(a) Method and content of notice. The director shall notify the contractor by the most expeditious method available, including but not limited to telephone, e-mail, and fax, of an action under this subchapter. In addition to the most expeditious method, the director shall also notify the contractor in writing, via certified mail, return receipt requested. The notice shall be in terms sufficient to apprise the contractor of the conduct or transactions upon which it is based. The director shall notify a contractor when:
  (1) a contractor is being investigated for potential debarment;
  (2) a contractor's contracts have been cancelled; or
  (3) a contractor will be disbarred.
(b) Investigation. The director shall investigate a complaint that a contractor has failed to perform under the contract for any of the reasons in this subchapter.
  (1) The director shall complete its investigation within 120 days of the receipt of the complaint. The director may, upon receipt of a complaint, cancel the contractor's contracts or cease payments under the contractor's contracts during the period the vendor is under investigation.
  (2) Participation of receiving state agency. The director, in conjunction with the receiving agency, shall decide whether to cancel the contractor's contracts by considering:
    (A) the effects of a work stoppage on the state agency;
    (B) the seriousness of the breach of contract;
    (C) any hazard to health, safety, welfare or property; and
    (D) any other reason the director and the state agency determine is relevant to the particular circumstances.
(c) Contractor response. A contractor shall submit a written response to the director within ten (10) days of receipt of the notice received under subsection (a) of this section. The contractor is presumed to have received the notice upon the director's receipt of fax confirmation or receipt returned by U.S. mail, whichever period is shorter. The director may, for good cause shown, allow the contractor one ten (10) day extension of time to provide the contractor's response.
(d) Contents of contractor response. The contractor shall respond to each reason the director cites in the notice and shall include all facts the contractor believes are relevant, including any applicable mitigating circumstances and remedial measures.
(e) Director finding. Upon completion of its investigation or upon receipt of the contractor's response, the director shall determine whether the contractor should be debarred. The director shall consider the seriousness of the contractor's acts or omissions and any mitigating factors or remedial measures. The director shall inform the contractor of its finding within ninety (90) days of the original notice provided in subsection (a) of this section. If the director is conducting an investigation under subsection (b) of this section, then the time periods in this subsection are extended by the length of the investigation.
(f) Mitigating circumstances. The director shall consider whether the contractor's failure to perform was caused, in whole or in part, by:
  (1) an act of God or force majeure; the director shall review whether the contractor provided the director with timely notification of the event and the reasonableness of the duration of the contractor's failure to perform after the event;
  (2) mutual mistake;
  (3) legal impossibility; or
  (4) significant economic disruption affecting a particular industry.
(g) Remedial measures. The director may consider whether the contractor:
  (1) immediately identified and remedied the cause of the failure to perform;
  (2) brought the offending conduct to the attention of the comptroller and fully investigated the circumstances surrounding that conduct;
  (3) cooperated fully in the director's investigation;
  (4) recognizes and understands the seriousness of the misconduct giving rise to the cause for debarment; and
  (5) any other remedial measures, including implementation of control procedures, ethics training, or other disciplinary actions against responsible individuals, that the contractor has instituted.

Source Note: The provisions of this §20.586 adopted to be effective January 24, 2017, 42 TexReg 243