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 and Maintenance Division in Austin 15 days prior to the last day of letting, in a form prescribed by the department, which shall include certain information concerning the bidder's equipment and experience as well as financial condition; and
         2. (ii) have its certified public accountant or 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."
      2. (B) The department will make its examination and determination based on the information submitted, and advise the bidder of its approved bidding capacity.
      3. (C) Satisfactory audited financial information will grant a 12-month period of qualification from the date of the statement.
      4. (D) A three-month grace period of qualification, for the purpose of preparing and submitting current audited information, will be granted, if requested, prior to the expiration date of the statement.
      5. (E) The department may require current audited information at any time if circumstances develop which may alter the firm's financial condition, ownership structure, affiliation status, or ability to operate as an ongoing 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 $250,000 or less, or the project pertains to specialty items not normal to the department's roadway projects program unless the department's director of Construction and Maintenance Division 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 submit:

         1. (i) a bidder's questionnaire, in the form prescribed by the department, which includes certain information concerning a bidder's equipment and experience; and
         2. (ii) unaudited and other financial data as required in the instructions to the bidder's questionnaire.

      3. (C) The department will make its examination and determination based on the information submitted, and advise the bidder of its approved bidding capacity. A bidder with no prior experience in construction or maintenance will receive a bidding capacity of $100,000. An experienced bidder with sufficient working capital and financial capability, as determined by the department, will receive a bidding capacity of:

         1. (i) $300,00 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) $500,000 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 $500,000 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.
2. (b) Registration of subcontractors. To be eligible as a subcontractor for a construction or maintenance contract entered by the commission under Texas Civil Statutes, Article 6674a, et seq., a subcontractor must submit a completed subcontractor's questionnaire.
3. (c) Building contracts. A bidder and a subcontractor do not have to comply with this section to be eligible to bid or be a subcontractor on a building contract.
4. (d) 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.