76R15895 DAK-D
By Cain, et al. S.B. No. 629
Substitute the following for S.B. No. 629:
By Nixon C.S.S.B. No. 629
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to alternative dispute resolution proceedings of
1-3 governmental bodies.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Subtitle F, Title 10, Government Code, is amended
1-6 by adding Chapter 2260 to read as follows:
1-7 CHAPTER 2260. RESOLUTION OF CERTAIN CONTRACT CLAIMS
1-8 AGAINST THE STATE
1-9 SUBCHAPTER A. GENERAL PROVISIONS
1-10 Sec. 2260.001. DEFINITIONS. In this chapter:
1-11 (1) "Contract" means a written contract between a unit
1-12 of state government and a contractor for goods or services, or for
1-13 a project as defined by Section 2166.001. The term does not
1-14 include a contract subject to Section 201.112, Transportation Code.
1-15 (2) "Contractor" means an independent contractor who
1-16 has entered into a contract directly with a unit of state
1-17 government. The term does not include:
1-18 (A) a contractor's subcontractor, officer,
1-19 employee, agent, or other person furnishing goods or services to a
1-20 contractor;
1-21 (B) an employee of a unit of state government;
1-22 or
1-23 (C) a student at an institution of higher
2-1 education.
2-2 (3) "Institution of higher education" has the meaning
2-3 assigned by Section 61.003, Education Code.
2-4 (4) "Unit of state government" means the state or an
2-5 agency, department, commission, bureau, board, office, council,
2-6 court, or other entity that is in any branch of state government
2-7 and that is created by the constitution or a statute of this state,
2-8 including a university system or institution of higher education.
2-9 The term does not include a county, municipality, court of a county
2-10 or municipality, special purpose district, or other political
2-11 subdivision of this state.
2-12 Sec. 2260.002. APPLICABILITY. This chapter does not apply
2-13 to a claim for personal injury or wrongful death arising from the
2-14 breach of a contract.
2-15 Sec. 2260.003. DAMAGES. (a) The total amount of money
2-16 recoverable on a claim for breach of contract under this chapter
2-17 may not, after deducting the amount specified in Subsection (b),
2-18 exceed the balance due and owing on the contract price, including
2-19 orders for additional work.
2-20 (b) Any amount owed the unit of state government for work
2-21 not performed under a contract or in substantial compliance with
2-22 its terms shall be deducted from the amount in Subsection (a).
2-23 Sec. 2260.004. REQUIRED CONTRACT PROVISION. (a) Each unit
2-24 of state government that enters into a contract to which this
2-25 chapter applies shall include as a term of the contract a provision
2-26 stating that the dispute resolution process used by the unit of
2-27 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
3-27 90th day after the date of notice under Subsection (b). A unit of
4-1 state government that does not comply with this subsection waives
4-2 the right to assert the counterclaim.
4-3 Sec. 2260.052. NEGOTIATION. (a) The chief administrative
4-4 officer or, if designated in the contract, another officer of the
4-5 unit of state government shall examine the claim and any
4-6 counterclaim and negotiate with the contractor in an effort to
4-7 resolve them. Except as provided by Subsection (b), the
4-8 negotiation must begin not later than the 60th day after the latest
4-9 of:
4-10 (1) the date of termination of the contract;
4-11 (2) the completion date in the original contract; or
4-12 (3) the date the claim is received.
4-13 (b) A unit of state government against which a claim is
4-14 filed is entitled to delay the beginning of negotiation until after
4-15 the 180th day after the date of the event giving rise to the claim.
4-16 (c) Each unit of state government with rulemaking authority
4-17 shall develop rules to govern the negotiation of a claim under this
4-18 section. If a unit of state government does not have rulemaking
4-19 authority, that unit shall follow the rules adopted by the attorney
4-20 general.
4-21 Sec. 2260.053. PARTIAL RESOLUTION OF CLAIM. (a) If the
4-22 negotiation under Section 2260.052 results in the resolution of
4-23 some disputed issues by agreement or in a settlement, the parties
4-24 shall reduce the agreement or settlement to writing and each party
4-25 shall sign the agreement or settlement.
4-26 (b) A partial settlement or resolution of a claim does not
4-27 waive a party's rights under this chapter as to the parts of the
5-1 claim that are not resolved.
5-2 Sec. 2260.054. PAYMENT OF CLAIM FROM APPROPRIATED FUNDS. A
5-3 unit of state government may pay a claim resolved in accordance
5-4 with this subchapter only from money appropriated to it for payment
5-5 of contract claims or for payment of the contract that is the
5-6 subject of the claim. If money previously appropriated for payment
5-7 of contract claims or payment of the contract is insufficient to
5-8 pay the claim or settlement, the balance of the claim may be paid
5-9 only from money appropriated by the legislature for payment of the
5-10 claim.
5-11 Sec. 2260.055. INCOMPLETE RESOLUTION. If a claim is not
5-12 entirely resolved under Section 2260.052 on or before the 270th day
5-13 after the date the claim is filed with the unit of state
5-14 government, unless the parties agree in writing to an extension of
5-15 time, the contractor may file a request for a hearing under
5-16 Subchapter C.
5-17 (Sections 2260.056-2260.100 reserved for expansion
5-18 SUBCHAPTER C. CONTESTED CASE HEARING
5-19 Sec. 2260.101. DEFINITION. In this subchapter, "office"
5-20 means the State Office of Administrative Hearings.
5-21 Sec. 2260.102. REQUEST FOR HEARING. (a) If a contractor is
5-22 not satisfied with the results of negotiation with a unit of state
5-23 government under Section 2260.052, the contractor may file a
5-24 request for a hearing with the unit of state government.
5-25 (b) The request must:
5-26 (1) state the factual and legal basis for the claim;
5-27 and
6-1 (2) request that the claim be referred to the State
6-2 Office of Administrative Hearings for a contested case hearing.
6-3 (c) On receipt of a request under Subsection (a), the unit
6-4 of state government shall refer the claim to the State Office of
6-5 Administrative Hearings for a contested case hearing under Chapter
6-6 2001 as to the issues raised in the request.
6-7 Sec. 2260.103. HEARING FEE. (a) The chief administrative
6-8 law judge of the office may set a fee for a hearing before the
6-9 office under this subchapter.
6-10 (b) The chief administrative law judge of the office shall
6-11 set the fee in an amount that:
6-12 (1) is not less than $250; and
6-13 (2) allows the office to recover all or a substantial
6-14 part of its costs in holding hearings.
6-15 (c) The chief administrative law judge of the office by rule
6-16 may establish a graduated fee scale, increasing the fee in relation
6-17 to the amount in controversy.
6-18 (d) The office may:
6-19 (1) assess the fee against the party who does not
6-20 prevail in the hearing; or
6-21 (2) apportion the fee against the parties in an
6-22 equitable manner.
6-23 Sec. 2260.104. HEARING. (a) An administrative law judge of
6-24 the office shall conduct a hearing in accordance with the
6-25 procedures adopted by the chief administrative law judge of the
6-26 office.
6-27 (b) Within a reasonable time after the conclusion of the
7-1 hearing, the administrative law judge shall issue a written
7-2 decision containing the administrative law judge's findings and
7-3 recommendations.
7-4 (c) The administrative law judge shall base the decision on
7-5 the pleadings filed with the office and the evidence received.
7-6 (d) The decision must include:
7-7 (1) the findings of fact and conclusions of law on
7-8 which the administrative law judge's decision is based; and
7-9 (2) a summary of the evidence.
7-10 (e) A person may not appeal the decision.
7-11 Sec. 2260.105. PAYMENT OF CLAIM. (a) The unit of state
7-12 government shall pay the amount of the claim or part of the claim
7-13 if the administrative law judge finds, by a preponderance of the
7-14 evidence, that under the laws of this state the claim or part of
7-15 the claim is valid.
7-16 (b) A unit of state government shall pay a claim under this
7-17 subchapter from money appropriated to it for payment of contract
7-18 claims or for payment of the contract that is the subject of the
7-19 claim. If money previously appropriated for payment of contract
7-20 claims or payment of the contract is insufficient to pay the claim,
7-21 the balance of the claim may be paid only from money appropriated
7-22 by the legislature for payment of the claim.
7-23 Sec. 2260.106. PREJUDGMENT INTEREST. Chapter 304, Finance
7-24 Code, applies to a judgment awarded to a claimant under this
7-25 chapter, except that the applicable rate of interest may not exceed
7-26 six percent.
7-27 Sec. 2260.107. EXECUTION ON STATE PROPERTY NOT AUTHORIZED.
8-1 This chapter does not authorize execution on property owned by the
8-2 state or a unit of state government.
8-3 SECTION 2. Chapter 2008, Government Code, as added by
8-4 Chapter 934, Acts of the 75th Legislature, Regular Session, 1997,
8-5 is redesignated as Chapter 2009, Government Code, and amended to
8-6 read as follows:
8-7 CHAPTER 2009 [2008]. ALTERNATIVE DISPUTE RESOLUTION FOR USE BY
8-8 GOVERNMENTAL BODIES [AT STATE AGENCIES]
8-9 SUBCHAPTER A. GENERAL PROVISIONS
8-10 Sec. 2009.001. [2008.001.] SHORT TITLE. This chapter may be
8-11 cited as the Governmental Dispute Resolution Act.
8-12 Sec. 2009.002. [2008.002.] POLICY. It is the policy of this
8-13 state that disputes before governmental bodies [state agencies] be
8-14 resolved as fairly and expeditiously as possible and that each
8-15 governmental body [state agency] support this policy by developing
8-16 and using alternative dispute resolution procedures in appropriate
8-17 aspects of the governmental body's [agency's] operations and
8-18 programs.
8-19 Sec. 2009.003. [2008.003.] DEFINITIONS. In this chapter:
8-20 (1) "Alternative dispute resolution procedure"
8-21 includes:
8-22 (A) a procedure described by Chapter 154, Civil
8-23 Practice and Remedies Code; and
8-24 (B) a combination of the procedures described by
8-25 Chapter 154, Civil Practice and Remedies Code.
8-26 (2) "Governmental body" has the meaning assigned by
8-27 Section 552.003.
9-1 (3) [(2)] "State agency" means an officer, board,
9-2 commission, department, or other agency in the executive branch of
9-3 state government with statewide jurisdiction that makes rules or
9-4 determines contested cases. The term includes:
9-5 (A) the attorney general;
9-6 (B) an institution of higher education as
9-7 defined by Section 61.003, Education Code; and
9-8 (C) the State Office of Administrative Hearings.
9-9 (4) [(3)] The following terms have the meanings
9-10 assigned by Section 2001.003:
9-11 (A) "contested case";
9-12 (B) "party";
9-13 (C) "person"; and
9-14 (D) "rule."
9-15 Sec. 2009.004. [2008.004. AGENCY] CONTRACTS; BUDGETING FOR
9-16 COSTS. (a) A governmental body [state agency] may pay for costs
9-17 necessary to meet the objectives of this chapter, including
9-18 reasonable fees for training, policy review, system design,
9-19 evaluation, and the use of impartial third parties.
9-20 (b) To the extent allowed by the General Appropriations Act,
9-21 a state [the] agency may use [for this purpose] money budgeted for
9-22 legal services, executive administration, or any other appropriate
9-23 aspect of the state agency's operations to pay for costs incurred
9-24 under Subsection (a).
9-25 (c) [(b)] A governmental body [state agency] may contract
9-26 with another governmental body [state agency], including the
9-27 Center for Public Policy Dispute Resolution at The University of
10-1 Texas School of Law, with an alternative dispute resolution system
10-2 created under Chapter 152, Civil Practice and Remedies Code, or
10-3 with a private entity for any service necessary to meet the
10-4 objectives of this chapter.
10-5 Sec. 2009.005. [2008.005.] SOVEREIGN IMMUNITY. (a) This
10-6 chapter does not waive immunity from suit and does not affect a
10-7 waiver of immunity from suit contained in other law.
10-8 (b) The state's sovereign immunity under the Eleventh
10-9 Amendment to the United States Constitution is not waived by this
10-10 chapter.
10-11 (c) Nothing in this chapter authorizes binding arbitration
10-12 as a method of alternative dispute resolution.
10-13 SUBCHAPTER B. ALTERNATIVE DISPUTE RESOLUTION
10-14 Sec. 2009.051. [2008.051.] DEVELOPMENT AND USE OF
10-15 PROCEDURES. (a) Each governmental body [state agency] may develop
10-16 and use alternative dispute resolution procedures. Alternative
10-17 dispute resolution procedures developed and used by a governmental
10-18 body [state agency] must be consistent with Chapter 154, Civil
10-19 Practice and Remedies Code.
10-20 (b) Alternative dispute resolution procedures developed and
10-21 used by a state agency also must be consistent[, and] with the
10-22 administrative procedure law, Chapter 2001. The State Office of
10-23 Administrative Hearings may issue model guidelines for the use of
10-24 alternative dispute resolution procedures by state agencies.
10-25 (c) [(b)] If a state agency that is subject to Chapter 2001
10-26 adopts an alternative dispute resolution procedure, it may do so by
10-27 rule.
11-1 Sec. 2009.052. [2008.052.] SUPPLEMENTAL NATURE OF
11-2 PROCEDURES. (a) Alternative dispute resolution procedures
11-3 developed and used under this chapter supplement and do not limit
11-4 other dispute resolution procedures available for use by [at] a
11-5 governmental body [state agency].
11-6 (b) This chapter may not be applied in a manner that denies
11-7 a person a right granted under other state or federal law or under
11-8 a local charter, ordinance, or other similar provision, including a
11-9 right to an administrative or judicial hearing.
11-10 Sec. 2009.053. [2008.053.] IMPARTIAL THIRD PARTIES. (a) A
11-11 governmental body [state agency] may appoint a governmental officer
11-12 or employee or a private individual to serve as an impartial third
11-13 party in an alternative dispute resolution procedure. The
11-14 governmental body's [agency's] appointment of the impartial third
11-15 party is subject to the approval of the parties, except that when a
11-16 State Office of Administrative Hearings administrative law judge
11-17 has issued an order referring a case involving a state agency to an
11-18 alternative dispute resolution procedure under Section
11-19 2003.042(a)(5) [2003.042(5)], the administrative law judge may
11-20 appoint the impartial third party for the parties if they cannot
11-21 agree on an impartial third party within a reasonable period.
11-22 (b) [The impartial third party must possess the
11-23 qualifications required under Section 154.052, Civil Practice and
11-24 Remedies Code.]
11-25 [(c)] A governmental body [state agency] also may obtain the
11-26 services of a qualified impartial third party through an agreement
11-27 with [the State Office of Administrative Hearings,] the Center for
12-1 Public Policy Dispute Resolution at The University of Texas School
12-2 of Law, an alternative dispute resolution system created under
12-3 Chapter 152, Civil Practice and Remedies Code, [or] another
12-4 governmental body, [state] or a federal agency or through a pooling
12-5 agreement with several governmental bodies [state agencies]. The
12-6 agreements may provide that the using governmental body [agency] or
12-7 the parties will reimburse the furnishing entity [agency], in kind
12-8 or monetarily, for the full or partial cost of providing the
12-9 qualified impartial third party.
12-10 (c) A state agency may also obtain the services of a
12-11 qualified third party through an agreement with the State Office of
12-12 Administrative Hearings.
12-13 (d) The impartial third party must possess the
12-14 qualifications required under Section 154.052, Civil Practice and
12-15 Remedies Code. The impartial third party is subject to the
12-16 standards and duties prescribed by Section 154.053, Civil Practice
12-17 and Remedies Code, and has the qualified immunity prescribed by
12-18 Section 154.055, Civil Practice and Remedies Code, if applicable.
12-19 Sec. 2009.054. [2008.054.] CONFIDENTIALITY OF CERTAIN
12-20 RECORDS AND COMMUNICATIONS. (a) Sections 154.053 and 154.073,
12-21 Civil Practice and Remedies Code, apply to the communications,
12-22 records, conduct, and demeanor of the impartial third party and the
12-23 parties.
12-24 (b) Notwithstanding Section 154.073(d), Civil Practice and
12-25 Remedies Code:
12-26 (1) a communication relevant to the dispute, and a
12-27 record of the communication, made between an impartial third party
13-1 and the parties to the dispute or between the parties to the
13-2 dispute during the course of an alternative dispute resolution
13-3 procedure are confidential and may not be disclosed unless all
13-4 parties to the dispute consent to the disclosure; and
13-5 (2) the notes of an impartial third party are
13-6 confidential except to the extent that the notes consist of a
13-7 record of a communication with a party and all parties have
13-8 consented to disclosure in accordance with Subdivision (1).
13-9 (c) Subsection (b)(1) does not apply to a final written
13-10 agreement to which a governmental body [entity] is a signatory that
13-11 is reached as a result of a dispute resolution procedure conducted
13-12 under this chapter. Information in the final written agreement is
13-13 subject to required disclosure, is excepted from required
13-14 disclosure, or is confidential in accordance with Chapter 552 and
13-15 other law.
13-16 (d) An impartial third party may not be required to testify
13-17 in any proceedings relating to or arising out of the matter in
13-18 dispute.
13-19 Sec. 2009.055. [2008.055. INTERAGENCY] SHARING OF
13-20 INFORMATION; CONSISTENCY OF PROCEDURES. (a) A governmental body
13-21 [state agency] may share the results of its alternative dispute
13-22 resolution program with other governmental bodies [agencies] and
13-23 with the Center for Public Policy Dispute Resolution at The
13-24 University of Texas School of Law. The center may collect and
13-25 analyze the information and report its conclusions and useful
13-26 information to governmental bodies [state agencies] and the
13-27 legislature.
14-1 (b) Governmental bodies [State agencies] should, to the
14-2 extent feasible given [the] differences in their [agency] purpose,
14-3 jurisdiction, and constituency, adopt policies and procedures for
14-4 alternative dispute resolution that are consistent with the
14-5 policies and procedures of other governmental bodies [state
14-6 agencies].
14-7 SECTION 3. Section 154.073, Civil Practice and Remedies
14-8 Code, is amended to read as follows:
14-9 Sec. 154.073. CONFIDENTIALITY OF CERTAIN RECORDS AND
14-10 COMMUNICATIONS [IN DISPUTE RESOLUTION PROCEDURES]. (a) Except as
14-11 provided by Subsections (c), [and] (d), and (e), a communication
14-12 relating to the subject matter of any civil or criminal dispute
14-13 made by a participant in an alternative dispute resolution
14-14 procedure, whether before or after the institution of formal
14-15 judicial proceedings, is confidential, is not subject to
14-16 disclosure, and may not be used as evidence against the participant
14-17 in any judicial or administrative proceeding.
14-18 (b) Any record made at an alternative dispute resolution
14-19 procedure is confidential, and the participants or the third party
14-20 facilitating the procedure may not be required to testify in any
14-21 proceedings relating to or arising out of the matter in dispute or
14-22 be subject to process requiring disclosure of confidential
14-23 information or data relating to or arising out of the matter in
14-24 dispute.
14-25 (c) An oral communication or written material used in or
14-26 made a part of an alternative dispute resolution procedure is
14-27 admissible or discoverable if it is admissible or discoverable
15-1 independent of the procedure.
15-2 (d) A final written agreement to which a governmental body,
15-3 as defined by Section 552.003, Government Code, is a signatory that
15-4 is reached as a result of a dispute resolution procedure conducted
15-5 under this chapter is subject to or excepted from required
15-6 disclosure in accordance with Chapter 552, Government Code.
15-7 (e) If this section conflicts with other legal requirements
15-8 for disclosure of communications, records, or materials, the issue
15-9 of confidentiality may be presented to the court having
15-10 jurisdiction of the proceedings to determine, in camera, whether
15-11 the facts, circumstances, and context of the communications or
15-12 materials sought to be disclosed warrant a protective order of the
15-13 court or whether the communications or materials are subject to
15-14 disclosure.
15-15 SECTION 4. Section 2003.001(2), Government Code, is amended
15-16 to read as follows:
15-17 (2) "Alternative dispute resolution procedure" has the
15-18 meaning assigned by Section 2009.003 [2008.003].
15-19 SECTION 5. Section 2003.042(a), Government Code, is amended
15-20 to read as follows:
15-21 (a) An administrative law judge employed by the office or a
15-22 temporary administrative law judge may:
15-23 (1) administer an oath;
15-24 (2) take testimony;
15-25 (3) rule on a question of evidence;
15-26 (4) issue an order relating to discovery or another
15-27 hearing or prehearing matter, including an order imposing a
16-1 sanction;
16-2 (5) issue an order that refers a case to an
16-3 alternative dispute resolution procedure, determines how the costs
16-4 of the procedure will be apportioned, and appoints an impartial
16-5 third party as described by Section 2009.053 [2008.053] to
16-6 facilitate that procedure;
16-7 (6) issue a proposal for decision that includes
16-8 findings of fact and conclusions of law; [and]
16-9 (7) [(6)] if expressly authorized by a state agency
16-10 rule adopted under Section 2001.058(f), make the final decision in
16-11 a contested case;[.]
16-12 (8) [(7)] serve as an impartial third party as
16-13 described by Section 2009.053 [2008.053] for a dispute referred by
16-14 an administrative law judge, unless one of the parties objects to
16-15 the appointment; and
16-16 (9) [(8)] serve as an impartial third party as
16-17 described by Section 2009.053 [2008.053] for a dispute referred by
16-18 a government agency under a contract.
16-19 SECTION 6. (a) Except as provided by Subsection (b) of this
16-20 section, this Act takes effect immediately.
16-21 (b) Sections 2-5 of this Act take effect September 1, 1999.
16-22 SECTION 7. (a) Chapter 2260, Government Code, as added by
16-23 this Act, applies only to a claim pending or arising on or after
16-24 the effective date of this Act, without regard to whether the
16-25 contract was entered into before, on, or after that date.
16-26 (b) Notwithstanding Section 2260.051(b), Government Code, as
16-27 added by this Act, a claimant must provide written notice to the
17-1 unit of state government for a claim pending before the effective
17-2 date of this Act not later than the 180th day after that date.
17-3 SECTION 8. Chapter 2260, Government Code, as added by this
17-4 Act, does not apply to a claim or dispute with respect to which the
17-5 76th Legislature or a previous legislature has enacted a concurrent
17-6 resolution granting permission to the contractor to bring a suit
17-7 against the state or a unit of state government.
17-8 SECTION 9. Chapter 2009, Government Code, as amended and
17-9 redesignated by this Act, and Section 154.073, Civil Practice and
17-10 Remedies Code, as amended by this Act, apply only to an alternative
17-11 dispute resolution proceeding that begins on or after September 1,
17-12 1999. An alternative dispute resolution proceeding that began
17-13 before September 1, 1999, is governed by the law applicable to the
17-14 proceeding immediately before the effective date of this Act, and
17-15 that law is continued in effect for that purpose.
17-16 SECTION 10. The importance of this legislation and the
17-17 crowded condition of the calendars in both houses create an
17-18 emergency and an imperative public necessity that the
17-19 constitutional rule requiring bills to be read on three several
17-20 days in each house be suspended, and this rule is hereby suspended,
17-21 and that this Act take effect and be in force according to its
17-22 terms, and it is so enacted.