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, and/or Group 16 - architecture as listed on the department's web site for precertification. Providers compensation for these services is typically based on units of service rates.
2. (b) Time to provide information. Prime providers and subproviders may provide information described in this section prior to selection. If the information is not furnished before selection, it must be provided after selection and before contract execution. 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. 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) 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 subparagraphs (D) and (E) 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 auditing standards and the indirect cost rate was developed in accordance with the Federal Acquisition Regulations, 48 CRF 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 eighteen months of the provider selection.

      4. (D) The department may contract with a prime provider or allow utilization of a subprovider lacking an approved indirect cost 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.
      5. (E) Prime providers or subproviders who have been in operation with an accounting system acceptable to the department, for less than one fiscal year since organization or comprehensive reorganization shall prepare a projected indirect cost rate for the first fiscal year of operation. The indirect cost rate will be supported by estimated expenditures and be in accordance with the Indirect Cost Rate guidance referred to in subparagraph A of this paragraph. The department's Audit Office will review the estimate and establish a provisional indirect cost rate for use in contract negotiations.
   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 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 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.