1. (a) Terms. The department may reduce the amount of funding of any contract or not renew any contract whenever the department determines that:

   1. (1) contractor has violated any term of its contract;
   2. (2) sufficient block grant funds are not available to either continue the contract at its current level of funding or to renew the contract;
   3. (3) based upon a competitive evaluation of proposals authorized under federal or state law or rules, the block grant funds will be awarded to the entity which has proposed superior services;
   4. (4) priorities or need for services change; or
   5. (5) contractor's performance under its contract has not been satisfactory;
   6. (6) the contractor has failed to comply with or is unable to comply with any provision of a federal or state law or regulation;
   7. (7) negative comments received under the Texas review and comment system concerning the contractor cannot be resolved to the satisfaction of the department.

2. (b) Exceptions. This section does not apply to the reduction in the amount of funding of a contract when:

   1. (1) department does not plan to provide the withheld funds to another entity in the same geographic area for the provision of similar services; and
   2. (2) the contract being reduced was awarded for a specific period under a competitive evaluation of proposals.

Source Note:The provisions of this §1.12 adopted to be effective February 6, 1984, 9 TexReg 412; amended to be effective October 30, 1985, 10 TexReg 4084.