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RULE §9.324SBE Subcontractor Termination

(a) If a contract has an SBE contract goal, the contractor may not substitute or terminate an SBE subcontractor submitted on a commitment agreement without the prior written consent of the department.

(b) Before requesting the department's approval to terminate or substitute for an SBE, the contractor must give written notice to the listed SBE with a copy to the department of the contractor's intent to request the termination or substitution of the SBE and provide a detailed explanation for the request.

(c) The contractor must give the listed SBE five days to respond to the notice and to advise the department and the contractor of the reasons the listed SBE objects to the proposed termination or substitution. The department may provide a shorter response time if required in a particular case as a matter of public necessity.

(d) When an SBE subcontractor is terminated or fails to complete its work on the contract for any reason, the contractor shall make good faith efforts to find, as a substitute for the original SBE, another SBE to perform, at least to the extent needed to meet the established contract goal the work that the original SBE was to have performed under the contract. If the contractor cannot find another SBE to perform the work originally committed to the terminated SBE the contractor shall make good faith efforts to obtain SBEs to perform other work under the contract equal to the work originally committed to the terminated SBE.

(e) The contractor must submit for approval the name of the SBE subcontractor that is to replace the SBE subcontractor listed in the original commitment agreement. Work performed by a substitute before the department has approved the substitution will not be counted toward the SBE goal.

(f) If the department determines there is good cause for the termination or replacement, the department will provide written consent for the action.

(g) Each contract will contain provisions that state the appropriate administrative remedies that apply if the contractor fails to comply with this section.

Source Note: The provisions of this §9.324 adopted to be effective September 1, 2012, 37 TexReg 5320

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