News & Press: Member Update

TxDOT Administrative Qualifications Proposed Rules Changes

Wednesday, February 20, 2019  
Posted by: Michael Hancock
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Member Update

February13, 2019

 

 

TxDOT Administrative Qualifications Proposed Rules Changes

 

At its January 31 meeting, the Texas Transportation Commission voted to propose several rules changes recommended by the agency’s Professional Engineering Procurement Services Division. All firms doing DOT work should be aware of these proposals.You can find a copy of the Commission’s minute order and proposed rules attached as well as on the ACEC Texas website here.

There are several components to the proposed rules. The first allows TxDOT, in certain situations, to extend a provider’s indirect cost rate for 90 days if the department has received the provider’s annual information submittal before the rate’s expiration date. This is intended to help address the logjam that sometimes occurs in the summer when the AQ process is ongoing along with active procurements.

The other two elements of the proposal are potentially more problematic. One establishes a requirement for a written bonus plan. It provides that bonus or incentive compensation is allowable only if (1) paid under a good faith agreement executed by the provider and employee before services are rendered and (2) paid under a plan that includes, at a minimum, elements that are in the AASHTO Audit and Accounting Guide (3) the plan was in effect when the services are rendered and is consistently followed, and (4) the payment is supported and documented by performance reviews based on measurable criteria.

The concern is that this language goes beyond the requirements of the AASHTO guide and FAR numerous points at which legitimate bonus plans can be questioned and rejected. Bonus plans inevitably have some subjectivity and are not mathematical formulae where data are input and an answer is provided. ACEC Texas will work to develop language that provides for consistency with FAR but allows some subjectivity.

The final element of the rules provides for annual rate negotiations. This is a worthy concept if it can create a way to get away from repetitive conflicting negotiations where firms end up with a “Dallas rate,” and “Houston rate,” etc. However, the devil is in the details.

The proposed rules provide that a firm must submit on an annual basis salary rates for all employees that the department anticipates using on contracts that will be negotiated in the next 12-monthh period. A rate may be used only if approved and considered reasonable by the department.

There are several elements of this proposal that have caused concern in the industry. One is the fear that the annual rate negotiation would become part of the administrative qualification process and that firms unable to reach agreement on a rate structure would be considered not administratively qualified and therefore unable to compete. PEPS leadership have told ACEC Texas that this is not the intent. Although information would be submitted at the time of AQ submittal, these processes would proceed on separate tracks and that a firm could be administratively qualified without having agreed to rates.

There are also numerous questions about just how the rate negotiation process would proceed that need to be clarified. What is the timing? Could it be deferred until a selection is made? Depending on how this process is structured, there are questions about whether it complies with the Professional Services Procurement Act.

Most significantly, firms have reservations about submitting compensation tied to individuals in a process that could make this information public information. We want to discuss whether there are ways to provide information by classification or some other manner to provide market guidance without this level of detail.

The rule would benefit from some better definition of what constitutes “reasonableness” in TxDOT’s review. Most firms would probably say that, except for extreme situations, reasonable is whatever the market requires. But if “reasonable” is whatever the Department decides without relation to the market, that is a problem.

We would appreciate receiving any feedback or comments that member firms have. ACEC Texas will be submitting comments and firms are welcome to do so as well. The deadline for comments is March 18. Please send your comments to steve@acectx.org by March 1.

We will be meeting with TxDOT early in the month to discuss options. We encourage you to think about potential issues but about potential solutions and alternatives as well. We believe the rules are well-intentioned with the goals of improving the negotiation process and creating more consistency.

So how can we help make this work?

 


 


 

 

 

 


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