closely connected or associated that one of them, either directly or indirectly, controls or has the power to control the other, if a third party controls or has the power to control both of them, or if they have been so closely allied through an established course of dealings, including but not limited to, the lending of financial assistance, engaging in joint ventures, etc., as to create a public perception that the two firms are a single entity.
   2. (2) Bidding crime--Any act prohibited by state or federal law, committed in any jurisdiction, and involving fraud, conspiracy, collusion, perjury, or material misrepresentation with respect to bidding on any public contract.
   3. (3) Commission--The three-member body appointed by the Governor of Texas to compose the State Highway and Public Transportation Commission.
   4. (4) Contractor--An individual, partnership, corporation, or other business entity which is eligible through prequalification to bid on any contract let by the department, or which functions, or seeks to function, as a subcontractor under any such contract, or as a supplier of materials or equipment to be used in the construction or maintenance of a part of the state highway system.
   5. (5) Debar, debarment--To disqualify (the disqualification of) a contractor from bidding on and/or entering into contract with the state that are the responsibility of the department, or from participating as a subcontractor under any such contract, or as a supplier of materials or equipment to be used in the construction or maintenance of a part of the state highway system.
   6. (6) Department--The State Department of Highways and Public Transportation.
   7. (7) Reinstate, reinstatement--To lift, modify, or suspend (the lifting, modification, or suspension of) debarment.
   8. (8) Subcontractor--An individual, partnership, corporation, or other business entity to which the prime contractor sublets, or proposes to sublet, any portion of a highway improvement contract.

3. (c) Debarment.

   1. (1) The commission, at its sole discretion, may debar a contractor and/or its affiliates from bidding on and/or entering into contracts let by the department, from participating as a subcontractor on any such contract, and/or from supplying materials or equipment to be used in the construction or maintenance of a part of the state highway system for any of the following reasons:

      1. (A) the contractor's conviction of a bidding crime, any plea of guilty or nolo contendere by the contractor to a charge of a bidding crime, or any public admission to a bidding crime by a contractor, whether made individually or through one or more of its officers or partners;
      2. (B) conviction of the contractor of any offense, including but not limited to, the bribery of or the payment of kickbacks or secret rebates to officials, employees or agents of any state, which indicates a lack of moral or ethical integrity and which reasonably relates to or reflects upon the business practices of the contractor:
      3. (C) disqualification of the contractor by any state and/or by an agency of the federal government for substantially any of the reasons listed in this paragraph or in §9.8 of this title (relating to Supplemental Procedures for Suspension or Debarment of a Contractor). In such a case, the period of debarment shall be that established by such state and/or the federal agency.
   2. (2) Except as provided in paragraphs (3) and (4) of this subsection, the period of a single debarment shall be no longer than 36 months.
   3. (3) In the case of multiple offenses by the same contractor arising out of separate occurrences, the commission, under the same process as set forth herein, may order additional periods of debarment, even though the total debarment period exceeds 36 months.
   4. (4) In any debarment proceeding against a contractor and/or an affiliate previously disqualified under this section, §9.7 of this title (relating to Procedure for Suspension of a Contractor), or §9.8 of this title (relating to Supplemental Procedures for Suspension or Debarment of a Contractor), the commission may order debarment of that contractor and/or the affiliate for an indefinite period or for such specific term as the commission deems commensurate with its findings.

4. (d) Hearing prior to debarment.

   1. (1) It is the policy of the commission that a contractor be afforded the opportunity for a hearing prior to its debarment.
   2. (2) Subject to an agreement between the commission and a contractor subject to debarment concerning some alternative procedure, the commission shall follow §§1.21-1.63 of this title (relating to Contested Case Procedure), in making its decision whether to debar a contractor.

5. (e) Reinstatement.

   1. (1) At the discretion of the commission, a debarment may be lifted, modified, or suspended at any time, if it is in the public interest to do so.
   2. (2) Subject to an agreement between the commission and a contractor seeking reinstatement concerning some alternative procedure, the commission shall follow §§1.21-1.63 of this title (relating to Contested Case Procedure), in making its decision whether to reinstate a contractor.

6. (f) Factors considered in debarment and reinstatement decisions.

   1. (1) Any mitigating circumstances may be considered by the commission in making its decision whether to debar or reinstate a contractor. Such circumstances may include, but are not limited to:

      1. (A) the degree of the contractor's culpability;
      2. (B) whether under the facts and circumstances of the contractor's case a lengthy debarment is necessary to protect the interest of the state;
      3. (C) any restitution paid by the debarred contractor for any perceived overcharges or other damages suffered by any unit of government as a result of the contractor's bidding crime;
      4. (D) cooperation by the debarred contractor with the state, the United States, or any other sovereign body in the investigation of bidding crimes, including the contractor's providing a full and complete account of his or its particular involvement therein; and
      5. (E) the contractor's disassociation from individuals and firms that have been involved in a bidding crime.
   2. (2) If the commission determines that a contractor falsified, misrepresented, or withheld information in order to secure reinstatement or the modification of an original debarment period, the commission may declare the reinstatement or modification null and void. The commission may seek the assistance and advice of the attorney general to determine whether information submitted by the contractor has in fact been falsified, misrepresented, or does not constitute a complete disclosure.

7. (g) Rules applicable to debarment and reinstatement.

   1. (1) For the purposes of debarment, the illegal or improper conduct of an individual may be imputed to a firm with which he is or was associated or by which he is or was employed when the individual engaged in such conduct within the course of his employment or with the knowledge or approval of the firm.
   2. (2) Debarment of a contractor in no way affects his contractual obligations to the State of Texas for services already contracted for by the department.
   3. (3) Any contractor qualified with the department to bid on its contracts shall have a duty immediately to notify the department if it is or has been convicted of or debarred in connection with a bidding crime in any jurisdiction.
   4. (4) Any procedures contained in the Administrative Procedure and Texas Register Act, Texas Civil Statutes, Article 6252-13a, but not specifically included in the department's "Contested Case Procedure" shall be applicable to proceedings held under these sections.
8. (h) Notices to contractors. A copy of the foregoing Procedure for Debarment of a Contractor shall be mailed to each prequalified contractor.

Source Note:The provisions of this §9.6 adopted to be effective April 7, 1982, 7 TexReg 1314; amended to be effective August 19, 1982, 7 TexReg 2893; amended to be effective February 26, 1986, 11 TexReg 858; amended to be effective June 1, 1987, 12 TexReg 1608; amended to be effective July 21, 1988, 13 TexReg 3412.