Professional Engineering Procurement Services (PEPS) Camille Thomason PEPS Center of Excellence...

Professional Engineering Procurement Services (PEPS)

Camille ThomasonPEPS Center of Excellence ManagerOctober 18, 2014

SELECTION PROCESSES AND ADMINISTRATIVE QUALIFICATION


Agenda Topics

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Rules Changes – Alignment with FHWA Requirements

Overview of Administrative Qualification

Preparing for the Federal Process

Other Processes

Questions

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February 2013 Rule Changes – Align with FHWA Requirements

Texas Administrative CodeTitle 43, Part I, Chapter 9, Subchapter C

Applicable to advertisements posted after February 21, 2013

Revised the administrative qualifications process to align with federal requirements

Separated federal from non-federal process:– Federal Process– Other processes


Federal Process

For contracts subject to 23CFR Part 172

Required for the procurement of an engineering or design related service contract that is both:– Directly related to a highway

construction project, and– Reimbursed with federal-aid

highway program (FAHP) funding


Federal Process

Firms providing engineering and design related services must be administratively qualified with an effective rate by the SOQ deadline; (modified August 2013) or be determined eligible by the TxDOT Audit Office, to use the federal safe harbor rate, by the SOQ deadline.

Applicable to the prime and subproviders


Federal Definition per FHWA

CFR Title 23, Part 172Engineering and design related services means program management, construction management, feasibility studies, preliminary engineering, design, engineering, surveying, mapping, or architectural related services with respect to a construction project subject to 23 U.S.C. 112(a).

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Process Type and Administrative Qualification

Federal Process: Administrative qualification is required for firms providing engineering and design related services on applicable projects.

Other Processes: Administrative qualification is not required to compete.– Comprehensive– Streamlined– Accelerated

Projected Contracts List will identify the process type to expect


Agenda Topics

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Other Processes

Questions

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Administrative Qualification

Defined in the TAC A single process used by the department to verify

that a provider:– Has a Federal Acquisition Regulation (FAR) compliant indirect

cost rate that meets department requirements– Has a job cost accounting system adequate for segregating

direct and indirect costs, and– Is aware of federal cost eligibility and documentation

requirements Refer to rule 9.34 for specific requirements, as

needed

Two options for becoming administratively qualified

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Option 1 – Qualification by Audit

Requires the preparation of a FAR compliant audit report by:– A qualified public accountant or– Acceptable federal, state, or

local agency More typical for medium to

large firms Preparation time varies by

firm size and availability of a CPA

Cost can range from $10,000 to $15,000

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Option 2 – Qualification by Self-Certification

Option made available with February 2013 TAC rule changes

Requires the completion of a specific report by the firm

Resulting rate is FAR compliant, if completed correctly

Has become option of choice for most small and some medium firms

Preparation time controlled by the firm

Cost to complete is significantly less 11


Administrative Qualification

Not a process where TxDOT audits a firm’s indirect costs

TxDOT merely reviews the information and indirect cost rate development process for compliance purposes

If elements are in conflict with requirements, adjustments will be made for approval purposes

Any adjustments are discussed with the firm for clarification purposes

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FAR Compliant - Indirect Cost Rate

As approved by PEPS Admin Qual Group

Becomes 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

Effective no more than 12 months

Expires 18 months after the end of the fiscal year upon which it was based

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A Firm’s Administrative Qualification Status

TxDOT maintains a list, posted externally– Firms listed with date range of effective status– If the date range shown is not inclusive of the current date,

then the firm is not currently administratively qualified An administratively qualified firm has an effective

indirect cost rate according to TAC rule 9.34 (a FAR compliant rate)

Rates are maintained confidentially by the PEPS Admin Qual Group

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Posted List – Administrative Qualification Status

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FAR Compliant Rate

The firm’s actual indirect cost rate for the firm’s last fiscal year

Assumed to be the most representative rate of the firm’s indirect costs

Used for cost development purposes when selected

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Administrative Qualficiation

Not required for every firm Requirements vary by selection process

– Federal Process most restrictive– Comprehensive, Streamlined, and Accelerated processes offer

more flexibility

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Agenda Topics

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Other Processes

Questions

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Firms providing engineering and design related services must be administratively qualified with an effective rate by the SOQ deadline; (modified August 2013) or be determined eligible by the TxDOT Audit Office, to use the federal safe harbor rate, by the SOQ deadline.


Federal Process

Administrative qualification is required for firms providing engineering and design related services on applicable projects.

What about firms not subject to the requirement?– They may be administratively qualified (not prohibited)– If not administratively qualified, no indirect cost rate, loaded

rates will be negotiated inclusive of base rate, indirect cost, and profit

What about a firm subject to the requirement, but unable to complete the administrative qualification process?– The only option is to establish eligibility

to use the federal Safe Harbor Rate20


August 2013 Rule Changes – Federal Safe Harbor Rate

The Federal Highway Administration is conducting a pilot program to evaluate the use of a “safe harbor rate.”

The safe harbor rate serves as an indirect cost rate for firms providing engineering and design-related services lacking a Federal Acquisition Regulations (FAR) compliant indirect cost rate.

The amendment to §9.35, Federal Process, allows the safe harbor rate to be used, which accommodates the department’s participation in the pilot program.

Rule change became effective August 15, 2013

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Safe Harbor Indirect Cost Rate – Test & Evaluation

Authorized FHWA trial Part of “Test and Evaluation Project TE-045” FHWA Financial Management Improvement (FMI) Initiative Purpose being to remove the potential barrier for certain firms TxDOT submitted the concept as the lead agency in

cooperation with the FHWA Texas Division Office 10 Participating states

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– Texas– Alabama– California– North Carolina– South Carolina

– Michigan– Missouri– North Dakota– Ohio– Washington


Safe Harbor Indirect Cost Rate – Test & Evaluation

The safe harbor indirect cost rate for optional use by eligible consulting firms on FAHP funded contracts under the test program is 110%.

Eligibility must be approved by the TxDOT Audit Office prior to the closing date of the solicitation in order to compete.

The test period for use and application of the safe harbor indirect cost rate on new contracts will expire on June 30, 2016.

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Safe Harbor Indirect Cost Rate

Level of use anticipated is low– Majority of solicitations are non-federal– Small firms are taking full advantage of self-certification– The rate is very low

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Eligibility Considerations

The firm has not had an indirect cost rate previously accepted by a cognizant agency and lacks previous experience with federally funded contracts for which an indirect cost rate would have been developed

The firm has limited or no federal contracting experience that has resulted in an accounting structure by which development of an indirect cost rate in accordance with Federal Cost Principles would be challenging and likely not result in a representative rate.

The firm lacks the financial resources to hire a certified public accountant (CPA) to conduct a FAR compliant audit.

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Eligibility Considerations - cont.

The firm lacks the financial sophistication to develop an indirect cost rate through the self-certification process.

The firm is a new or start-up firm without a contract-related history to use as a base for development of an indirect cost rate.

The firm does not have an audited or self-certified actual indirect cost rate developed in accordance with the FAR cost principals.

The firm is not currently administratively qualified, and has not been previously administratively qualified by TxDOT.

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Additional Guidelines

The firm must complete and submit the internal control questionnaire

The firm must demonstrate that they have, and are utilizing, an acceptable cost accounting system capable of segregating direct and indirect costs.

The safe harbor rate will be applicable for the duration of the contract.

The safe harbor rate is not intended for and will not be used as a field rate for a field-based contract. If needed, a field rate will be negotiated.

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Agenda Topics

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Other Processes

Questions

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Other Processes

The majority of TxDOT solicitations Administrative Qualification is not required to

compete So what rates will TxDOT use for a selected team?


Other Process

For a selected team:A. A firm may be administratively qualifiedB. Non-engineering firms are exemptC. Engineering services that are exempt:

• Bridge Inspection• Materials Inspection and Testing• Geotechnical Engineering• Surveying and Mapping• Subsurface Utility Engineering• Architecture

D. If none of the above, they can accept the TxDOTdeveloped rate

• As of August 2014 its 145%

For survey firms, only A or C would apply


Exempt Status

Means TxDOT does not expect a firm to be administratively qualified (although a firm is not prohibited from becoming administratively qualified)

If not administratively qualified:– The firm is not subject to taking the TxDOT

developed rate for contracting purposes– Loaded rates will be negotiated inclusive of base

rate, indirect cost, and profit


Agenda Topics

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Other Processes

Questions

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Administrative Qualification Guidance

External web page includes information presented

PEPS Administrative Qualification Group is point of contact for questions

Contact information posted on the web page– Bruce Reed (512) 416-2315

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Thank you - Questions?

Camille ThomasonPEPS Division – Center of [email protected]

Professional Engineering Procurement Services (PEPS) Camille Thomason PEPS Center of Excellence...

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