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TITLE 43TRANSPORTATION
PART 1TEXAS DEPARTMENT OF TRANSPORTATION
CHAPTER 9CONTRACT AND GRANT MANAGEMENT
SUBCHAPTER BHIGHWAY IMPROVEMENT CONTRACTS
RULE §9.12Qualification of Bidders

(a) Eligibility. To be eligible to bid on department contracts, potential bidders must satisfy the requirements listed in this section. All potential bidders must complete a Confidential Questionnaire or a Bidders Questionnaire.

  (1) If the department has accepted from a contractor a properly completed Confidential Questionnaire, as described in subsection (c) of this section, and audited financial information, as described in subsection (b)(1) of this section, the contractor is eligible to bid on any project for which the contractor meets any necessary special technical qualification requirements, has sufficient available bidding capacity, and has submitted a properly completed a Certification of Eligibility Status form if it is a federal-aid project.

  (2) A contractor that has submitted only a Bidders Questionnaire, as described in subsection (d) of this section, may bid only on a specified project for which the department has waived the requirements of paragraph (1) of this subsection. Such a project is referred to as a waived project and generally has one of the following characteristics:

    (A) the engineer's estimate for the project is $300,000 or less;

    (B) the project is a routine maintenance project;

    (C) the project is an emergency project; or

    (D) the project contains specialty items not normal to the department's roadway projects program.

(b) Financial Information. This section refers to three types of financial information.

  (1) Audited financial information is information resulting from 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 information in conformity with generally accepted accounting principles. A bidder that submits audited financial information, as required for a Confidential Questionnaire in accordance with subsection (c) of this section, is eligible to bid on all projects for which the bidder has available bidding capacity, as determined under subsection (e) of this section.

  (2) Reviewed financial information may be used in a Bidders Questionnaire under subsection (d) of this section. The scope of reviewed financial information is substantially less than audited financial information, and the information is the result 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 independent accountant, which means that the independent accountant is not aware of any material modifications that should be made in order for the financial information to conform to generally accepted accounting principles. A bidder that submits reviewed financial information is subject to the limitations described in subsections (d) and (e) of this section for a waived project.

  (3) Compiled financial information also may be used in a Bidders Questionnaire under subsection (d) of this section. Compiled financial information only presents information that is the representation of management. No opinion or other assurance is expressed by the independent accountant. A bidder that submits compiled financial information is subject to the limitations described in subsections (d) and (e) of this section for a waived project.

(c) Confidential Questionnaire. A potential bidder must satisfy the requirements of this subsection to be eligible to bid on a construction or maintenance contract, except as provided by subsection (d) of this section.

  (1) A potential bidder must:

    (A) 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;

    (B) have a certified public accountant firm that is licensed to practice public accountancy in this state prepare the audited and any other financial information required by the department;

    (C) satisfactorily comply with any technical qualification requirements determined by the department to be necessary for a specific project; and

    (D) properly complete the Certification of Eligibility Status form contained in the Confidential Questionnaire for the purpose of bidding on federal-aid projects.

  (2) 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.

  (3) Satisfactory audited financial information will grant a 12-month period of qualification from the date of the financial statement.

  (4) 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) 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.

(d) Bidders Questionnaire. To be eligible to bid on a contract under this subsection or on a contract to be awarded under §9.19 of this subchapter, a bidder must:

  (1) submit a Bidders Questionnaire to the department's headquarters office in Austin 10 days prior to the date the bid opens, in a form prescribed by the department, which includes certain information concerning a bidder's equipment and experience;

  (2) submit unaudited and other data as required in the instructions to the Bidders Questionnaire ;

  (3) satisfactorily comply with any technical qualification requirements determined by the department to be necessary on a specific project; and

  (4) for a federal-aid project, properly complete the Certification of Eligibility Status form contained in the Bidders 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.

(e) Bidding capacity. The department will make its examination and determination based on the information submitted under subsection (c) or (d) of this section, as appropriate, and advise the bidder of its approved bidding capacity.

  (1) For a bidder submitting a Confidential Questionnaire and audited financial information, the amount of the bidding capacity will be determined by multiplying the net working capital by a factor determined by the department based on the expected dollar volume of projects to be awarded and the number of bidders prequalified by the department. If this calculation results in a positive amount that is not greater than $1,000,000, the bidder will receive a bidding capacity of $1,000,000 if the bidder has positive net working capital and the bidder provides documentation of at least two years' experience and four completed projects in the field in which the bidder wishes to bid. Bidding capacity determined under this paragraph applies for any project and is not limited to waived projects.

  (2) For a bidder submitting a Bidder's Questionnaire with no prior experience in construction or maintenance, or a negative working capital position (i.e., financial statements indicate that current liabilities exceed current assets), will receive a bidding capacity of $300,000 for waived projects only.

  (3) For a bidder submitting a Bidders Questionnaire and compiled financial information if the principals of the bidder have at least one year experience in construction or maintenance and have satisfactorily completed at least two projects in these fields, the bidding capacity is $500,000 for waived projects only.

  (4) For a bidder submitting a Bidders Questionnaire and compiled financial information and the principals of which have at least two years experience in construction or maintenance and have satisfactorily completed at least four projects in these fields, the bidding capacity is $1,000,000 for waived projects only. Those contractors possessing more than two years experience will be granted an additional $250,000 in bidding capacity for each additional year of experience in construction or maintenance, with a maximum bidding capacity of $3,000,000 for waived projects only.

  (5) For a bidder submitting a Bidders Questionnaire and reviewed financial information and the principals of which have at least three years of experience in construction 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 of $1,000,000. Bidding capacity determined under this paragraph is limited to waived projects only.

(f) Effect of contract performance. A firm's bidding capacity or eligibility to bid on a highway improvement contract may be affected by a decision of the deputy executive director under §9.24 of this chapter (relating to Performance Review Committee and Actions).

(g) Affiliated entities. In making examinations and determinations under this section, the department will make a determination of bidder affiliations. Bidders the department determines are affiliated are not eligible to submit bids for the same project. A bidder that is determined to be affiliated but that can establish independence from the other affiliated bidders may request, in accordance with this subsection, an exception to its ineligibility.

  (1) For purposes of this subchapter:

    (A) two or more bidders are affiliated if:

      (i) the bidders share common officers, directors, or controlling stockholders;

      (ii) a family member of an officer, director, or controlling stockholder of one bidder serves in a similar capacity in another of the bidder;

      (iii) an individual who has an interest in, or controls a part of, one bidder either directly or indirectly also has an interest in, or controls a part of, another of the bidders ;

      (iv) the bidders are so closely connected or associated that one of the bidders, either directly or indirectly, controls or has the power to control another bidder;

      (v) one bidder controls or has the power to control another of the bidders; or

      (vi) the bidders are closely allied through an established course of dealings, including but not limited to the lending of financial assistance; and

    (B) a family member of an individual is the individual's parent, parent's spouse, step-parent, step-parent's spouse, sibling, sibling's spouse, spouse, child, child's spouse, spouse's child, spouse's child's spouse, grandchild, grandparent, uncle, uncle's spouse, aunt, aunt's spouse, first cousin, or first cousin's spouse.

  (2) To request the exception to the department's finding of affiliation, a bidder must submit to the executive director a written request explaining the basis for the exception accompanied by supporting evidence, including an affidavit affirming that the bidder is independent from and not coordinating with the affiliates or any other bidder. The written request must be received not later than the 30th day before the date of the bid opening for which the exception is requested.

  (3) The department will review the request and supporting evidence provided to determine the affiliation or independence of the potential bidders. The department will consider, in addition to other affiliation criteria:

    (A) transactions between the potential bidders; and

    (B) the extent to which the potential bidders share:

      (i) equipment;

      (ii) personnel;

      (iii) office space; and

      (iv) finances.

  (4) If the department finds that the bidders are independent, the director of the division reviewing the request will recommend to the executive director that the requesting bidder be granted an exception.

  (5) The executive director will review the request, supporting evidence, and department's recommendation and will make the final determination on the request. The executive director will send to the bidder the final written determination. An exception granted to the bidder remains in effect for future bid openings unless the exception is revoked under paragraph (6) of this subsection.

  (6) The granting of an exception under this subsection does not remove the classification of the bidders as affiliated. The department reserves the right to conduct follow-up reviews and revoke the exception if the follow-up reviews indicate that the bidders are no longer independent. A bidder's failure to act independently of its affiliates or other bidder during the period it was granted an exception under this subsection may result in the imposition of sanctions.

  (7) If bidders classified as affiliates submit bids on the same project, the department reserves the right to reject all bids on that project and relet the contract.

  (8) Affiliated bidders that are granted an exception under this subsection and that have been sanctioned in accordance with Chapter 10 of this title must meet the exception criteria in that chapter to be eligible to bid.

(h) Building contracts. To be eligible to bid on a building contract, a potential bidder must satisfactorily comply with any financial, experience, technical, or other requirements contained in the governing specifications applicable to the project.


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; amended to be effective January 4, 2001, 25 TexReg 13007; amended to be effective June 17, 2004, 29 TexReg 5795; amended to be effective December 11, 2008, 33 TexReg 10054; amended to be effective September 19, 2018, 43 TexReg 5996

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