(a) Fiscal Integrity Provisions.
  (1) A Board shall develop fiscal integrity evaluation indicators designed to appraise the fiscal integrity of its workforce service providers.
  (2) A Board shall assess its workforce service providers to ensure the providers meet the requirements of the Board's fiscal integrity evaluation based on the following schedule:
    (A) contracts under $100,000--the fiscal indicators must be verified prior to the award of the contract and at each renewal of the contract;
    (B) contracts between $100,000 and $500,000--the fiscal indicators must be verified prior to the award of the contract, at each renewal of the contract, and not less than biennially; and
    (C) contracts over $500,000--the fiscal indicators must be verified prior to the award of the contract, at each renewal of the contract, and not less than once annually.
  (3) The fiscal integrity evaluation shall include the following provisions for ensuring that workforce service providers are meeting performance measures in compliance with requirements contained in:
    (A) federal and state statutes and regulations and directives of the Commission or Agency;
    (B) Office of Management and Budget (OMB) circulars applicable to the entity, such as OMB Circulars A-21, A-87, or A-122, and the Office of the Governor's Uniform Grant Management Standards; and
    (C) any other safeguards a Board has identified that are designed to ensure the proper and effective use of funds placed under the control of its workforce service providers.
  (4) The fiscal integrity evaluation shall also include the review and consideration of the prospective or renewing workforce service provider's prior three-year financial history before the Board awards or renews a workforce service contract. The review shall include any adverse judgments or findings, such as administrative audit findings; Commission, Agency, or Board monitor findings; or sanctions by a Board or court of law.
  (5) The fiscal integrity evaluation may include provisions such as accounting for program income in accordance with federal regulations, resolving questioned costs and the repayment of disallowed costs in a timely manner, and safeguarding fixed assets, as well as those referenced in the Agency's Financial Manual for Grants and Contracts.
(b) Bonding, Insurance, and Other Methods of Securing Funds to Cover Losses.
  (1) A Board shall ensure that at least 10 percent of the funds subject to the control of the workforce service providers is protected through bonds, insurance, escrow accounts, cash on deposit, or other methods to secure the funds consistent with this subchapter. A Board and its workforce service providers may, consistent with this section, use any method or combination of methods to meet this requirement. At the Board's discretion, the Board may pay for the bonding, insurance, or other protection methods or require its workforce service providers, to the extent allowable under state and federal law, to pay for such protection.
  (2) In conducting the fiscal integrity evaluation required in this section, a Board may determine that more than 10 percent of the funds subject to the control of its workforce service providers shall be secured through bonds, insurance, escrow accounts, or other methods consistent with this subchapter.
  (3) Escrow of funds may also be used to satisfy the requirements of this subsection provided that:
    (A) the funds placed in escrow require the signature of persons other than the persons with signatory authority for the Board's workforce service providers;
    (B) the funds do not lapse due to requirements for timely expenditure of funds; and
    (C) this provision does not conflict with any provision in contract, rule, or statute for the timely expenditure of funds.
  (4) If a bond is used, a Board shall ensure that the bond is executed by a corporate surety or sureties holding certificates of authority, authorized to do business in the state of Texas.
  (5) A Board shall ensure, based on the schedule referenced in subsection (a)(2) of this section, that each of its workforce service providers is required to verify that:
    (A) the insurance or bond policy is valid, premiums are paid to date, the company is authorized to provide the bonding or insurance, and the company is not in receivership, bankruptcy, or some other status that would jeopardize the ability to draw upon the policy;
    (B) the escrow account balances are at an appropriate level;
    (C) the method of securing the funds has not been withdrawn, drawn upon, obligated for another purpose, or is no longer valid for use as the method of security; and
    (D) other such protections as are applicable and relied upon by the Board are verified as in force.
  (6) A Board shall ensure that the workforce service providers are required to disclose any changes in and circumstances regarding the method of securing or protecting the funds under the workforce service providers' control.
(c) Standards of Conduct. A Board shall ensure that the workforce service providers:
  (1) comply with federal and state statutes and regulations regarding standards of conduct and conflict of interest provisions including, but not limited to, the following:
    (A) 29 C.F.R. §97.36(b)(3), which includes requirements from the Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments;
    (B) professional licensing requirements, when applicable; and
    (C) applicable OMB circular requirements and the Office of the Governor's Uniform Grant Management Standards.
  (2) avoid any conflict of interest or any appearance of a conflict of interest; and
  (3) refrain from using nonpublic information gained through a relationship with the Commission, an Agency employee, a Board, or a Board employee, to seek or obtain financial gains that would be a conflict of interest or the appearance of a conflict of interest.
(d) Disclosures. A Board shall require its workforce service providers to disclose the following:
  (1) Matters Subject to Disclosure. A Board shall ensure that its workforce service providers promptly disclose in writing the following:
    (A) A substantial financial interest that the workforce service provider, or any of its workforce service provider employees in decision-making positions, have in a business entity that is a party to any business transaction with a Board member or Board employee who is in a Board decision-making position;
    (B) A gift greater than $50 in value given to a Board member or Board employee by a workforce service provider or its employees; and
    (C) the existence of any conflict of interest and any appearance of a conflict of interest, or the lack thereof.
  (2) Content of Disclosure. A Board shall ensure that its workforce service providers' written disclosures contain the following:
    (A) information describing the conflict of interest; and
    (B) information describing the appearance of a conflict of interest, and actions the workforce service provider and its employees will take in order to prevent any conflict of interest from occurring.
  (3) Frequency of Disclosure. A Board shall ensure that its workforce service providers disclose:
    (A) at least annually, and as frequently as necessary, any conflict of interest and any appearance of a conflict of interest;
    (B) within 10 days of giving a gift greater than $50 in value as referenced in this section; and
    (C) at least annually that no conflict of interest and no appearance of a conflict of interest exists.
  (4) Matters Not Subject to Disclosure. This provision does not apply to:
    (A) a financial transaction performed in the course of a contract with the Board; or
    (B) a transaction or benefit that is made available to the general public under the same terms and conditions.

Source Note: The provisions of this §802.21 adopted to be effective February 7, 2011, 36 TexReg 604