Authority/Reference(s) Texas Human Resources Code §40.0563, §40.058; Texas Government Code 264.153(a)(2)
Revision Date August 9, 2021


Performance based contracting is the approach to contracting that focuses on specified results and outcomes while giving considerable latitude in determining the manner or means of achieving those outcomes and the resources required in the process. These types of contracts tie regular payments, financial incentives, and financial remedies to a contractor’s performance. See: Performance Based Contracts.

DFPS monitors performance based contracts by conducting ongoing and continual oversight of the contractor's performance. Performance is measured by the continual review of data that indicates current status and identifies predictive trends. The contract manager continually reviews the results of the contractor's performance through data provided in:  

  • Required reports submitted by the contractor.
  • Ad hoc reports requested by DFPS.
  • Third party review and analysis of data and trends, if applicable.
  • IMPACT reports.
  • CLASS compliance reports.

This ongoing continual approach of data collection, analysis, and monitoring assists with ensuring:

  • Early identification of problems and trends.
  • Identification of areas where technical assistance may be beneficial.
  • Evaluation of service implementation in accordance with the contract.
  • Fiscal, programmatic, and administrative compliance of the contractor's processes and procedures with the contract terms and conditions.

Contract staff will track performance throughout the life of the contract.  Performance results may be used by DFPS to make decisions about contract status, to adjust the nature and intensity of DFPS' contract monitoring and quality assurance activities, and to keep stakeholders informed about the success of the performance based contracting effort. Any and all analyses can be used by DFPS to determine subsequent performance targets, the need for contract changes, or impose corrective actions. When performance indicates, DFPS may provide contract financial incentives or impose financial or other remedies as indicated in the progressive intervention plan process.

Ongoing fiscal monitoring may include, but is not limited to:

  • Review of the contractor's financial management systems to ensure:
    • Accountability and proper documentation for DFPS' dollars spent.
    • Sufficient cash flow is on hand and procedures are in place to monitor cash flow.
    • Proper and standard accounting procedures are being followed.
    • Appropriate internal controls are in place and are enforced and monitored.
  • Analysis of financial reports that assess the current financial viability of the organization, such as:
    • External financial statement.
    • Annual independent audit.
    • A single audit, when required.
  • Review of contractor's invoices submitted to DFPS for payment.
  • Review of contractor's adherence to proper payment of subcontractors, when applicable. See policy Subcontracting Responsibilities.

Ongoing programmatic monitoring may include, but is not limited to:

  • Validation of performance measure data.
  • Identification of trends and patterns in performance measure data.
  • Review and analysis of IMPACT data reports, ad hoc reports, CLASS data and incident reports.
  • Review and analysis of other contract deliverables.
  • Review of complaints received from internal staff and external stakeholders.
  • Review for compliance with DFPS policies and procedures.
  • Review for compliance with DFPS Minimum Standards, when applicable.

Ongoing administrative monitoring may include, but is not limited to:

  • Review of the contractor's organizational structure to ensure:
    • Staff have the appropriate qualifications for the services provided.
    • Staffing patterns are sufficient to support service delivery.
  • Ensure the contractor has an adequate staff training plan that supports the services provided.
  • Ensure all subcontract monitoring plans and time lines are in place to manage and oversee any subcontracted service providers, when applicable.
  • Verify proper insurance coverage is current and maintained.
  • Ensure background checks are conducted as required and continual compliance with this contract requirement is strictly enforced.
  • If applicable, ensure cybersecurity training is completed for all subcontractors and contracted employees who have access to identified DFPS computer systems: PEIRS, IMPACT, TARE or CLASS.
  • Ensuring a system is in place for tracking and reporting critical incidence(s).
  • Verify the contractor is accessible and responsive to the contract manager, or designated department personnel.
  • Review prompt and accurate submittal of invoices, reports, and other required documents.
  • Verify the contractor is in compliance with applicable state and federal regulations.
  • Verify the contractor has documentation of service delivery that is maintained in accordance with contract requirement(s) and DFPS Minimum Standards, when applicable.