The definitions set forth in this section apply throughout this chapter and have the following meanings, unless the context clearly indicates otherwise.

(1) Above standard - Performance ranging from standard to that meeting the lower range of superior.

(2) Active contractor - A contractor who has participated in department activities through maintaining required prequalification and having a history of performing department work.

(3) Affiliate - An associate, subordinate associate, or subsidiary firm which may involve the intermingling of funds, officers, or officials of one or more firms.

(4) Assistant secretary of engineering and regional operations - The primary representative of the secretary of transportation responsible for the highway construction program and for the qualification of contractors employed thereon.

(5) Below standard - Performance bordering on standard extending to the limits of inadequate.

(6) Bidding proposal - A form issued by the department for the submission of a contractor's bid containing spaces for entering bid amounts, authentication, and other data.

(7) Capacity multiplier - A number between ((5.0))7.5 and ((7.5))12.5 multiplied by a firm's net worth to calculate its maximum bidding capacity.

(8) Conditional qualification - A temporary qualification status given a contractor or design-builder who has received a "below standard" or "inadequate" overall rating or for other reasons which result in restrictions to a contractor's ability to bid on department work or a design-builder's ability to be short listed.

(9) Contractor - Any person, partnership, firm, corporation or joint venture who or which, in the pursuit of an independent business, undertakes, offers to undertake, or submits a bid to perform construction work for the department.

(10) Department - The department of transportation.

(11) Design-builder - Any firm, corporation, partnership, or joint venture that acts as a single entity to perform both design and construction phases of a project.

(12) Endorser - The region operations engineer or immediate supervisor of the construction project engineer, or project architect or, under specified conditions, the region administrator responsible for reviewing contractor's or design-builder's performance reports.

(13) Inadequate - Performance failing completely to meet the prescribed standard or requirement.

(14) Instructions to proposers - A document containing requirements for a proposal submitted by a design-builder.

(15) Integrity - The quality of being of sound moral principle, uprightness, honesty, and sincerity.

(16) Joint venture - Two or more persons, sole proprietorships, companies, corporations, or combinations thereof, entering into an agreement for a business venture such as a construction project.

(17) Limited work class - A work classification given when a contractor or design-builder lacks the total experience, organization, equipment, or skills required to perform the entire range of work within a work class.

(18) Maximum capacity rating - The total value of uncompleted prime contract work a contractor or design-builder is permitted to have under contract with the department at any time.

(19) Performance inquiry - A request made to a contractor's or design-builder's previous employers for an evaluation of the quality and manner of that contractor's or design-builder's performance.

(20) Performance rating - A numerical rating which is equal to the grand total of the evaluation elements of the performance report used to measure and quantify the quality of contractor or design-builder performance.

(21) Prequalification - The process of evaluating a contractor's or design-builder's financial status, organizational structure, experience, integrity, and other required qualifications to determine a contractor's responsibility and suitability for performing department work. This term is used interchangeably with qualification.

(22) Performance report - A report prepared to evaluate the performance of a prime contractor or design-builder upon completion of, or at an interim period during a department project which is used to adjust a prime contractor's or design-builder's qualification status. Such reports are designated as either a prime contractor performance report or a design-builder performance report.

(23) Project estimate - A document prepared by the department establishing the estimated value of all items of work, the total estimated value of work within each class of work, and the estimated total value of a project.

(24) Proposal - A document submitted by a design-builder, containing technical approach and pricing, in response to instructions to proposers document.

(25) Rater - The designated individual, normally the project engineer, responsible for evaluation of the quality and manner of performance of a contractor or design-builder in the completion of a project.

(26) Request for qualifications - A document requesting the submittal of a statement of qualifications from a design-builder.

(27) Revocation of qualification - The act by which a contractor's qualification is terminated.

(28) Secretary - The secretary of transportation who may delegate functions under this chapter to the assistant secretary of engineering and regional operations or such other individual as deemed appropriate.

(29) Short list - A document listing design-builders who, upon evaluation of statements of qualifications, qualify for submission of a proposal.

(30) Standard - The expected, acceptable quality of performance, considered to meet the demand, need or requirement.

(31) Standard questionnaire - The application form completed by a contractor or design-builder to present information relating to the applicant's financial status, experience, organization, and equipment for the purpose of becoming qualified to perform department work.

(32) Statement of qualifications - A document submitted by a design-builder in response to a request for qualifications document.

(33) Superior - Preeminent performance consistently at an extremely high level.

(34) Suspension of qualification - The termination of a contractor's qualification for a specified period of time.

(35) Unsatisfactory - Below standard or inadequate performance, failing to meet requirements.

(36) Work class - A specific type of work within the various classifications of work, e.g., grading, draining, fencing, etc.

(37) Work class rating - The maximum value within a class of work that is used to determine a firm's eligibility to receive a bid proposal or submit a statement of qualifications document for a single project.

(1) The maximum capacity rating shall be determined by multiplying the contractor's reported net worth by a factor of ((5.0))7.5. The factor may be increased at a rate of ((0.5))1 annually, provided the contractor has maintained a satisfactory performance record with the department and has completed a contract of ((fifty thousand dollars))$50,000 or more within the preceding prequalification year. The maximum factor shall be ((7.5))12.5. The department may at any time decrease the rating factor if the contractor's performance becomes less than standard, however no decrease in the bidding capacity will become effective until action to appeal, as specified in these rules, has been completed.

(2) For the purpose of prequalification and establishing the maximum capacity rating, the following additional resources may be added to net worth if supported with documentation as specified:

(a) An operating line of credit - Documentation from an acceptable financial institution stating the amount of credit authorized, its expiration date, and the amount currently available. The document must be authenticated by an official authorized to execute lines of credit on behalf of the institution. Should the operating line of credit be revoked, it shall be deducted before computing a new annual maximum capacity rating.

(b) A parent firm guarantee of net worth - A sworn statement from the parent firm that guarantees the performance of the subsidiary for any contracts awarded it. The document shall include a parent firm guarantee in an amount such that when calculated in subsection (1) of this section will not be less than the value of uncompleted contracts of the subsidiary. An audited financial statement, as prescribed in WAC 468-16-090(9), may be requested from the parent firm when deemed appropriate.

(3) Resources listed above will not be accepted in lieu of a minimum net worth of ((fifty thousand dollars))$50,000.

(4) For the purpose of prequalification and establishing the maximum capacity rating, a bidding company which has established a leveraged ESOP (Employee Stock Ownership Plan) may use, in place of its net worth, the lesser of:

(a) The company's net worth, as adjusted by eliminating any contra-equity or unearned compensation entry in the net worth section of the balance sheet which is directly related to the ESOP loan; or

(b) The company value as established by the company's most recent valuation for ESOP purposes provided the valuation was performed within the last ((twelve))12 months which meets federal guidelines for ESOP-related valuations. The department may require submission of a copy of this valuation report for documentation purposes.

(5) When the value of a firm's uncompleted work for the department exceeds its maximum capacity rating, a bidding proposal shall be denied that firm.