Chapter 7, Contract Application and Award

Revision 23-1, Effective Nov. 13, 2023

7.1 Allotment of Funds

Revision 23-1, Effective Nov. 13, 2023

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 people served and cost of services provided by county.

The funds are administered by the designated service provider per the Independent Living Services Standards and the rules in the 26 TAC, Part 1 Chapter 357, Independent Living Services.

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

Revision 23-1, Effective Nov. 13, 2023

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

Revision 23-1, Effective Nov. 13, 2023

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 per the requirements in the Independent Living Services Standards for Providers and other activities specific to the contract application. The service provider is responsible 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.

Salaries and wages are to reflect actual hours worked on the grant. Individual salaries may be increased permanently for merit, to account for cost-of-living, or when an employee is promoted. 

One-time salary increases may only be provided for merit rather than as a distribution of unspent funds. HHSC may request unredacted performance evaluations to support a one-time merit increase.

To request a budget revision, the service provider must submit Form 3000, Budget Revision Request, for review and approval by the contract manager. The request must reflect the revised budget request and include the justification.

7.4 Administrative Rate

Revision 23-1, Effective Nov. 13, 2023

HHSC shall reduce the administrative budget amounts to achieve an administrative rate of 40 percent or less of annual budget by fiscal year 2026. In fiscal year 2024 the maximum allowed administrative budget amount will be 50 percent of the total contract budget, in fiscal year 2025 the maximum allowed administrative budget amount will be 45 percent of the total contract budget, and in fiscal year 2026, and subsequent fiscal years, the maximum allowed administrative budget amount will be 40 percent of the total contract budget. Grantees already below the maximum rate for a fiscal year may not raise their administrative budget amount to the maximum allowed for that fiscal year. The cost savings of the administrative rate reduction will be added to the purchased services budget to increase funds for service provision to individuals served by this contract.

7.5 Contract Award

Revision 23-1, Effective Nov. 13, 2023

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

Base any commitment or expenditure of contract funds on the approved application and signed contract, including any subsequent, properly approved amendment.

An amendment to the contract is required when 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 45 CFR Part 75. 

7.6 Special Contract Provisions or Restrictions

Revision 23-1, Effective Nov. 13, 2023

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

Factors considered in determining if 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 Texas 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 or technical assistance;
  • more frequent financial or program performance reporting; and
  • increased contract monitoring.

7.7 Service Provider Responsibilities

Revision 23-1, Effective Nov. 13, 2023

Service providers are: 

  • responsible for providing required information about people, 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;
  • required to accept full legal responsibility for the program, including fulfilling contract requirements;
  • required to direct all program and administrative aspects through effective and sound management practices and policies;
  • must provide fiscal and program management of the contract; and
  • not to assign any portion of the contract in whole or in part without prior approval from HHSC.