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Section 3: Procurement

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For both construction and non-construction projects being managed by local governments (LGs), are located on the state highway system or include federal or state funding, the LG must obtain approval from TxDOT for its proposed procurement procedure for the selection of a professional services provider, a contractor for a construction or maintenance project, or a materials provider.

In some cases, the LG will need to purchase services or goods not in these categories. The LG should refer to Chapter 3, Section 3 – Procurement of “Other” Goods and Services in this Manual for guidance on these types of procurement procedures.

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Donation of Preliminary Engineering Services

23 U.S.C. §323(c) allows “persons” to donate funds, materials or services in connection with a federal-aid project. Mapping, surveying, environmental, preliminary design and final design are all considered to be services. When TxDOT self-performs services needed for a project, TxDOT may credit the fair market value of donated engineering services to the state share of the project. 23 U.S.C. §323(c) notes any donated funds, or the fair market value of any donated materials or services, accepted and incorporated into the project by the state transportation department shall be credited against the state share. If the LG proposes to apply its costs paid for consultant services to the non-federal share of a project or program, the LG must provide documentation it followed an approved consultant selection process meeting the provisions of 23 CFR Part 172. This requirement applies whether or not the LG incurred the cost for these services before it decided to seek federal funds for construction.

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Professional Service Provider


The LG may use a professional services provider for program management, construction management, feasibility studies, preliminary engineering, design, engineering, surveying, mapping or architectural services related to a construction project. Professional services providers are defined, in part, as professional engineers, registered architects or registered professional land surveyors in the Texas Government Code, Chapter 2254, Subchapter A, often referred to as the Professional Services Procurement Act. This law requires a two-step, qualifications-based process in selecting and negotiating costs for contracts with professional providers.

The use of a professional service provider by the LG can be an eligible reimbursable cost in accordance with the local participation rules found in 43 TAC §§15.50 et seq. If the LG is seeking reimbursement for project-related professional services, it must be specifically stated in the advance funding agreement (AFA).

A general overview of the federal requirements for the professional services consultant process is described in the Federal Highway Administration (FHWA) video “Hiring a Consultant Using Competitive Negotiation Procedures” available on the FHWA Federal-aid Essentials for Local Public Agencies website. Selection of a professional services provider must conform to applicable sections of both federal and state law if cost reimbursement is desired by the LG or if the LG desires to have the value of the professional services credited to its share of the project or program.

LGs must submit their proposed professional services procurement process to their TxDOT district office for review. TxDOT may only grant approval to proposed processes complying with applicable federal and state rules. For design/build projects, the selection procedure requirements can be found in 43 TAC §27.7. The LG’s use of TxDOT’s selection process or an alternate process must receive prior written approval by TxDOT.

The Local Government Project Management Guide (LGPM Guide) provides additional guidance on the required practices used for professional services selection and contracting. The Guide also lists the LG and TxDOT district responsibilities for the professional service provider selection process and agreements.

Professional service providers (contractors and suppliers) are not allowed to participate in federally funded projects if they are suspended or debarred. The professional service provider is required to certify as to its current eligibility status. Certification is also required of all prospective participants in lower-tier transactions. This includes sub-consultants, material suppliers, vendors, etc. The state of Texas has similar requirements prohibiting contracts with debarred providers. The LG is required to verify its professional service providers and lower-tier providers are not debarred by the federal or state government prior to contract award. Additional information on debarment is provided in the Debarment Certification section of Chapter 7.

Federal Requirements

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  1. 23 CFR Part 172 – Prescribes policies and procedures for the administration of engineering- and design-related service contracts for which reimbursement with federal funds is requested.
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    1. Qualifications-based competitive negotiation is the primary method for procurement of professional services. Price is not to be used as a factor in the analysis and selection of the most qualified firm. The proposal solicitation process shall assure qualified in-state and out-of-state consultants are given a fair opportunity to be considered for award of the contract. Small purchase or non-competitive negotiation procedures may be used in limited situations with TxDOT approval.
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    3. Basing compensation for professional services on a cost plus a percentage of cost or on a percentage of construction cost is not acceptable.
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    5. The contracting agency must prepare written procedures for each method of procurement it proposes to utilize.
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    7. Recipients of federal funds must approve the written procedures and all revisions for their sub recipients. TxDOT is the recipient of federal funds and the LG is the sub recipient.

State Requirements

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  1. 43 TAC, Part 1, Chapter 9, Subchapter C – Establishes TxDOT’s standard procedures for selection and contract management of architectural, professional engineering and land surveying service providers for transportation projects. 43 TAC §§9.30-31, 9.33-37, and 9.39 have application to procurement by LGs when state or federal funds are used on the project.
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  3. Texas Government Code Chapter 2254, Subchapter A – Provides procurement requirements for professional services by all governmental entities. The entity:
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    1. Must procure architectural, engineering or land surveying services through a qualifications-based selection process.
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    3. Must negotiate with the most qualified provider for a fair and reasonable price.
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    5. Must formally terminate negotiations if a satisfactory contract cannot be negotiated. The entity must then select the next highest qualified provider and attempt to negotiate a contract for a fair and reasonable price.
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Construction Contractor


The LG procurement process for advertising, letting and awarding the construction contract must be approved by TxDOT. Consideration for prequalification requirements and post-qualification requirements should be considered early in the design process so the proposed procurement process can be submitted to the TxDOT district for review and approval well in advance of approval of the plans, specifications and estimates.

For construction and maintenance projects on the state highway system (with or without state or federal funds), the LG must require contractors to be prequalified by TxDOT. TxDOT qualifies bidders to become eligible to bid or to receive a bid proposal on a construction or maintenance project. The agency has two levels of qualification, both of which require annual requalification. These are described in detail in the LGPM Guide.

Any prequalification or qualification criteria in addition to TxDOT’s must be approved by TxDOT before becoming part of the bid documents. Some projects may be of a nature for which TxDOT may waive the prequalification requirements. TxDOT contractor prequalification process has two basic levels:

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  1. Confidential Questionnaire or fully prequalified (contractors complete a confidential questionnaire and provide audit financials); and
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  3. Bidder’s Questionnaire or eligible to bid on projects identified as being waived (bidders complete a questionnaire).

Waived projects may include, but are not limited to, specialty projects (i.e. sidewalks, hike and bike trails, streetscape, traffic and others), maintenance projects or roadway projects of $500,000 or less. Waived specialty and maintenance projects have no dollar limit and may exceed the $500,000 limit. The LG must contact the district early in the project to determine if prequalification is necessary.

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Materials Providers

TxDOT reviews and approves products and materials from various manufacturers and producers for use on its construction contracts. The LG will be required to use these approved sources if the project is on the state highway system or if the project is off the state highway system but involves state or federal funding. The LGPM Guide provides additional information on the requirements for using approved materials providers.

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