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RULE §806.7 Contracting with Central Non-Profit Agencies

Published: 2015

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(a) The council may select and contract with one or
more central nonprofit agencies and shall contract through a request
for proposals for a period not to exceed five years to perform, at
a minimum, the duties set forth in §122.019(a) and (b) of Chapter
122 of the Human Resources Code.
(b) The management fee rate charged by a central nonprofit
agency for its services to the CRP(s) and its method of calculation
must be approved by the council. The maximum management fee rate must
  (1) computed as a percentage of the selling price of
the product; or
  (2) the contract price of a service; and
  (3) must be included in the selling price or contract
price; and
  (4) must be paid at the time of sale.
(c) The council shall annually review the management
fee and shall publish in the Texas Register a request for
comment on the proposed management fee not later that the 60th day
before the review. The council shall give reasonable notice of the
intended management fee review to each CRP. In the event of a proposed
management fee rate change the council shall require the CNA to provide
documentation in support of any such change. Any supporting documentation
of the CNA's proposed rate shall be made available to the public upon
request. The council, at its sole discretion, may negotiate and approve
varying management fees for a CNA to provide a fee structure that
corresponds to the level of service being given by a CNA to each
of the CRPs.
(d) A percentage of the management fee described in
subsection (b) of this section shall be set by the council and paid
to the council in an amount necessary to reimburse the general revenue
fund for direct and reasonable costs incurred by the comptroller in
administering its duties under Chapter 122.
(e) In accordance with the Texas Human Resources Code,
§122.019(c), the council shall annually review services by and
the performance of a CNA, and the revenue required to accomplish the
program. The purpose of the review shall be to determine whether a
CNA has complied with statutory requirements, contract requirements,
and performance standards set forth in §189.12 of this title
(relating to performance standards for a central nonprofit agency).
(f) Following the review of a CNA as required by §122.019(d)
of the Human Resources Code, the council at its sole discretion, may
approve the performance of the central nonprofit agency and the continuation
of the contract through its termination date. The council may issue
a request for proposals or negotiate an emergency contract not to
exceed one year, when a contract with a CNA is terminated by the council
  (1) the central nonprofit agency ceases operations;
  (2) the central nonprofit agency gives notice that
it can not complete the contract;
  (3) the central nonprofit agency's performance contract
has been terminated due to its failure to perform its contractual
obligations; or
  (4) review of the central nonprofit agency results
in disapproval of its performance.
(g) In the event a new CNA succeeds to the contract
for any reason provided in these rules, the prior CNA shall cooperate
fully and assist the new CNA to take over CNA duties and responsibilities
as soon as possible with minimal disruption to the operations of the
program. Such cooperation and assistance will include turning over
to the council the terminated CNA's records described in the Texas
Human Resources Code §122.009(a), which includes but is not limited
to a marketing plan, a listing of CRPs participating in the state
use program, copies of all contracts with CRPs participating in the
state use program, a listing of state agencies that purchase state
use products and services, program funding requirements, and job descriptions
for staffing a CNA to perform its duties under its contract with the
(h) Not later than the 60th day before the date the
council adopts or renews a contract, the council shall publish notice
of the proposed contract in the Texas Register.
(i) No later than October 1st of each year the CNA
will provide to the council, regarding CRP(s) which have contracted
with the CNA, the following information for the period of July 1st
through June 30th of each year:
  (1) for CRPs:
    (A) a collective executive summary of the CRPs annual
state use program evaluations;
    (B) the number of disabled persons employed by type
of disability and the number of non-disabled workers employed in programs
managed by the CRP(s) or who are employed by businesses or workshops
that receive supportive employment from CRPs;
    (C) the amount of annual wages and the average and
range of weekly earnings for disabled and non-disabled workers who
are employed in CRPs under this chapter;
    (D) a summary of the sale of products offered by the
    (E) a list of products and/or services offered by a
    (F) the geographic distribution of CRP(s); and
    (G) a report of all CRPs that have not met the criteria
for participation in the state use program in a format approved by
the council.
  (2) from each CRP data on individual outplacement or
supported employment to include:
    (A) the number of individuals in outplacement employed;
    (B) the hourly wage range;
    (C) the range of hours worked; and
    (D) the number of disabled persons employed by primary
type of disability.
(j) In accordance with the Texas Human Resource Code,
§122.019 (c) and §122.019(d), a CNA will provide or make
available to the council:
  (1) quarterly reports for each calendar quarter of
its contract of sales of products or services, wages paid and hours
worked by persons with disabilities for CRPs participating in the
state use program;
  (2) quarterly reports for each calendar quarter listing
CRPs that do not meet criteria for participation in the state use
program and the reasons that each CRP listed does not meet the criteria;

  (3) at least once a year by October 31st, and prior
to any review and/or re-negotiation of the contract:
    (A) an updated marketing plan;
    (B) a proposed annual budget with estimated sales,
commissions, and expenses;
    (C) a program budget with details on how the expected
revenue and expenses will be allocated to directly support and expand
the state use program and other programs that expand direct services
and/or the enhancement of employment opportunities for persons with
disabilities; and
    (D) an audited annual financial statement which should
include information on FDIC coverage of all cash balances, earnings
attributed to the management fee for the state use program, accounts
receivable, cash reserves, line of credit borrowings, interest payments,
bad debt, administrative overhead and any detailed supporting documentation
requested by the council;
  (4) quarterly reports of categories of expenditures
in reporting format approved by the council;
  (5) records in accordance with the Texas Human Resources
Code §122.009(a) and §122.0019(d) for audit purposes, provided
however, that any records provided by a CNA which may be subject
to any exception to Chapter 552 of the Texas Government Code, would
not be disclosed to any third party except with the permission of
the CNA or in accordance with the provisions of Chapter 552, Government
Code (the "Public Information Act"); and
  (6) any other information the council requests as set
forth in Chapter 189 of this title (relating to Purchase of Products
and Services from Persons with Disabilities).
(k) Duties of a CNA include, but not be limited to:
  (1) recruit and assist community rehabilitation programs
in developing and submitting applications for the selection of suitable
products and services;
  (2) facilitate the distribution of orders among community
rehabilitation programs;
  (3) manage and coordinate the day-to-day operations
of the program, including the general administration of contracts
with community rehabilitation programs;
  (4) promote increased supported employment opportunities
for persons with disabilities;
  (5) investigate products and services before they are
proposed by CRPs for the state use program and after their approval
for compliance with Texas Government Code §2155.138 and §2155.069;
  (6) monitor CRPs to ensure that all criteria for participation
in the state use program are met.
(l) The services of a central nonprofit agency may
include marketing and marketing support services, such as:
  (1) assistance to CRPs regarding solicitation and negotiation
of contracts;
  (2) direct marketing of products and services to state
agencies and political subdivisions;
  (3) research and development of products and services;
  (4) public relations activities to promote the program;
  (5) customer relations;
  (6) education and training;
  (7) accounting services related to purchase orders,
invoices, and payments to CRPs; and
  (8) other duties as designated by the council that
may include:
    (A) establishing a payment system with a goal to pay
CRPs within fourteen (14) to twenty-one (21) calendar days, but not
less than thirty (30) days of completion of work and proper invoicing;
    (B) resolving contract issues and/or problems as they
arise between the CRPs and customers of the program, referring those
that cannot be resolved to the council;
    (C) maintaining a system that tracks and monitors product
and service sales; and
    (D) tracking and reporting quality and delivery times
of products and services.
(m) Each year by October 31st, a central nonprofit
agency will establish performance goals for the next fiscal year in
support of objectives set by the council. Those performance goals
will include, but not be limited to:
  (1) sales of products or services;
  (2) wages paid to persons with disabilities;
  (3) hours worked by persons with disabilities;
  (4) response time to customers' inquiries and/or complaints;
  (5) quality standards and delivery goals for CRP programs
(n) The CNA shall have an authorized representative
present at all council meetings who can bind the CNA to any representations,
agreements or decisions regarding agenda items subject to the council's
(o) The council may terminate a contract with a central
non-profit agency if:
  (1) the council finds substantial evidence of the
central non-profit agency's noncompliance with contractual obligations
or of conflict of interest; and
  (2) the council has provided at least 30 days written
notice to that central non-profit agency of the termination of the
(p) The council may request an audit by the state auditor
  (1) the management fee set for any central non-profit
agency; or
  (2) the financial condition of any central non-profit
(q) A person may not operate a community rehabilitation
program and at the same time contract with the council as a central
non-profit agency.
(r) The council must annually review the management
fees the CRPs are charged by the CNAs.

Source Note: The provisions of this §806.7 adopted to be effective April 21, 1997, 22 TexReg 3437; amended to be effective January 8, 2001, 25 TexReg 12991; amended to be effective January 3, 2002, 26 TexReg 11042; amended to be effective March 23, 2005, 30 TexReg 1643; amended to be effective January 5, 2009, 34 TexReg 64; transferred effective September 1, 2015, as published in the Texas Register August 7, 2015, 40 TexReg 5065