Chapter 7: Contract Application and Award

Revision 19-1, Effective March 1, 2019

7.1 Allotment of Funds

HHSC may consider the following when determining the amount allotted to each service provider:

  • service area;
  • population of the area served; and
  • history of service delivery, which is the number of previous consumers served and cost of services provided by county.

The funds are administered by the designated service provider in accordance with the rules in the 40 TAC Chapter 104, Independent Living Services, and in accordance with the Independent Living Services Standards.

When HHSC determines that a service provider will not spend all the funds allotted for a fiscal year to carry out the rules in the independent living services, HHSC may allot the projected unused portion to other service providers to provide the covered services in the chapter and subchapter. The extra allotment is considered an increase in the other service providers’ allotments for that fiscal year.

The service provider ensures other sources of funds, such as other grants and comparable benefits, are expensed before using funds allocated under the Independent Living Services Standards.

7.2 Contract Application

An application process is used for awarding contracts to service providers under the Independent Living Services Program. HHSC shall establish a process for applications to be submitted in accordance with 1 TAC, Part 15, Chapter 392 Subchapter J Independent Living Services Program Contracts.

Service providers seeking financial assistance to provide the services outlined in the Independent Living Services Standards shall submit a contract application packet in accordance with the established process.

The contract application packet will include instructions, required forms, and a deadline for submission. It will also provide information on:

  • county service areas;
  • the work plan;
  • the budget;
  • the cost allocation plan, including the indirect cost rate if applicable;
  • job descriptions for contract-funded positions; and
  • other requirements.

Financial assistance is provided based on a completed and approved contract application submitted by the service provider.

7.3 Contract Work Plan and Budget

The service provider prepares a work plan with activities for carrying out the Independent Living Services (ILS) Program. Work plan activities are required for all service providers according to the requirements in the Independent Living Services Standards and other activities specific to the contract application. The service provider has the responsibility to fulfill the approved work plan and comply with the ILS Program requirements.

The contract budget shall reflect anticipated costs associated with the activities outlined in the work plan.

Costs are to be budgeted under these cost categories:

  • Salaries and Wages
  • Fringe Benefits
  • Travel
  • Equipment (capitalized)
  • Supplies and Materials
  • Purchased Services
  • Other Costs
  • Indirect Cost (if applicable)

Funds budgeted by cost category cannot be moved to other cost categories without requesting and receiving approval from HHSC through a formal budget revision. Additionally, funds within Purchased Services cannot be moved between complex rehabilitation or other purchased service categories without requesting and receiving approval from HHSC through a formal budget revision. Funds may be requested to be moved out of an administrative cost category into a purchased service category; however, purchased service funds cannot be moved into an administrative category.

To request a budget revision, the service provider must submit Form 3000, Budget Revision Request, reflecting the revised budget request (with the justification included) for review and approval by the contract manager.

7.4 Contract Award

HHSC develops an agreement with the service provider, upon approval of the contract application. The basis for the agreement is the approved application and contract.

Any commitment or expenditure of contract funds must be based on the approved application and signed contract, including any subsequent, properly approved amendment.

An amendment to the contract is required when:

  • a formal budget revision approved by HHSC is required; or
  • a substantial change is made to the work plan (whether or not the change is linked to budget changes).

The contracts for independent living services are paid in part with federal grant funds. Because the contract is considered a sub recipient relationship, the service provider is required to follow the federal grant management guidance in 2 Code of Federal Regulations (CFR), Part 200, Uniform Guidance, Administrative Requirements, Cost Principles, and Audit Requirements for Federal Awards.

7.5 Special Contract Provisions or Restrictions

The contract may include special provisions or restrictions based on an assessment of risk during the contract application process.

Factors considered in determining whether special provisions or restrictions are appropriate include the potential service provider’s:

  • breadth of experience with the Independent Living Services Program;
  • history of performance with health and human services contract requirements;
  • monitoring reviews and audit findings;
  • financial stability;
  • quality of management systems; and
  • ability to effectively implement program requirements.

The contract’s special conditions or restrictions may address such topics as:

  • additional approvals needed for contract decisions;
  • required training and/or technical assistance;
  • more frequent financial and/or program performance reporting; and
  • increased contract monitoring.

7.6 Service Provider Responsibilities

  • be responsible for providing required information about consumers, services provided, services outcomes, expenditures, and any other related activity deemed necessary to meet federal reporting, state reporting, or monitoring requirements, or to assure the provision of quality services;
  • accept full legal responsibility for the program, including fulfilling contract requirements;
  • direct all program and administrative aspects through effective and sound management practices and policies;
  • provide fiscal and program management of the contract; and
  • not assign any portion of the contract in whole or in part without prior approval from HHSC.