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1. Amendment. As of the Effective Date, the Parties hereby amend the FMA as <br />follows: <br />SUBSECTION 5.6.5 IS AMENDED TO READ AS FOLLOWS: <br />5.6.5.1 Limitation on Use of Funds — Employees and Administrative Costs. <br />With the exception of Program Administration Costs of EAA, funds may not be <br />used for: (a) costs of any Party's employees; or (b) any Party's administrative <br />costs, such as costs of overhead, management, administration, research, planning, <br />engineering, or legal services, or any other ancillary costs that are not directly <br />required for the Program. <br />5.6.5.2 Special Exception. <br />Notwithstanding anything in Section 5.6.5.1(a), an employee of Texas State <br />University may submit a proposal for consideration and may be awarded a <br />contract for work associated with the implementation of a Conservation Measure <br />in Chapter 5 or Program activity in Chapter 6 of the HCP assigned to any Party in <br />an approved Work Plan and Funding Application as long as each of the following <br />conditions are met: <br />(a) The costs for the measures are not used to fund an increase in <br />Texas State's permanent Staff or for work that is historically operational in <br />nature; <br />(b) The contract for the project has been awarded through a <br />competitive procurement process that considers cost, contractor qualifications, <br />and merits of the contractor's proposal, and through which the selected <br />contractor's proposal was determined to be competitive with respect to each of <br />these criteria; and <br />(c) After the contractor has been selected, the EAA will issue those <br />contracts for which Texas State or the City of San Marcos is responsible under <br />which a Texas State Employee will be paid, and the HCP Program Manager will <br />page 2 of 6 <br />