1. (a) Exception. Administrative qualification is not necessary for non-engineering firms and provider services included in Group 6 - bridge inspection, Group 12 - materials inspection and testing, Group 14 - geotechnical services, Group 15 - surveying and mapping, or Group 16 - architecture as listed on the department's web site for precertification. Provider compensation for these services is typically based on units of service rates. The Audit Office and the Design Division may agree to grant exceptions for other provider services on a case by case basis. In determining whether to grant an exception, the Audit Office and the Design Division may consider the nature of the services to be provided, the method of payment to be used, the reasonableness and feasibility of requiring an audited indirect cost rate, and any other relevant factors. Any request for an exception must be received by the Audit Office prior to the due date of the letter of interest.
2. (b) Time to provide information. Each prime provider and subprovider must submit the information described in this section no later than the LOI due date. The administrative qualification submittal is a separate submittal from the precertification submittal, and is submitted to the Texas Department of Transportation, Audit Office, 125 E. 11th Street, Austin, Texas 78701-2483. Administrative qualification submittals will not be received by the Design Division.

3. (c) Evaluation factors. The department will consider the following factors in determining administrative 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) Indirect cost rate audit. The prime provider or subprovider must submit an indirect cost rate audit for the time period specified in subparagraph (C) of this paragraph performed by an independent certified public accountant, an agency of the federal government, another state transportation agency, or a local transit agency except as provided in subparagraph (D) of this paragraph. If the audit is performed by an independent certified public accountant, the provider or subprovider must assure that the department will be given access to the audit work papers.

      1. (A) The audit report shall include statements that the audit was performed in accordance with generally accepted government auditing standards and the indirect cost rate was developed in accordance with the Federal Acquisition Regulations, 48 CFR Part 31.

         1. (i) AASHTO Uniform Audit and Accounting Guide is acceptable guidance for the audit of the indirect cost rate.
         2. (ii) Department requirements that differ from the AASHTO guide are contained in the Indirect Cost Rate Guidance available through the department's website.
      2. (B) The department may perform indirect cost 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.
      3. (C) The end of the fiscal period of the audit report must be within twenty four months of the date the notice was posted.
      4. (D) The department may contract with a prime provider or allow utilization of a subprovider lacking an approved indirect cost rate audit if the prime provider or subprovider has been in operation, as currently organized, for less than one fiscal year or the estimated value of its portion of the contract is not more than $500,000.
   3. (3) Salary rates. The department will consider current salary rates, range of rates, or average rates by job classification.
   4. (4) Direct costs. The department will consider 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 to the managing office when notified by the Design Division upon selection approval of a provider for the contract, for use in negotiations as identified in §9.37 of this subchapter (relating to Selection).
5. (e) Prohibited actions. Administrative qualification information obtained through this section will not be made available to the CST by the department's 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; amended to be effective March 15, 2001, 26 TexReg 2053; amended to be effective February 17, 2005, 30 TexReg 725; amended to be effective November 18, 2010, 35 TexReg 10056.