1. (a) Exception. Administrative qualification is not necessary for provider services included in Group 6--bridge inspection, Group 12--materials inspection and testing, Group 14--geotechnical services, Group 15--surveying and mapping, and/or Group 16--architecture of §9.43 of this title (relating to Qualification Requirements by Work Group). Providers compensation for these services is based on units of service rates or a lump sum contract.
2. (b) Time to provide information. Prime providers and subproviders may provide information described in this section prior to selection. This information must be provided after selection. The administrative qualification submittal is a separate submittal from the precertification submittal, and is submitted to the Texas Department of Transportation, Audit Office, 8th Floor, 125 E. 11th Street, Austin, Texas 78701-2483. Administrative qualification submittals will not be received by the CRC. Submission prior to selection is encouraged to facilitate timely contract execution requirements.

3. (c) Evaluation factors. The department will consider the following factors in determining qualifications of prime providers or subproviders.

   1. (1) Adequate accounting system. The prime provider or subproviders must demonstrate the existence of an adequate accounting system that meets the department's audit requirements, as evidenced by certification by an independent certified public accountant or governmental agency. The system must be adequate to support all billings made to the department and other clients.

   2. (2) Overhead rate audit. The prime provider or subprovider must submit an overhead rate audit for the most recently completed fiscal year performed by an independent certified public accountant, an independent audit organization, or governmental agency except as provided in subparagraphs (E) and (F) of this paragraph.

      1. (A) The audit report shall include statements that the audit was performed in accordance with the criteria required by the department and generally accepted auditing standards including:

         1. (i) Federal Acquisition Regulations, 48 CFR 31; and
         2. (ii) department overhead guidelines, a copy of which will be included in the precertification information packet.
      2. (B) The audit report shall describe the estimating system used by the prime provider or subprovider, and state whether estimates are prepared in accordance with the accounting system.
      3. (C) The department may perform overhead rate audits of any prime provider or subprovider under contract to, or desiring to do business with the department. These audits will be conducted consistent with the criteria outlined in this subsection.
      4. (D) The end of the fiscal period of the audit report must be within 18 months of the provider selection.

      5. (E) The department may contract with a prime provider or allow utilization of a subprovider lacking an approved overhead rate audit if:

         1. (i) the value of the contract is less than $250,000;
         2. (ii) the prime provider or subprovider can adequately document and support all proposed costs; and
         3. (iii) all other qualification requirements of this subsection are met.
      6. (F) Prime providers or subproviders who have been in business for less than one complete fiscal year of the provider, have reorganized to the extent that the most recent overhead rate audit does not reflect a currently valid overhead rate, or have established and operated an accounting system acceptable to the department for a period of less than one year shall prepare a projected overhead rate which will be supported by estimated expenditures in accordance with the department's overhead rate audit guidelines for the first fiscal year's operations since organization, reorganization, or implementation of the acceptable accounting system. The department's audit office shall review the estimate and establish a provisional combined overhead rate for use in contract negotiations.
   3. (3) Salary rates. The department will consider current salaries and ranges by classification.
   4. (4) Direct costs. The department will consider other direct costs such as copies, Computer Aided Design and Drafting (CADD), or other direct costs.
4. (d) Provision of administrative qualification information. The department's Audit Office will provide administrative qualification information when requested by a managing office upon selection of a provider for the contract, for use in negotiations as identified in §9.37 of this title (relating to Selection).
5. (e) Prohibited actions. Administrative qualification information obtained through this section will not be made available to the CST by the Audit Office prior to contract selection.

Source Note:The provisions of this §9.42 adopted to be effective April 1, 1997, 22 TexReg 64; amended to be effective June 21, 1998, 23 TexReg 6258.