Updated: March 21, 2013
Effective February 21, 2013, TxDOT maintains three processes for the purpose of procuring engineering, surveying, and architecture services. The three processes are the Standard Process, Federal Process, and Small Contract Process. The administrative requirements for these processes are addressed in the Texas Administrative Code, Title 43, Subchapter C, in Sections 9.34(b), 9.35(b), and 9.36(b), respectively.
Standard Process and Small Contract Process
Unless exemption is applicable, as addressed below, to compete for a contract using the Standard Process or Small Contract Process a provider either must be administratively qualified or must accept an indirect cost rate, as addressed below for providers not administratively qualified.
Providers not Administratively Qualified
The department may contract with a prime provider or allow the use of a subprovider that is not administratively qualified if:
For firms not administratively qualified that may compete for contracts through the Standard Process or Small Contract Process, complete the Certification of No Indirect Cost Rate Audit and submit to the TxDOT Audit Office according to the instructions on the form. Firms are encouraged to do this prior to submitting a response to a solicitation so the information is readily available, if selected. Multiple submittals are not necessary. The Audit Office will maintain a list of firms accepting the Audit Office developed rate for reference by a managing office upon provider selection. The purpose for this list is for TxDOT convenience only. There is no requirement to be on this list. If this information is already on file, it can save contract development time for selected firms. If a firm becomes administratively qualified, they will be removed from this list.
Transition for Previously Administratively Qualified Firms
For firms selected on a Standard Process or Small Contract Process with a closing date prior to June 30, 2013, if a firm was previously administratively qualified under the old rules with a FY2010 audit, the FY2010 audited rate will be the Audit Office developed rate for the purpose of rate schedule development.
For Standard and Small Contract processes closing after June 30, 2013, selected firms not administratively qualified will be subject to the process described above
Exemptions to Administrative Qualification
The Federal Process applies to an engineering or design related service contract directly related to a highway construction project and reimbursed with federal-aid highway program (FAHP) funding.
A firm providing engineering and design related services must be administratively qualified by the closing date of the NOI to compete for contracts using the Federal Process. No engineering services are exempt. The requirement is not applicable to non-engineering firms.
Become Administratively Qualified
Administrative qualification is a process used by the department to verify that a provider has an indirect cost rate that meets department requirements.
A provider may demonstrate administrative qualification by an audit or by self-certification of its incorporated entity. Indirect cost rates must be based on the entire incorporated entity and may not be based on the entity's units or divisions. TxDOT requires the use of direct labor cost as the allocation base for allocating indirect costs.
Administrative Qualification by Audit
An audit may be performed by an independent certified public accountant (CPA), an agency of the federal government, another state transportation agency, or a local transit agency. An audit performed by an independent CPA must be conducted in accordance with the current versions of 48 C.F.R. Part 31, the Generally Accepted Government Auditing Standards (GAGAS), and the American Association of State Highway Transportation Officials (AASHTO) Uniform Audit and Accounting Guide. The provider must provide the department with unrestricted access to the audit work papers, records, and other information as requested by the Audit Office.
Administrative Qualification by Self-certification
Self-certification may be conducted by the provider and must include a cost report and an internal controls report. The self-certified cost report must comply with the current versions of 48 C.F.R. Part 31, the GAGAS, and the AASHTO Uniform Audit and Accounting Guide. The self-certified internal control report must certify the provider has internal controls in place within its organization. Both the cost report and the internal control report must be signed by a company officer and notarized.
Note: Although the cost report information is to be developed in compliance with GAGAS, the cost report is not an audit.
The audit or self-certification shall be based on the provider's fiscal year. The indirect cost rate, as approved by the Audit Office, shall become effective six months after the end of the provider's fiscal year, or immediately if filed more than six months after the end of the provider's fiscal year. It shall be effective no more than twelve months and shall expire eighteen months after the end of the fiscal year upon which it is based.
A provider must submit on an annual basis a compensation analysis for all executives in accordance with the AASHTO Uniform Audit and Accounting Guide.
The department may audit the indirect cost rate of a provider under contract with, or seeking to do business with, the department. These audits will be conducted in accordance with the criteria outlined in the rules.
A provider must submit a signed Certification of Final Indirect Costs with the audit report or self-certification. The certification must follow the requirements of the Federal Highway Administration.
Administrative qualification is applicable only to the incorporated business entity upon which the indirect cost rate is based and does not extend to a subsidiary, affiliate, or parent of the incorporated entity.
Submittal and Review Process for Administrative Qualification
A provider must submit its administrative qualification information (Audit or Self-certification Report) to the TxDOT Audit Office by email or to the physical address below.
Subject: Administrative Qualification Submittal
TxDOT Audit Office
125 E. 11th Street
Austin, Texas 78701
This is a separate submittal from precertification submittal. Administrative qualification submittals will not be received by the Design Division.
Upon review of an audit report or self-certification received from a provider, the Audit Office may request additional information from the provider. If the submittal is not complete and accurate, the Audit Office will return it to the provider for correction. Upon request for additional information by the Audit Office, the provider shall submit the information within 15 days after the day that it receives the Audit Office's request. If the information is not provided within the 15-day period, the submittal will be placed on pending status for an additional 15 days. If the information is not received within the additional 15-day period, the submittal will not be processed for administrative qualification.
The Audit Office will provide a selected firm's indirect cost rate information to the managing office on notification from the Design Division, for use in negotiations. The Audit Office will not provide a firm's administrative qualification information to the managing office or the consultant selection team before the selection of that firm.
For questions on Administrative Qualification, please contact the Audit Office by phone or email.
Subject: Question on Administrative Qualification