SECTION 9.155. Conflict of Interest and Ethics Policies

(a) Purpose. This section prescribes ethical standards of conduct applicable to private entities, including consultants and subconsultants, participating in the department's design-build program. A private entity's failure to comply with these standards of conduct may result in the private entity's preclusion from participation in a project or sanctions being imposed under Chapter 10 of this title (relating to Ethical Conduct by Entities Doing Business with the Department).

(b) Gifts and benefits. A proposer, design-build contractor, consultant, or subconsultant participating in the design-build program, or an affiliate of any of those entities, may not offer, give, or agree to give a gift or benefit to a member of the commission or to a department employee whose work for the department includes the performance of procurement services relating to a project under this subchapter, or who participates in the administration of a design-build contract. Notwithstanding this prohibition, a consultant or subconsultant, unless a member of a proposer or design-build contractor team, if authorized under subsection (c) of this section may offer, give, or agree to give a token item that does not exceed an estimated value of $25 (excluding cash, checks, stocks, bonds, or similar items), where the item is distributed generally as a normal means of advertising.

(c) Conflicts of interest.

(1) Purpose. This subsection prescribes department policy on conflicts of interest relating to consultants and subconsultants participating in the design-build program, and thereby:

(A) protects the integrity and fairness of the program and all procurements carried out by the department as part of the program;

(B) avoids circumstances where a consultant, proposer, or design-build contractor obtains, or appears to obtain, an unfair competitive advantage as a result of work performed by a consultant or subconsultant;

(C) provides guidance to private entities so they may assess and make informed business decisions concerning their participation in the program; and

(D) protects the department's interests and confidential and sensitive project-specific and programmatic information.

(2) Applicability. This subsection applies to all projects undertaken by the department under this subchapter. This subsection applies to consultants and subconsultants, and to individual employees of consultants and subconsultants who participated in the performance of services for the department. A reference in this subsection to a consultant or subconsultant also means individual employees of a consultant or subconsultant who participated in the performance of services for the department. To the extent that the department has previously consented in writing to a consultant's or subconsultant's performance of services that are in conflict with this subsection, participation on a proposer team as an equity owner or team member, acting as a consultant or subconsultant to a proposer, or having a financial interest in a proposer or an equity owner or team member of a proposer, this subsection does not modify or alter the prior consent. The foregoing does not prevent, however, the application of this subsection to the consultant or subconsultant for other projects, including taking into account the performance of services on the project for which consent was obtained. This subsection may by extension prohibit or restrict the ability of a proposer to have a consultant or subconsultant participate on the proposer team as an equity owner or team member, act as a consultant or subconsultant to the proposer, or have a financial interest in the proposer or an equity owner or team member of the proposer.

(3) Period in which a conflict of interest applies. If a determination is made under this subsection that the performance of services by a consultant or subconsultant raises a conflict of interest, the resulting prohibition or restriction provided in this subsection continues, both for the private entity and any individual that is an employee of or was employed by the private entity and participated in the performance of services for the department, until the date the performance of services ends and all work product prepared by the entity and other information and data provided to the entity in the performance of services is publicly available, provided that, for a private entity or individual performing procurement services, the resulting prohibition or restriction shall end no earlier than the execution of the design-build contract or cancellation of the procurement for the project for which the private entity or individual is performing services.

(4) Application to new firm. If a conflict of interest is determined to apply to an individual under paragraph (3) of this subsection and the individual changes employers, the conflict of interest and prohibition with respect to the individual will not apply to the individual's new employer. If the new employer is otherwise eligible to perform consultant services, the new employer will remain eligible despite the employment of the individual. This paragraph does not apply to an individual employed by an affiliate of its previous employer, and the conflict of interest and prohibition with respect to the individual will apply to that affiliate.

(5) Federal requirements. For federal-aid projects, the department must comply with the Federal Highway Administration's organizational conflict of interest regulations (found in 23 C.F.R. §636.116). The requirements of this subsection do not limit, modify, or otherwise alter the effect of those regulations, and will be applied consistent with those regulations.

(6) General conflict of interest standards. Except as provided in paragraph (7) of this subsection, a consultant that is providing consultant services to the department with respect to a design-build project may not be a proposer or participate as an equity owner, team member, consultant, or subconsultant of or to a proposer for that project, or have a financial interest in any of the foregoing entities with respect to that project. Subject to the requirements of paragraph (8) of this subsection, a consultant that is performing consultant services for a design-build project will not be prohibited from participating on a different design-build project as a proposer or participating as an equity owner, team member, consultant, or subconsultant of or to a proposer for the different project, or having a financial interest in any of the foregoing entities with respect to the different project.

(7) Providing services for the same project. A consultant that is actively providing preliminary engineering and architectural services to the department with respect to a design-build project, or that performed and completed environmental or traffic and revenue services for a design-build project, may be a proposer or participate as an equity owner, team member, consultant, or subconsultant of or to a proposer for the same project, or have a financial interest in any of the foregoing entities with respect to that project, provided:

(A) with respect to a consultant providing preliminary engineering and architectural services, all work product prepared by the consultant and other information and data provided to the consultant in the performance of services is made available to all proposers prior to the issuance of the final request for proposals for that project; or

(B) the executive director issues a written determination under paragraph (9) of this subsection that:

(i) the consultant will not, or in the case of the previous performance of consultant services did not, have access to or obtain knowledge of confidential or sensitive information, procedures, policies, and processes that could provide an unfair competitive advantage with respect to the procurement for that project;

(ii) the data and information provided to the consultant in the performance of the consultant services is either irrelevant to the procurement for that project or is available on an equal and timely basis to all proposers;

(iii) the work products from the consultant incorporated into or relevant to the procurement for that project are generally available on an equal and timely basis to all proposers; and

(iv) with respect to environmental services, a record of decision or finding of no significant impact has been issued for the project.

(8) Procurement and financial services. A consultant actively engaged and performing procurement services or financial services with respect to a design-build project may be a proposer or participate as an equity owner, team member, consultant, or subconsultant of or to a proposer for another design-build project, or may have a financial interest in any of the foregoing entities with respect to another design-build project, provided that, beginning at the time that the consultant becomes a proposer or participates as part of or acquires a financial interest in a proposer with respect to the other design-build project, as described by this paragraph, the consultant is prohibited from reviewing alternative technical concepts and proposals for the project for which the consultant is providing services to the department until a contract for the project is entered into, and the consultant must institute ethical walls or other safeguards required by the department.

(9) Requests for determinations or exceptions. A consultant, proposer, or design-build contractor may submit a request to the executive director for a determination whether participation in a design-build project or the performance of particular services with respect to a design-build project would constitute a conflict of interest, or for approval of an exception to the applicability of this subsection to those services. A request for approval of an exception may be made if a consultant, proposer, or design-build contractor desires to appeal a previous determination that a conflict of interest exists. The executive director will forward a request to the department's Office of General Counsel for analysis and recommendation prior to issuing a decision. In determining whether a conflict of interest exists, or whether to approve an exception, the executive director shall consider:

(A) the extent to which the firm or individual employee obtained access to or the ability to gain knowledge of confidential or sensitive information, procedures, policies, and processes concerning the design-build program or a particular project or procurement that could provide an unfair competitive advantage with respect to the procurement or project at issue;

(B) the type of consulting services at issue;

(C) the particular circumstances of each procurement;

(D) the specialized expertise needed by the department and proposers to implement the procurement;

(E) the past, current, or future working relationship between the consultant and the department;

(F) the period of time between the potential conflict situation and the project at issue; and

(G) the potential impact on the procurement and project at issue, including competition.

(10) Multiple services. If a consultant is providing more than one category of consultant services to the department and there are differences in the standards, restrictions, and limitations applicable to those categories, the standards, restrictions, and limitations applicable to a category that are more stringent apply.

(11) Participation on proposer or design-build contractor team. A consultant participating with respect to a design-build project as a proposer or design-build contractor, or as an equity owner, team member, consultant, or subconsultant of or to a proposer or design-build contractor, or having a financial interest in any of the foregoing entities, is eligible to provide consultant services to the department for another design-build project, provided that, when the consultant is retained to perform consultant services for the department, the restrictions in this subsection shall apply.

(12) Restriction of services and conditions to approvals and exceptions. In instances where a written determination under paragraph (9) of this subsection that a conflict of interest does not exist, including, in particular, where the conditions prescribed in paragraph (7) of this subsection have been met, or that grants an exception to the application of this subsection, the department may still, in its discretion:

(A) restrict the scope of services the consultant or subconsultant may be eligible to perform for the department in order to further the intent and goals of this subsection; and

(B) condition an approval, determination, or exception as the executive director determines appropriate to further the intent and goals of this subsection, including by requiring the consultant, subconsultant, proposer, or design-build contractor to execute confidentiality agreements, institute ethical walls, or segregate certain personnel from participation in a project or the performance of consultant services.

(13) Provisions are nonexclusive. The provisions in this subsection do not address every situation that may arise in the context of the department's design-build program nor require a particular decision or determination when faced with facts similar to those described in this subsection. The department retains the ultimate and sole discretion to determine on a case-by-case basis whether a conflict of interest exists and what actions may be appropriate to avoid, neutralize, or mitigate any actual or potential conflict, or the appearance of any conflict. Except as provided in paragraph (14) of this subsection, the provisions of this subsection shall not be construed to preclude or condone any conduct with regard to projects other than projects under a design-build contract. The department will continue to evaluate other projects based on applicable rules and its traditional conflict of interest standards.

(14) Comprehensive development agreement projects. A consultant providing procurement or financial services with respect to a comprehensive development agreement project described in Chapter 27, Subchapter A of this title (relating to Comprehensive Development Agreements) may be a proposer or participate as an equity owner, team member, consultant, or subconsultant of or to a proposer for a design-build project, or may have a financial interest in any of the foregoing entities with respect to a design-build project, under the conditions described in paragraph (8) of this subsection.

(d) Rules of contact. In order to provide a fair and unbiased procurement process, a request for qualifications will contain rules of contact regulating communications between proposers or any of its team members and the commission, the department, and third parties involved in the procurement. Communication includes face-to-face, telephone, facsimile, electronic-mail (e-mail), or formal written communication. The rules of contact become effective upon the issuance of the request for qualifications and may be modified in the request for proposals. The rules of contact will include provisions:

(1) prohibiting a proposer or any of its team members from communicating with another proposer or its team members with regard to the project, request for qualifications, or request for proposals, or either team's qualifications submittal or proposal;

(2) requiring each proposer to designate one or more representatives responsible for contact with the department, and requiring the proposer to correspond with the department regarding the project, request for qualifications, or request for proposals only through the department's authorized representatives and the proposer's designated representatives;

(3) prohibiting any ex parte communication regarding the project, request for qualifications, or request for proposals or the procurement with any member of the commission or with any department staff, advisors, contractors, or consultants involved in the procurement until the earliest of the execution and delivery of the design-build contract, the rejection of all qualifications submittals or proposals by the department, or the cancellation of the procurement;

(4) permitting communications in exceptional circumstances and designating department personnel authorized to approve those communications, and providing that the restrictions on communications shall not preclude or restrict communications with regard to matters unrelated to the project, request for qualifications or request for proposals, or participation in public meetings of the commission or any public or proposer workshop related to the project, request for qualifications, or request for proposals;

(5) designating a department employee not involved in the procurement to act as an ombudsman who is authorized to receive confidential communications, including questions, comments, or complaints regarding the procurement and who, after removing, to the extent practicable, any information identifying the proposer, forwards the communications to the employees designated as the department's authorized representatives; and

(6) authorizing the executive director to disqualify a proposer from the procurement and participation in the project at issue or to impose another sanction under Chapter 10 of this title if it is determined that a proposer has engaged in any improper communications in violation of the rules of contact.

(e) Exceptions to rules of contact. Notwithstanding subsection (d)(1) of this section:

(1) minor or specialty subcontractors that are shared between two or more proposer teams may communicate with members of each of those teams so long as those proposers establish a protocol to ensure that the subcontractor will not act as a conduit of information between the teams; and

(2) the prohibition provided by that subsection does not apply to public discussions regarding the project, request for qualifications, or request for proposals at any department sponsored informational meetings.

Source Note: The provisions of this §9.155 adopted to be effective March 15, 2012, 37 TexReg 1780; amended to be effective September 14, 2016, 41 TexReg 7134