1. (a) Audited financial qualification of construction and maintenance bidders. Unless waived under paragraph (2) of this subsection, to be eligible to bid on a construction or maintenance contract a potential bidder must be prequalified in accordance with paragraph (1) of this subsection.

   1. (1) Requirements.

      1. (A) To be qualified to bid on a construction or maintenance contract, a potential bidder must:

         1. (i) submit a confidential questionnaire to the department's Construction Division in Austin 10 days prior to the last day of bid opening, in a form prescribed by the department, which shall include certain information concerning the bidder's equipment and experience as well as financial condition;
         2. (ii) have its certified public accountant submit the audited and other financial information required by the current edition of the department's Bulletin Number 2, titled "Contractor's Financial Resources";
         3. (iii) satisfactorily comply with any technical qualification requirements determined by the department to be necessary for a specific project; and
         4. (iv) for the purpose of bidding on federal-aid projects, properly complete the Certification of Eligibility Status form contained in the Confidential Questionnaire.
      2. (B) The department will make its examination and determination based on the information submitted, and advise the bidder of its approved bidding capacity. Information adverse to the potential bidder contained in the Certification of Eligibility Status form will be reviewed by the department and the Federal Highway Administration, and may result in the bidder being declared ineligible to submit bids on federal-aid projects.
      3. (C) Satisfactory audited financial information will grant a 12-month period of qualification from the date of the financial statement.
      4. (D) A three month grace period of qualification, for the purpose of preparing and submitting current audited information, will be granted prior to the expiration date of the financial statement.
      5. (E) The department may require current audited information at any time if circumstances develop which are factors that could alter the firm's financial condition, ownership structure, affiliation status, or ability to operate as an on-going concern.

   2. (2) Waiver.

      1. (A) The department will waive the audited financial qualification requirements of paragraph (1) of this subsection if the engineer's estimate is $300,000 or less, or the project pertains to specialty items not normal to the department's roadway projects program unless the executive director or the director's designee determines that audited financial qualification should be required due to:

         1. (i) safety considerations;
         2. (ii) the complexity of the work; or
         3. (iii) the potential impact of the work on adjacent property owners.

      2. (B) To be eligible to bid on a contract for which the audited financial qualification requirements have been waived under subparagraph (A) of this paragraph, or on a contract to be awarded under §9.19 of this title (relating to Emergency Contract Procedures), a bidder must:

         1. (i) submit a bidder's questionnaire, in a form prescribed by the department, which includes certain information concerning a bidder's equipment and experience;
         2. (ii) submit unaudited and other data as required in the instructions to the bidder's questionnaire;
         3. (iii) satisfactorily comply with any technical qualification requirements determined by the department to be necessary on a specific project; and
         4. (iv) for a federal-aid project, properly complete the Certification of Eligibility Status form contained in the bidder's questionnaire (Information adverse to the potential bidder contained in the certification will be reviewed by the department and by the Federal Highway Administration, and may result in the bidder being declared ineligible to submit bids on a federal-aid project).

      3. (C) The department will make its examination and determination based on the information submitted, and advise the bidder of its approved bidding capacity.

         1. (i) A bidder with no prior experience in construction or maintenance will receive a bidding capacity of $300,000.

         2. (ii) An experienced bidder with sufficient working capital and financial capability, as determined by the department, will receive a bidding capacity of:

            1. (I) $500,000 for a bidder submitting compiled financial information if the principals of the bidder have at least one year experience in construction and/or maintenance and have satisfactorily completed at least two projects in these fields;
            2. (II) $1,000,000 for a bidder submitting compiled financial information if the principals of the bidder have at least two years experience in construction and/or maintenance and have satisfactorily completed at least four projects in these fields; and
            3. (III) over $1,000,000 for a bidder submitting reviewed financial information if the principals of the bidder have at least three years of experience in construction and/or maintenance and have satisfactorily completed at least six projects in these fields (The amount of the bidding capacity will be determined by multiplying the net working capital by a factor determined by the department based upon the expected dollar volume of projects to be awarded and the number of bidders prequalified by the department. In the event that this calculation does not result in an amount greater than $1,000,000, the bidder will receive a bidding capacity equal to the amount listed in subclause (II) of this clause).
2. (b) Building contracts. To be eligible to bid on a building contract, a potential bidder must satisfactorily comply with any financial, experience, technical, or other requirement contained in the governing specifications applicable to the project.
3. (c) Financial statements. For purposes of this section, an audited financial statement involves an examination of the accounting system, records, and financial statements by an independent certified public accountant in accordance with generally accepted auditing standards. Based on the examination, the auditor expresses an opinion concerning the fairness of the financial statements in conformity with generally accepted accounting principles. A reviewed financial statement is substantially less in scope than an audited financial statement, and consists primarily of inquiries of company personnel and analytical procedures applied to financial data by an independent certified public accountant. Only negative assurance is expressed by the auditor, meaning the auditor is not aware of any material modifications that should be made in order for the financial statements to conform to generally accepted accounting principles. A compiled financial statement is limited to presenting in the form of financial statements information that is the representation of management. No opinion or any other form of assurance is expressed on the statements by the auditor.

Source Note:The provisions of this §9.12 adopted to be effective November 23, 1994, 19 TexReg 8867; amended to be effective September 22, 1995, 20 TexReg 7086; amended to be effective December 12, 1999, 24 TexReg 10901.