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78R2011 CLG-D
By: Davis of Dallas H.B. No. 1780
A BILL TO BE ENTITLED
AN ACT
relating to payment to a subcontractor under a public work
contract.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 2253, Government Code, is amended by
adding Subchapter E to read as follows:
SUBCHAPTER E. RESOLUTION OF CERTAIN PAYMENT CLAIMS AGAINST PRIME
CONTRACTOR
Sec. 2253.101. APPLICABILITY OF SUBCHAPTER TO PRIME
CONTRACTOR. This subchapter applies only to a prime contractor
that enters into a public work contract with a governmental entity.
Sec. 2253.102. RIGHT TO ALTERNATIVE DISPUTE RESOLUTION. In
a dispute between a subcontractor and prime contractor involving
payment for the provision of any public work labor or material under
a public work contract, the parties may engage in negotiations and
mediation under this subchapter to attempt to resolve the dispute
without litigation. The alternative dispute resolution remedy
provided by this subchapter is not an exclusive remedy.
Sec. 2253.103. REQUIRED CONTRACT PROVISION. (a) Each
prime contractor that enters into a written contract with a
subcontractor for the provision of public work labor or material
shall include as a term of the contract a provision stating that the
dispute resolution process established under this subchapter may be
used to attempt to resolve any dispute for payment arising under the
contract.
(b) The attorney general on request shall provide
assistance to a prime contractor in developing the contract
provision required by this section.
(c) The contract provision required by this section is
considered to be part of the contract without regard to whether the
provision is included in the contract.
Sec. 2253.104. CLAIM FOR PAYMENT; NOTICE. (a) To initiate
negotiation and mediation under this subchapter, a subcontractor
who has a written agreement with a prime contractor to provide
public work labor or material under a public work contract must make
a claim against the prime contractor for payment of any balance due
and owing for any labor performed or material delivered under the
contract. The prime contractor may assert a counterclaim against
the subcontractor.
(b) A subcontractor must provide written notice of a claim
under this section to the prime contractor and to the governmental
entity that awarded the public work contract not later than the
120th day after the date on which the claimed labor was performed or
the claimed material was delivered.
(c) The notice for a claim under this section must contain:
(1) a copy of the written agreement between the
subcontractor and prime contractor;
(2) a sworn statement of the amount claimed; and
(3) the information required to be provided by a
payment bond beneficiary under Section 2253.043(a).
(d) A prime contractor must assert any counterclaim in a
writing delivered to the subcontractor and governmental entity not
later than the 14th day after the date of notice under Subsection
(b). A prime contractor that does not comply with this subsection
waives the right to assert the counterclaim in a negotiation and
mediation under this subchapter and in any proceeding subsequent to
the negotiation and mediation.
Sec. 2253.105. RULES TO GOVERN DISPUTE RESOLUTION. (a) The
governing body of each governmental entity with rulemaking
authority shall develop rules to govern the negotiation and
mediation of a claim under this subchapter. If a governmental
entity does not have rulemaking authority, the governmental entity
shall follow the model rule adopted under Subsection (b).
(b) A model rule for negotiation and mediation under this
subchapter shall be provided for voluntary adoption by the
governing bodies of governmental entities through the coordinated
efforts of the State Office of Administrative Hearings and the
office of the attorney general.
(c) Rules for mediation adopted under this section at a
minimum must provide that:
(1) the mediation process is nonbinding;
(2) the mediator shall be neutral and impartial and
controls the procedure of the mediation;
(3) the parties shall cooperate fully with the
mediator;
(4) each party must be represented by at least one
officer with authority to negotiate a resolution of the dispute;
(5) the mediation shall be conducted expeditiously
with as little delay as possible;
(6) the mediation procedure and the statements made by
the participants shall be treated as offers of settlement under the
applicable rules of evidence and are inadmissible for any purpose,
including impeachment, in any judicial, administrative, or other
similar proceeding;
(7) the mediator shall be disqualified as a witness,
consultant, or expert in any proceeding relating to the subject
matter of the mediation; and
(8) at the beginning of the mediation the parties
should agree in writing to all provisions and rules of the mediation
procedure as modified by the mediator and further agreement of the
parties.
(d) In developing rules under this section, the governing
body of a governmental entity may use any alternative dispute
resolution procedures developed by the governing body under Section
2009.051 to the extent those procedures do not conflict with this
subchapter.
Sec. 2253.106. NEGOTIATION. Not later than the 14th day
after the date a claim under Section 2253.104 is received, the chief
administrative officer of the governmental entity shall examine the
claim and any counterclaim received and shall direct negotiations
between the prime contractor and subcontractor, including the
scheduling of a meeting between the two parties, in an effort to
resolve the dispute. The negotiations must begin not later than the
14th day after the date on which the prime contractor and
subcontractor are directed to begin negotiations.
Sec. 2253.107. PARTIAL RESOLUTION OF CLAIM. (a) If the
negotiation under Section 2253.106 results in the resolution of
some disputed issues by agreement or in a settlement, the parties
shall reduce the agreement or settlement to writing and each party
shall sign the agreement or settlement.
(b) A partial settlement or resolution of a claim does not
waive a party's rights under this chapter as to the parts of the
claim that are being negotiated or mediated and that are not
resolved.
(c) If a claim is not entirely resolved under Section
2253.106 on or before the 180th day after the date notice of the
claim is filed with the prime contractor under Section 2253.104,
the subcontractor may file a request for a mediation under this
subchapter with the governing body of the governmental entity that
directed the negotiations under Section 2253.106.
Sec. 2253.108. MEDIATION; EARLY AGREEMENT TO MEDIATE. (a)
Before the 180th day after the date notice of the claim is filed
with the prime contractor under Section 2253.104, the parties may
agree to mediate a claim made under this subchapter.
(b) The mediation shall be conducted in accordance with
rules adopted under Section 2253.105.
Sec. 2253.109. AMOUNTS RECOVERABLE. (a) The total amount
of money recoverable on a claim under this subchapter may not, after
deducting the amount specified in Subsection (b), exceed an amount
equal to the sum of:
(1) the balance due and owing on the contract price;
and
(2) the amount or fair market value of orders or
requests for additional work made by a prime contractor to the
extent that the orders or requests for additional work were
actually performed.
(b) Any amount that would be owed the subcontractor for work
not performed under a contract or in substantial compliance with
its terms shall be deducted from the amount recoverable under
Subsection (a).
Sec. 2253.110. ADDITIONAL REMEDIES. If a resolution
resulting in a settlement between the parties is not reached
through the alternate dispute resolution procedure established by
this subchapter, or if the parties elect not to engage in
negotiations or mediation under this subchapter, a subcontractor
may pursue any other applicable remedy available under this chapter
or state or federal law.
SECTION 2. This Act takes effect September 1, 2003, and
applies only to a contract entered into on or after that date.