(a) Inspection of merchandise.
  (1) Qualified ordering entities must inspect all shipments received against orders and report any discrepancies to the comptroller immediately.
  (2) If unlisted shortages are discovered, the contractor and the comptroller must be notified immediately. Unless shipments are checked immediately upon arrival and such shortage reports are made within 15 days, the contractor cannot be held responsible for shortages.
  (3) A contractor may be required to pick up any merchandise not conforming to specifications and replace the merchandise immediately.
(b) Substitutions. Substitution of items called for in a contract is not permitted without the prior approval of the director. No such approval will be granted unless substituted items are of equal quality and are offered at the same or lower price.
(c) Cancellations.
  (1) Cancellations on orders issued by the comptroller's statewide procurement division, either on the part of the vendor or a qualified ordering entity, are not permitted without the prior written approval of the comptroller's statewide procurement division.
  (2) Orders may be canceled without the contractor's consent due to unsatisfactory performance or nonperformance by the contractor.
  (3) Orders may not be canceled without first obtaining the consent of the contractor if the reason for cancellation is not the fault of the contractor.
  (4) A contract or a portion of a contract may be canceled on request of the contractor if the contractor is unable to perform due to circumstances beyond its control. In these instances, the comptroller's statewide procurement division will consider such requests when presented in writing with proper documentation.
(d) Damages for failure to perform.
  (1) A vendor who fails to perform as required under a contract shall be liable for actual damages and costs incurred by the state.
  (2) If any merchandise delivered under a contract has been used or consumed by an agency and on testing is found not to comply with specifications, no payment may be approved by the comptroller's statewide procurement division for such merchandise until the amount of actual damages incurred has been determined.
  (3) The comptroller shall seek to collect damages by following the procedures established by the Office of the Attorney General for the collection of delinquent obligations.

Source Note: The provisions of this §20.486 adopted to be effective January 24, 2017, 42 TexReg 240