1 TAC §111.14
The Texas Building and Procurement Commission proposes amendments
to Title 1, T.A.C., Chapter 111, Subchapter B, §111.14, concerning Subcontracts.
Amendments are proposed to revise language, which references a respondent's
ability to perform all of the subcontracting opportunities identified by the
agency. If the respondent is able to fulfill any of the potential subcontracting
opportunities identified with its own equipment, supplies, materials, and/or
employees, the respondent must sign an affidavit and provide a statement explaining
how the respondent intends to fulfill each subcontracting opportunity.
Amendments are proposed to add additional HUB Subcontracting Plan requirements
when a state agency expands the original scope of work through a change order
or contract amendment.
Amendments are proposed to require monthly HUB Subcontracting Plan monitoring
and the submission of compliance reports as a condition for payment.
In addition, amendments are proposed to provide further clarification and
define the good faith effort requirements in the HUB Subcontracting Plan.
These amendments include: defining "reasonable time to respond" as ten (10)
working days for construction related projects and five (5) working days for
all other projects, expanding the advertising portion of the good faith effort
requirements to include an option to provide notice to minority/women trade
associations and/or development centers in lieu of advertising in general
circulation, trade association or minority/women focused media, and requiring
respondents to provide notice to three (3) or more HUBs per subcontracting
opportunity or a minimum of nine (9) HUBs per contract.
Cindy Reed, Deputy Executive Director, determines that for the first five-year
period the rule is in effect, there will be a moderate increase in the administrative
costs required to respond to state contracting opportunities, as well as award
state contracts when the expected value is $100,000 or more and the contracting
agency has determined that subcontracting opportunities are probable.
If the expected value of a state contract is $100,000 or more and the contracting
agency determines that there are no opportunities for subcontracting, there
will be no additional administrative burden for respondents to state agency
procurement opportunities.
Cindy Reed further determines that for each year of the first five-year
period the amendments are in effect, the public benefit anticipated as a result
of enforcing the rule will be in compliance with Texas Government Code, Chapter
2161, relating to the Historically Underutilized Business Program. Respondents
to state contracting opportunities will experience moderate increases in administrative
costs with regard to responding to state contracting opportunities where the
expected contract value is $100,000 or more and the contracting agency has
determined that subcontracting opportunities are probable.
Comments on the proposals may be submitted to Robert F. Moreland, Legal
Counsel, Texas Building and Procurement Commission, P.O. Box 13047, Austin,
TX 78711-3047. Comments must be received no later than thirty days from the
date of publication of the proposal in the
Texas
Register.
The amendments are proposed under the authority of the Texas
Government Code, Title 10, Subtitle D, §2152.003, §2161.002, and §2161.253,
which provide the Texas Building and Procurement Commission with the authority
to promulgate rules necessary to implement the section.
The following code is affected by this rule: Government Code, Title 10,
Subtitle D, Chapter 2161.
§111.14.Subcontracts.
(a)
Requirement for HUB subcontracting plans. In accordance
with [
the
] Texas Government Code, Chapter 2161, Subchapter F, each
state agency that considers entering into a contract with an expected value
of $100,000 or more shall, before the agency solicits bids, proposals, offers,
or other applicable expressions of interest, determine whether subcontracting
opportunities are probable under the contract.
(1)
State agencies shall use the following steps
to determine
if
[
in making the determination of whether
] subcontracting
opportunities are probable under the contract:
(A)
Use the HUB participation goals in §111.13 of this
title (relating to Annual Procurement Utilization Goals);
(B)
Research the Centralized Master Bidders List, the HUB Directory,
the Internet, and other directories, identified by the commission, for HUBs
that may be available to perform the contract work;
(C)
In addition
[
Additionally
], determination
of subcontracting opportunities may include, but is not limited to, the following:
(i)
contacting other state and local agencies and institutions
of higher education to obtain information regarding similar contracting and
subcontracting opportunities; and
(ii)
reviewing the history of similar agency purchasing transactions.
(2)
If subcontracting opportunities are probable, each agency's
invitation for bids or other purchase solicitation documents for construction,
professional services, other services, and commodities for $100,000 or more
shall state that probability and require a HUB subcontracting plan
to
be submitted at the same time as the response (bid, proposal, offer, or other
applicable expression of interest). Responses
[
Accordingly, potential
contractor/vendor responses
] that do not include a completed HUB subcontracting
plan
in accordance with subsection (b) of this section,
shall be
rejected due to material failure to comply with advertised specifications
in accordance with §113.6 (a) of this title (relating to Bid Evaluation
and Award). The plan shall include goals established pursuant to §111.13
of this title (relating to Annual Procurement Utilization Goals).
In
addition, when an agency determines subcontracting opportunities are probable
in the areas of equipment, supplies, materials, or services, the state agency
shall identify within the contract specifications the potential areas of subcontracting
opportunities.
(b)
Development and evaluation of HUB subcontracting plans.
A state agency shall require a
respondent
[
potential contractor/vendor
] to state whether it is a Texas certified HUB.
A state agency
shall also require a respondent to state overall subcontracting and overall
HUB subcontracting to be provided in the contract. Respondents
[
Potential contractors/vendors
] shall follow, but are not limited to,
procedures in subsection (b) (1) of this section when developing the HUB subcontracting
plan. The HUB subcontracting plan shall include the form provided by the
Texas Building and Procurement Commission
[
agency
] identifying
the subcontractors that will be used during the course of the contract, the
expected percentage of work to be subcontracted and the approximate dollar
value of that percentage of work. The
respondent
[
potential
contractor/vendor
] shall provide all additional information required
by the agency.
(1)
Evidence of good faith effort in developing a HUB subcontracting
plan includes, but is not limited to, the following procedures:
(A)
Divide the contract work into reasonable lots or portions
to the extent consistent with prudent industry practices.
(B)
Notify HUBs of the
subcontracting opportunities
[
work
] that the
respondent
[
potential contractor/vendor
] intends to subcontract. The preferable method of notification shall
be in writing. The notice shall, in all instances, include the scope of the
work, information regarding the location to review plans and specifications,
information about bonding and insurance requirements, and identify a contact
person. The notice shall be provided to potential HUB subcontractors prior
to submission of the
respondent's
[
contractor's/vendor's
]
bid. The
respondent
[
potential contractor/vendor
] shall
provide potential HUB subcontractors reasonable time to respond to the
respondent's
[
potential contractor's/vendor's
] notice. "Reasonable
time to respond" in this context is no less than
ten
[
five
] working days
for construction related projects, including heavy
construction, building construction, and special trade construction and no
less than five working days for all other projects, including professional
services, other services, and commodities
from receipt of notice, unless
circumstances require a different time period, which is determined by the
agency and documented in the contract file. The
respondent
[
potential contractor/vendor
] shall effectively use the commission's
Centralized Master Bidders List, the HUB Directory, Internet resources, and
other directories as identified by the commission or agency when searching
for HUB subcontractors.
Respondents
[
Contractors/Vendors
]
may rely
on
[
upon
] the services of minority, women,
and community organizations contractor groups, local, state, and federal business
assistance offices, and other organizations that provide assistance in identifying
qualified applicants for the HUB program who are able to
provide
[
perform
] all or select elements of the HUB subcontracting plan. The
respondent
[
potential contractor/vendor
] shall provide the
notice described in this section to three or more HUBs
per each subcontracting
opportunity
that
provide
[
perform
] the type of
work required
for each subcontracting opportunity identified in the contract
specifications or any other subcontracting opportunity the respondent cannot
complete with its own equipment, supplies, materials, and/or employees. If
more than three subcontracting opportunities are identified the respondent
shall contact a total minimum of nine (9) HUBs. The respondent must document
the HUBs contacted on the form provided by the Texas Building and Procurement
Commission and provide supporting documentation (phone logs, fax transmittals,
etc.) to demonstrate compliance with this subsection.
[
Upon request,
the potential contractor/vendor shall provide official written documentation
(i.e. phone logs, fax transmittals, etc.) to demonstrate compliance with the
notice required in this subsection.
]
(C)
Provide written justification of the selection process
if a non HUB subcontractor is selected through means other than competitive
bidding, or a HUB bid is the best value responsive bidder to a competitive
bid invitation, but is not selected.
(D)
Advertise HUB subcontracting opportunities in general circulation
[
,
]
or
trade association [
,
]
or
[
and/or
] minority/woman
focused
[
focus
] media concerning
subcontracting opportunities
or provide notice to minority or women trade
organizations or development centers to assist in identifying HUBs by disseminating
subcontracting opportunities to their membership/participants. The notice
shall, in all instances, include the scope of work, information regarding
location to review plans and specifications, information about bonding and
insurance requirements, and identify a contact person. Respondent must provide
notice to organizations or development centers no less than ten working days
for construction related projects and no less than five working days for all
other projects prior to submission of response (bid, proposal, offer, or other
applicable expression of interest).
(E)
Encourage a selected non-certified minority or woman owned
business subcontractor to apply for certification by the commission in accordance
with the procedures set forth in §111.17 of this title (relating to Certification
Process).
[(2)
If the contract is a lease contract,
the lessor shall comply with the requirements of this section from and after
the occupancy date provided in the lease, or such other time as may be specified
in the invitation for bid for the lease contract.]
(2)
[
(3)
] In making a determination
if
[
whether
] a good faith effort has been made in the development
of the required HUB subcontracting plan, a state agency shall require the
respondent
[
potential contractor/vendor
] to submit supporting
documentation explaining
how
[
in what ways
] the
respondent
[
potential contractor/vendor
] has made a good
faith effort according to each criterion listed in subsection (b)(1) of this
section. The documentation shall include at least the following:
(A)
if
[
whether
] the
respondent
[
potential contractor/vendor
] divided the contract work
into reasonable lots or portions consistent with prudent industry practices;
(B)
if
[
whether
] the
respondent's
[
potential contractor's/vendor's
] notices contain adequate
information about bonding, insurance, the availability of plans, the specifications,
scope of work, and other requirements of the contract to three or more qualified
HUBs
per each subcontracting opportunity identified in the contract specifications
or a minimum of nine HUBs for contracts with more than three (3) identified
subcontracting opportunities per contract
allowing reasonable time
for HUBs to participate effectively;
(C)
if
[
whether
] the
respondent
[
potential contractor/vendor
] negotiated in good faith with
qualified HUBs, not rejecting qualified HUBs who were also the best value
responsive bidder;
(D)
if
[
whether
] the
respondent
[
potential contractor/vendor
] documented reasons for rejection
of a HUB or met with the rejected HUB to discuss the rejection;
(E)
if
[
whether
] the
respondent
[
potential contractor/vendor
] advertised
HUB subcontracting
opportunities
in general circulation [
,
]
or
trade
association [
,
]
or
[
and/or
] minority/woman
focused
[
focus
] media concerning subcontracting opportunities[
;
]
or provided notice to minority or women trade organizations
or development centers to assist in identifying HUBs by disseminating subcontracting
opportunities to their membership/participants
and
;
(F)
if
[
whether
] the
respondent
[
potential contractor/vendor
] assisted non-certified HUBs
to become certified.
(3)
[
(4)
] A
respondent's
[
potential contractor's/vendor's
] participation in a Mentor Protégé
Program under the Texas Government Code §2161.065, and the submission
of a protégé as a subcontractor in the HUB subcontracting plan
constitutes a good faith effort for the particular area to be subcontracted
with the protégé. When submitted, state agencies may accept
a Mentor Protégé Agreement that has been entered into by the
respondent
[
potential contractor/vendor
] (mentor) and a certified
HUB (protégé). The agency shall consider the following in determining
the
respondent's
[
potential contractor's/vendor's
] good
faith effort:
(A)
if
[
whether
] the
respondent
[
potential contractor/vendor
] has entered into a fully executed
Mentor Protégé Agreement that has been registered with the commission
prior to submitting the plan, and
(B)
if
[
whether
] the
respondent's
[
potential contractor/vendor
] HUB subcontracting plan identifies
the areas of subcontracting that will be performed by the protégé.
(4)
[
(5)
] The HUB subcontracting plan
shall be reviewed and evaluated prior to contract award and, if accepted,
shall become a provision of the agency's contract. No changes shall be made
to an accepted
HUB
subcontracting plan prior to its incorporation
into the contract. State agencies shall review the supporting documentation
submitted by the
respondent
[
potential contractor/vendor
]
to determine if a good faith effort has been made in accordance with this
section and the bid specifications. If the agency determines that a submitted
HUB subcontracting plan was not developed in good faith, the agency shall
treat the lack of good faith as a material failure to comply with advertised
specifications, and the subject bid or other response shall be rejected. The
reasons for rejection shall be recorded in the procurement file.
(5)
If the respondent is able to fulfill any
of the potential subcontracting opportunities identified with its own equipment,
supplies, materials and/or employees, respondent must sign an affidavit and
provide a statement explaining how the respondent intends to fulfill each
subcontracting opportunity. The respondent must:
(A)
agree to produce evidence of existing staffing to meet
contract objectives,
(B)
agree to supply monthly payroll records showing company
staff fully engaged in the contract, and
(C)
agree to periodic on site reviews of company headquarters
or work site where services are to be performed. Upon request, the respondent
shall provide supporting documentation to substantiate the statement/affidavit.
In addition, if any subcontracting opportunity the respondent intends to
self perform requires a license, the respondent must submit documentation
identifying the license holder as its own employee.
(6)
[
If the potential contractor/vendor can perform all
the subcontracting opportunities identified by the agency, a statement of
the potential contractor's/vendor's intent to complete the work with its employees
and resources without any subcontractors will be submitted with the potential
contractor's/vendor's bid, proposal, offer, or other expression of interest.
] If the
respondent
[
potential contractor/vendor
]
is selected and decides to subcontract any part of the contract after the
award, as a provision of the contract, the contractor/vendor must comply with
provisions of this section relating to developing and submitting a subcontracting
plan before any modifications or performance in the awarded contract involving
subcontracting can be authorized by the state agency. If the selected contractor/vendor
subcontracts any of the work without prior authorization and without complying
with this section, the contractor/vendor would be deemed to have breached
the contract and be subject to any remedial actions provided by Texas Government
Code, Chapter 2161, state law and this section. Agencies may report nonperformance
relative to its contracts to the commission in accordance with Chapter 113,
Subchapter F of this title (relating to the Vendor Performance and Debarment
Program).
(c)
Submission, review and determination of changes to an approved
HUB
subcontracting plan during contract performance. If at any time
during the term of the contract, a contractor/vendor desires to make changes
to the approved subcontracting plan,
the
[
such
] proposed
changes must be received for prior review and approval by the state agency
before changes will be effective under the contract. The contractor/vendor
must comply with provisions of subsection (b) of this section relating to
developing and submitting a subcontracting plan for substitution of work or
of a subcontractor, prior to any alternatives being approved under the subcontracting
plan. The state agency shall approve changes by amending the contract or by
another form of written agency approval. The reasons for amendments or other
written approval shall be recorded in the procurement file.
If a state
agency expands the original scope of work through a change order or contract
amendment, the state agency shall determine if the additional scope of work
contains additional probable subcontracting opportunities not identified in
the initial solicitation. If the agency determines additional probable subcontracting
opportunities exist, the agency will require the contractor/vendor to submit
a revised subcontracting plan for the additional probable subcontracting opportunities.
The revised subcontracting plan shall comply with the provisions of this
section relating to development and submission of a subcontracting plan before
any modifications or performance in the awarded contract involving the additional
scope of work can be authorized by the agency. If the contractor/vendor subcontracts
any of the additional subcontracting opportunities identified by the agency
without prior authorization and without complying with this section, the contractor/vendor
would be deemed to have breached the contract and be subject to any remedial
actions provided by Texas Government Code, Chapter 2161, state law and this
section. Agencies may report nonperformance relative to its contracts to the
commission in accordance with Chapter 113, Subchapter F of this title (relating
to the Vendor Performance and Debarment Program.)
(d)
Determining contractor/vendor contract compliance. The
contractor/vendor shall maintain business records documenting its compliance
with the HUB subcontracting plan and shall submit a compliance report to the
contracting agency
monthly
[
periodically
] and in the
format required by the
Texas Building and Procurement Commission
[
contract documents
].
The compliance report submission shall be
required as a condition for payment.
During the term of the contract,
the state agency shall
monitor the HUB subcontracting plan monthly to
determine
if
[
whether
]
the value of the
subcontracts to HUBs meets or exceeds the HUB subcontracting provisions specified
in the contract. Accordingly,
state agencies shall audit and require
a contractor/vendor to whom a contract has been awarded to report to the agency
the identity and the amount paid to its subcontractors in accordance with §111.16(c)
of this title (relating to State Agency Reporting Requirements). If the contractor/vendor
is meeting or exceeding the provisions, the state agency shall maintain documentation
of the contractor's/vendor's efforts in the contract file. If the contractor/vendor
fails to meet the HUB subcontracting provisions specified in the contract,
the state agency shall notify the contractor of any deficiencies. The state
agency shall give the contractor/vendor an opportunity to submit documentation
and explain to the state agency why the failure to fulfill the HUB subcontracting
plan should not be attributed to a lack of good faith effort by the contractor/vendor.
(1)
To determine if
[
In determining whether
] the contractor/vendor made the required good faith effort, the agency
may not consider the success or failure of the contractor/vendor to subcontract
with HUBs in any specific quantity. The agency's determination is restricted
to considering factors indicating good faith effort including, but not limited
to, the following:
(A)
whether the contractor gave timely notice to the subcontractor
regarding the time and place of the subcontracted work;
(B)
whether the contractor facilitated access to the work site,
electrical power, and other necessary utilities; and
(C)
whether documentation or information was provided that
included potential changes in the scope of contract work.
(2)
If a determination is made that the contractor/vendor failed
to implement the HUB subcontracting plan in good faith, the agency, in addition
to any other remedies, may report nonperformance to the commission in accordance
with Chapter 113, Subchapter F of this title (relating to Vendor Performance
and Debarment Program).
In addition, if the contractor/vendor failed
to implement the subcontracting plan in good faith, the agency may revoke
the contract for breach of contract and make a claim against the contractor/vendor.
(3)
State agencies shall review their procurement procedures
to ensure compliance with this section. In accordance with §111.26 of
this title (relating to HUB coordinator responsibilities) the agency's HUB
coordinator and contract administrators should facilitate institutional compliance
with this section.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on April 2, 2003.
TRD-200302160
Cynthia de Roch
Attorney
Texas Building and Procurement Commission
Earliest possible date of adoption: May 18, 2003
For further information, please call: (512) 475-2400