1. (a) Subject to prior Board approval, the Department and a Subrecipient shall enter into and execute a Contract for the disbursement of program funds. The Department, acting by and through its Executive Director or his/her designee, may authorize, execute, and deliver authorized modifications and/or amendments to the Contract, as allowed by state and federal laws and rules.
2. (b) The Subrecipient may subcontract for the delivery of client assistance without obtaining Department's prior approval, but must obtain the Department's written permission before subgranting federal funds.
3. (c) The Subrecipient is responsible for ensuring that the performance rendered under all subcontracts, subgrants and other agreements are rendered so as to comply with Homeless Program requirements, as if such performance rendered were rendered by the Subrecipient. Department maintains the right to monitor and require the Subrecipient's full compliance with the terms of the Subrecipient Contract.
4. (d) A performance statement and budget are attachments to the Contract between the Subrecipient and the Department. Execution of the Contract enables the Subrecipient to access funds through the Department's Contract System.

5. (e) Amendments and Extensions to Contracts.

   1. (1) Except for amendments that only move funds within budget categories, the Department reserves the right to deny amendment requests if any of the following conditions exist:

      1. (A) the request for an amendment was received in writing less than thirty (30) calendar days from the end of the Contract Term;
      2. (B) if the award for the Contract was competitively awarded and the amendment would materially change the scope of the Contract performance or affected the score;
      3. (C) if the funds associated with the Contract will reach their federal or state expiration date within forty-five (45) calendar days of the request;
      4. (D) if the Subrecipient is delinquent in the submission of their Single Audit or their Single Audit Certification form required by §1.403 in Chapter 1 of this Title;
      5. (E) if the Subrecipient owes the Department disallowed amounts in excess of $1,000 and a Department-approved repayment plan is not in place or has been violated;
      6. (F) for amendments adding funds (not applicable to amendments for extending time), if the Department has cited the Subrecipient for violations within §7.11 of this Subchapter (related to Compliance Monitoring) and the corrective action period has expired without correction of the issue or a satisfactory plan for correction of the issue;
      7. (G) the Contract has expired; or
      8. (H) a member of the Subrecipient's board has been debarred and has not been removed.
   2. (2) Denial of an amendment may be subject to §1.7 of this Title, regarding appeals.

6. (f) The Department reserves the right to use a Cost Reimbursement method of payment whereby reimbursement of costs incurred by a Subrecipient is made only after the Department has reviewed and approved backup documentation provided by the Subrecipient to support such costs for all funds if at any time the following apply:

   1. (1) The Department determines that the Subrecipient has maintained cash balances in excess of need;
   2. (2) The Department identifies significant deficiency in the cash controls or financial management system used by the Subrecipient; or
   3. (3) The Subrecipient fails to comply with the reporting requirements in §7.5 and §7.6 of this Subchapter.
7. (g) Voluntary deobligation. The Subrecipient may fully relinquish funds in the form of a written request signed by the signatory, or successor thereto, of the Contract. The Subrecipient may partially relinquish funds under a Contract in the form of a written request from the signatory if the partial relinquishment in performance measures and budget would not have impacted the award of the Contract. Voluntary relinquishment of a Contract does not limit a Subrecipient's ability to participate in future funding.
8. (h) Funds provided under a Contract may not be used for sectarian or explicitly religious activities such as worship, religious instruction or proselytization, and must be for the benefit of persons regardless of religious affiliation.

Source Note:The provisions of this §7.4 adopted to be effective July 22, 2018, 43 TexReg 4728.