By: Cain, Ellis S.B. No. 629
Harris, Wentworth
A BILL TO BE ENTITLED
AN ACT
1-1 relating to contract claims against a unit of state government.
1-2 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-3 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-4 by adding Chapter 2260 to read as follows:
1-5 CHAPTER 2260. RESOLUTION OF CERTAIN CONTRACT CLAIMS
1-6 AGAINST THE STATE
1-7 SUBCHAPTER A. GENERAL PROVISIONS
1-8 Sec. 2260.001. DEFINITIONS. In this chapter:
1-9 (1) "Contract" means a written contract between a unit
1-10 of state government and a contractor for:
1-11 (A) goods;
1-12 (B) services; or
1-13 (C) a project as defined by Section 2166.001.
1-14 (2) "Contractor" means an independent contractor who
1-15 has entered into a contract directly with a unit of state
1-16 government. The term does not include:
1-17 (A) a contractor's subcontractor, officer,
1-18 employee, agent, or other person furnishing goods or services to a
1-19 contractor;
1-20 (B) an employee of a unit of state government;
1-21 or
1-22 (C) a student at an institution of higher
1-23 education.
1-24 (3) "Institution of higher education" has the meaning
2-1 assigned by Section 61.003, Education Code.
2-2 (4) "Unit of state government" means the state or an
2-3 agency, department, commission, bureau, board, office, council,
2-4 court, or other entity that is in any branch of state government
2-5 and that is created by the constitution or a statute of this state,
2-6 including a university system or institution of higher education.
2-7 The term does not include a county, municipality, court of a county
2-8 or municipality, special purpose district, or other political
2-9 subdivision of this state. The term does not include the Texas
2-10 Department of Transportation.
2-11 Sec. 2260.002. APPLICABILITY. This chapter does not apply
2-12 to a claim for personal injury or wrongful death arising from the
2-13 breach of a contract.
2-14 Sec. 2260.003. DAMAGES. (a) The total amount of money
2-15 recoverable on a claim for breach of contract under this chapter
2-16 may not, after deducting the amount specified in Subsection (b),
2-17 exceed the balance due and owing on the contract price, including
2-18 orders for additional work.
2-19 (b) Any amount owed the unit of state government for work
2-20 not performed under a contract or in substantial compliance with
2-21 its terms shall be deducted from the amount in Subsection (a).
2-22 Sec. 2260.004. REQUIRED CONTRACT PROVISION. (a) Each unit
2-23 of state government that enters into a contract to which this
2-24 chapter applies shall include as a term of the contract a provision
2-25 stating that the dispute resolution process used by the unit of
2-26 state government under this chapter must be used to attempt to
3-1 resolve a dispute arising under the contract.
3-2 (b) The attorney general shall provide assistance to a unit
3-3 of state government in developing the contract provision required
3-4 by this section.
3-5 Sec. 2260.005. EXCLUSIVE PROCEDURE. The procedures
3-6 contained in this chapter are exclusive and required prerequisites
3-7 to suit in accordance with Chapter 107, Civil Practice and Remedies
3-8 Code.
3-9 Sec. 2260.006. SOVEREIGN IMMUNITY. This chapter does not
3-10 waive sovereign immunity to suit or liability.
3-11 (Sections 2260.007-2260.050 reserved for expansion
3-12 SUBCHAPTER B. NEGOTIATION OF CLAIM
3-13 Sec. 2260.051. CLAIM FOR BREACH OF CONTRACT; NOTICE. (a) A
3-14 contractor may make a claim against a unit of state government for
3-15 breach of a contract between the unit of state government and the
3-16 contractor. The unit of state government may assert a counterclaim
3-17 against the contractor.
3-18 (b) A contractor must provide written notice to the unit of
3-19 state government of a claim for breach of contract not later than
3-20 the 180th day after the date of the event giving rise to the claim.
3-21 (c) The notice must state with particularity:
3-22 (1) the nature of the alleged breach;
3-23 (2) the amount the contractor seeks as damages; and
3-24 (3) the legal theory of recovery.
3-25 (d) A unit of state government must assert, in a writing
3-26 delivered to the contractor, any counterclaim not later than the
4-1 90th day after the date of notice under Subsection (b). A unit of
4-2 state government that does not comply with this subsection waives
4-3 the right to assert the counterclaim.
4-4 Sec. 2260.052. NEGOTIATION. (a) The chief administrative
4-5 officer or, if designated in the contract, another officer of the
4-6 unit of state government shall examine the claim and any
4-7 counterclaim and negotiate with the contractor in an effort to
4-8 resolve them. Except as provided by Subsection (b), the
4-9 negotiation must begin not later than the 60th day after the later
4-10 of:
4-11 (1) the date of termination of the contract;
4-12 (2) the completion date in the original contract; or
4-13 (3) the date the claim is received.
4-14 (b) A unit of state government against which a claim is
4-15 filed is entitled to delay the beginning of negotiation until after
4-16 the 180th day after the date of the event giving rise to the claim.
4-17 (c) Each unit of state government with rulemaking authority
4-18 shall develop rules to govern the negotiation of a claim under this
4-19 section. If a unit of state government does not have rulemaking
4-20 authority, that unit shall follow the rules adopted by the attorney
4-21 general.
4-22 Sec. 2260.053. PARTIAL RESOLUTION OF CLAIM. (a) If the
4-23 negotiation under Section 2260.052 results in the resolution of
4-24 some disputed issues by agreement or in a settlement, the parties
4-25 shall reduce the agreement or settlement to writing and each party
4-26 shall sign the agreement or settlement.
5-1 (b) A partial settlement or resolution of a claim does not
5-2 waive a party's rights under this chapter as to the parts of the
5-3 claim that are not resolved.
5-4 Sec. 2260.054. PAYMENT OF CLAIM FROM APPROPRIATED FUNDS. A
5-5 unit of state government may pay a claim resolved in accordance
5-6 with this subchapter only from money appropriated to it for payment
5-7 of contract claims or for payment of the contract that is the
5-8 subject of the claim. If money previously appropriated for payment
5-9 of contract claims or payment of the contract is insufficient to
5-10 pay the claim or settlement, the balance of the claim may be paid
5-11 only from money appropriated by the legislature for payment of the
5-12 claim.
5-13 Sec. 2260.055. INCOMPLETE RESOLUTION. If a claim is not
5-14 entirely resolved under Section 2260.052 on or before the 270th day
5-15 after the date the claim is filed with the unit of state
5-16 government, unless the parties agree in writing to an extension of
5-17 time, the contractor may file a request for a hearing under
5-18 Subchapter C.
5-19 (Sections 2260.056-2260.100 reserved for expansion
5-20 SUBCHAPTER C. CONTESTED CASE HEARING
5-21 Sec. 2260.101. DEFINITION. In this subchapter, "office"
5-22 means the State Office of Administrative Hearings.
5-23 Sec. 2260.102. REQUEST FOR HEARING. (a) If a contractor is
5-24 not satisfied with the results of negotiation with a unit of state
5-25 government under Section 2260.052, the contractor may file a
5-26 request for a hearing with the unit of state government.
6-1 (b) The request must:
6-2 (1) state the factual and legal basis for the claim;
6-3 and
6-4 (2) request that the claim be referred to the State
6-5 Office of Administrative Hearings for a contested case hearing.
6-6 (c) On receipt of a request under Subsection (a), the unit
6-7 of state government shall refer the claim to the State Office of
6-8 Administrative Hearings for a contested case hearing under Chapter
6-9 2001, Government Code, as to the issues raised in the request.
6-10 Sec. 2260.103. HEARING FEE. (a) The chief administrative
6-11 law judge of the office may set a fee for a hearing before the
6-12 office under this subchapter.
6-13 (b) The chief administrative law judge of the office shall
6-14 set the fee in an amount that:
6-15 (1) is not less than $250; and
6-16 (2) allows the office to recover all or a substantial
6-17 part of its costs in holding hearings.
6-18 (c) The chief administrative law judge of the office by rule
6-19 may establish a graduated fee scale, increasing the fee in relation
6-20 to the amount in controversy.
6-21 (d) The office may:
6-22 (1) assess the fee against the party who does not
6-23 prevail in the hearing; or
6-24 (2) apportion the fee against the parties in an
6-25 equitable manner.
6-26 Sec. 2260.104. HEARING. (a) An administrative law judge of
7-1 the office shall conduct a hearing in accordance with the
7-2 procedures adopted by the chief administrative law judge of the
7-3 office.
7-4 (b) Within a reasonable time after the conclusion of the
7-5 hearing, the administrative law judge shall issue a written
7-6 decision containing the administrative law judge's findings and
7-7 recommendations.
7-8 (c) The administrative law judge shall base the decision on
7-9 the pleadings filed with the office and the evidence received.
7-10 (d) The decision must include:
7-11 (1) the findings of fact and conclusions of law on
7-12 which the administrative law judge's decision is based; and
7-13 (2) a summary of the evidence.
7-14 Sec. 2260.105. PAYMENT OF CLAIM. (a) The unit of state
7-15 government shall pay the amount of the claim or part of the claim
7-16 if the administrative law judge finds, by a preponderance of the
7-17 evidence, that under the laws of this state the claim or part of
7-18 the claim is valid.
7-19 (b) A unit of state government shall pay a claim under this
7-20 subchapter from money appropriated to it for payment of contract
7-21 claims or for payment of the contract that is the subject of the
7-22 claim. If money previously appropriated for payment of contract
7-23 claims or payment of the contract is insufficient to pay the claim,
7-24 the balance of the claim may be paid only from money appropriated
7-25 by the legislature for payment of the claim.
7-26 Sec. 2260.106. PREJUDGMENT INTEREST. Chapter 304, Finance
8-1 Code, applies to a judgment awarded to a claimant under this
8-2 chapter, except that the applicable rate of interest may not exceed
8-3 six percent.
8-4 Sec. 2260.107. EXECUTION ON STATE PROPERTY NOT AUTHORIZED.
8-5 This chapter does not authorize execution on property owned by the
8-6 state or a unit of state government.
8-7 SECTION 2. This Act takes effect September 1, 1999.
8-8 SECTION 3. (a) This Act applies only to a claim pending or
8-9 arising on or after the effective date of this Act, without regard
8-10 to whether the contract was entered into before, on, or after that
8-11 date.
8-12 (b) Notwithstanding Subsection (b), Section 2260.051,
8-13 Government Code, as added by this Act, a claimant must provide
8-14 written notice to the unit of state government for a claim pending
8-15 before the effective date of this Act not later than the 180th day
8-16 after that date.
8-17 SECTION 4. The importance of this legislation and the
8-18 crowded condition of the calendars in both houses create an
8-19 emergency and an imperative public necessity that the
8-20 constitutional rule requiring bills to be read on three several
8-21 days in each house be suspended, and this rule is hereby suspended.