| (a) A Subrecipient that does not expend more than 20%
of its Program Year formula allocation (excluding any additional funds
that may be distributed by the Department and any funds voluntarily
transferred to LIHEAP CEAP) by the end of the first quarter of the
Contract Term following the Program Year for two consecutive years
will have funding recaptured. A Subrecipient's Contract will be amended
to reflect the average percentage of funds that expended over the
last two years. LIHEAP-WAP funding recapture will be consistent with
Tex. Gov't Code, Chapter 2105.
(b) The cumulative balance of the funds made available
in subsection (a) of this section will be allocated proportionally
by formula to Subrecipients that expended 90% of the prior year's
Contract, excluding adjustments made in subsection (a) of this section,
by the end of the original Contract Term.
(c) At any time that a Subrecipient believes they may
be at risk of meeting one of the criteria noted in subsection (n)
of this section relating to criteria for Deobligation of funds, notification
must be provided to the Department.
(d) A written "Notification of Possible Deobligation"
will be sent to the Executive Director and the Board of Directors
or other governing body of the Subrecipient by the Department as soon
as the Department identifies that a criterion listed in subsection
(n) of this section is at risk of not being met. Written notice will
be sent electronically and/or by mail. The notice will include an
explanation of the criteria met. A Notification will not be sent,
and the steps in this section not triggered, if an Amendment increasing
funds has been provided to the Subrecipient in the prior 90 calendar
days.
(e) Within 15 calendar days of the date of the "Notification
of Possible Deobligation" referenced in subsection (d) of this section,
a Mitigation Action Plan must be submitted to the Department by the
Subrecipient in the format prescribed by the Department.
(f) A Mitigation Action Plan is not limited to but
must include:
(1) Explanation of why the identified criteria under
this section occurred setting out all fully relevant facts.
(2) Explanation of how the criteria will be immediately,
permanently, and adequately mitigated such that funds are expended
during the Contract Term. For example, if production or expenditures
appear insufficient to complete the Contract timely, the explanation
would need to address how production or expenditures will be increased
in the short- and long-term to restore projected full Expenditure
and timely execution of the contract.
(3) If applicable because of failure to produce Unit
Production or Expenditure targets under the existing Production Schedule,
a detailed narrative of how the Production Schedule will be adjusted,
going forward, to assure achievement of sufficient, achievable Unit
Production and Expenditures to ensure timely and compliant full utilization
of all funds.
(4) An explanation of how the other criteria under
this section will be mitigated. For example, if Unit Production criteria
for a time period were not met, then the explanation will need to
include how the other criteria will not be triggered.
(5) If relating to a Unit Production or Expenditure
criteria, a description of activities currently being undertaken including
an accurate description of the number of units in progress, broken
down by number of units in each of these categories: units that have
been qualified, audited, assessed, contracted, inspected, and invoiced
and as reflected in an updated Production Schedule.
(6) Provide any request for a reduction in Contracted
Funds, reasons for the request, desired Contracted Funds amount, and
revised Production Schedule reflecting the reduced Contracted Funds.
(g) At any time after sending a Notification of Deobligation,
the Department or a third-party assigned by the Department may monitor,
conduct onsite visits, perform other assessments, or engage in any
other oversight of the Subrecipient that is determined appropriate
by the Department under the facts and circumstances.
(h) The Department or a third-party assigned by the
Department will review the Mitigation Action Plan, and where applicable,
assess the Subrecipient's ability to meet the revised Production Schedule
or remedy other Concern.
(i) After the Department's receipt of the Mitigation
Action Plan, the Department will provide the Subrecipient a written
Corrective Action Notice which may include one or more of the criteria
identified in this section (relating to Deobligation and other mitigating
actions) or other acceptable solutions or remedies.
(j) The Subrecipient has seven calendar days from the
date of the Corrective Action Notice to appeal the Corrective Action
Notice to the Executive Director. Appeals may include:
(1) A request to retain the full Fund Award if Partial
Deobligation was indicated;
(2) A request for only partial Deobligation of the
full Contracted Fund if full Deobligation was indicated in the Corrective
Action Notice; or
(3) Request for other lawful action consistent with
the timely and full completion of the Contract and Production Schedule
for all Contracted Funds.
(k) In the event that an appeal of a staff decision
under this section is submitted to the Executive Director, the Executive
Director may grant extensions or forbearance of targets included in
the Production Schedule, may provide for continued operation of a
Contract, may authorize Deobligation, or may take other lawful action
that is designed to ensure the timely and full completion of the Contract
for all Contracted Funds.
(l) In the event an appeal is not submitted within
seven calendar days from the date of the Corrective Action Notice,
the Corrective Action Notice will automatically become final without
need of any further action or notice by the Department, and the Department
will amend/terminate the Contract with the Subrecipient to effectuate
the Corrective Action Notice.
(m) In the event the Executive Director denies an appeal
of a staff decision under this section, the Subrecipient may appeal
that decision in accordance with §1.7(f) of this title (relating
to the Process for Filing an Appeal of the Executive Director's Decision
to the Board).
(n) Any one or more of the criteria noted in this subsection
may prompt the Deobligation process under this rule. If the criteria
are met, then notification and ensuing processes discussed elsewhere
in this subchapter will apply.
(1) Subrecipient fails to provide the Department with
a Production Schedule for its current Contract within 30 calendar
days of receipt of the draft Contract. The Production Schedule must
be signed by the Subrecipient's Executive Director/Chief Executive
Officer, and approved by the Department in writing;
(2) By the third program reporting deadline, Subrecipient
must report at least one unit weatherized for each Weatherization
Contract;
(3) By the fifth program reporting deadline, less than
25% of total expected unit production has occurred based on the Production
Schedule, or less than 20% of total Awarded Funds have been expended;
(4) By the seventh program reporting deadline, less
than 50% of total expected unit production has occurred based on the
Production Schedule, or less than 50% of total Awarded Funds have
been expended; or
(5) The Subrecipient fails to submit a required monthly
report explaining any variances between the Production Schedule and
actual results on Production Schedule criteria.
(o) A Subrecipient that has funds Deobligated under
this section but that fully expends the reduced amount of its Contract,
will have access to the full amount of the following Program Year
WAP allocation. A Subrecipient which has had funds Deobligated under
this section that fails to fully expend the reduced amount of its
Contract will automatically have its following Program Year WAP allocation
Deobligated by the lesser of 24.99% or the proportional amount that
had been Deobligated in the prior year.
(p) Funds Deobligated under this section, funds voluntarily
relinquished, or additional funds should they become available, will
be Reobligated proportionally by the formula described in §6.404
of this subchapter (relating to Distribution of WAP Funds) or other
method approved by the Department's Board amongst all Subrecipients
that did not have any funds Deobligated during this evaluation period
to ensure full utilization of funds within a limited timeframe including
possible allocation of WAP funds to Subrecipients in varying populations
from each funding source (DOE and LIHEAP), based on availability of
the source.
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