SRC-SLL S.B. 175 75(R)    BILL ANALYSIS


Senate Research CenterS.B. 175
By: Barrientos
Jurisprudence
4-17-97
As Filed


DIGEST 

Currently, Texas law does not require units of state government to include
an alternative dispute resolution (ADR) clause in contracts the unit
enters into with private entities.  This means the only recourse for many
businesses which have contract disputes with state agencies is to seek
relief through the court system.  According to the state auditor's office,
ADR is increasingly being used by state agencies to solve contract
disputes and avoid costly litigation and claims.  However, many state
agencies have not adopted ADR policies or incorporated ADR provisions in
state contracts. This bill will require units of state governments, when
entering into contracts with other persons, to include an alternative
dispute resolution clause in the contract.  

PURPOSE

As proposed, S.B. 175 will require units of state government to include an
alternative dispute resolution clause in contracts the unit enters into
with other persons. 

RULEMAKING AUTHORITY

Rulemaking authority is granted to the State Office of Administrative
Hearings in SECTION 1 (Section 111.004(a), Chapter 111, Title 5, Civil
Practice and Remedies Code) of this bill. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Title 5, Civil Practice and Remedies Code, by adding
Chapter 111, as follows: 

CHAPTER 111.  RESOLUTION OF CONTRACT CLAIMS AGAINST THE STATE

Sec.  111.001. DEFINITION.  Defines "unit of state government" (unit).

Sec.  111.002. ALTERNATIVE DISPUTE RESOLUTION PROCESS.  Requires each unit
that enters into a written contract with another person to develop an
alternative dispute resolution process under which disputes arising under
a contract may be informally resolved. Sets forth the requirements for the
alternative dispute resolution process.  Authorizes the alternative
dispute resolution process to include arbitration or mediation  or any
other similar process.  Authorizes the unit to use an alternative dispute
resolution process developed by the State Office of Administrative
Hearings (SOAH) under Section 111.004, instead of developing an
alternative dispute resolution process. 

Sec.  111.003. REQUIRED CONTRACT PROVISION.  Requires each unit that
enters into a written contract with another person to include as a term of
the contract a provision stating that the alternative dispute resolution
process used by the unit under this chapter must be used to attempt to
resolve a dispute arising under the contract.  Requires the attorney
general to provide assistance to a unit in developing the contract
provision required by this section. 

Sec.  111.004. MODEL ALTERNATIVE DISPUTE RESOLUTION PROCESSES. Requires
SOAH, by rule, to adopt a model alternative dispute resolution process to
be used by units to comply with Section 111.002.  Authorizes  SOAH to
develop more than one model process.  Requires SOAH to consult with the
Center for Public Policy Dispute  Resolution at the University of Texas,
the General Services Commission, and any other person SOAH considers
appropriate, in developing a model dispute resolution process. 

SECTION 2. Effective date: September 1, 1997.
  Makes application of this Act prospective to January 1, 1998.

SECTION 3. Requires SOAH to develop at least one model alternative dispute
resolution process, as required by Section 111.004, Civil Practice and
Remedies Code, as added by this Act, not later than December 1, 1997. 

SECTION 4. Emergency clause.