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Section 2: Contract Standards

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Authority to Perform Services

The local government and TxDOT may only contract with each other to perform functions and services that state law authorizes them to perform. If either party does not have the authority to perform an act, TxDOT cannot enter into an Interlocal contract to pay a local government to perform the act for TxDOT. The same is true for the local government. For example, TxDOT does not have its own statutory authority to build and operate a library, so TxDOT cannot enter an Interlocal agreement for a local government to provide a library for TxDOT, even though that service is a governmental function.

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An Interlocal contract must be authorized by the governing body of the local government when required by law. The local government must provide some proof that the governing body approved entering into an agreement. This proof is usually in the form of an Ordinance or Resolution, and it must be incorporated into the Interlocal Agreement by reference and be attached.

The exception is an Interlocal contract with a municipally owned electric utility, in which the governing body may establish procedures for entering into an Interlocal contract that does not exceed $100,000 without requiring the approval of the governing body. Tex. Gov’t Code §791.011(d)(1).

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An Interlocal contract may be amended to reflect significantly changed conditions or mutually agreed changes in scope of work. If the local government withdraws from the project after the contract is executed, the local government is responsible for all costs incurred by TxDOT under the contract.

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