37 TAC §§379.17 - 379.39
The Texas Military Facilities Commission (Commission) adopts
new Chapter 379, §§379.17 - 379.39, relating to procedures for the
negotiation and mediation of certain breach of contract claims asserted by
contractors against the State of Texas pursuant to §9 of House Bill 826,
76th. Legislature, Regular Session, Chapter 68 (1999)(codified at Government
Code, Chapter 2260), without changes to the proposed text as published in
the June 30, 2000, issue of the
Texas Register
(25 TexReg 6305).
Historically, the State of Texas has been immune from suit on a contract
on the basis of sovereign immunity. Contractors seeking to assert and recover
damages on a breach of contract claim had to obtain legislative consent to
sue and a legislative appropriation to satisfy any resulting judgment. With
the enactment of Chapter 2260, the legislature has established a new and exclusive
administrative process by which a contractor who enters into a written contract
with a unit of state government for goods, services or projects, may pursue
a breach of contract claim for damages. Chapter 2260 requires a contractor
who asserts a breach of contract claim and the Commission to attempt to resolve
the contractor's claim and any counterclaim through negotiation, and authorizes,
but does not require, the parties to mediate their dispute. If the contractor's
claim is not resolved in its entirety within the statutory time frame, the
contractor may request a contested case hearing before the State Office of
Administrative Hearings ("SOAH"). Chapter 2260 authorizes the SOAH administrative
law judge to render a non-appealable decision ordering the Commission to pay
damages up to $250,000. If the contractor's claim exceeds $250,000, Chapter
2260 requires the administrative law judge to issue a written report of his
or her findings to the legislature, recommending that the legislature either
appropriate money to pay all or part of a valid claim or deny such appropriation
and withhold consent to sue.
Section 2260.052(c) requires that the Commission adopt rules to establish
negotiation and mediation provisions. An interagency dispute resolution working
group, co-sponsored by the OAG and the Center for Public Policy Dispute Resolution
at the University of Texas School of Law and consisting of representatives
of state agencies, legislative offices, and institutions of higher education
and representatives of contractors and vendors who do business with the state,
assisted the OAG and SOAH with the development of both sets of rules.
The rules provide a process sufficiently flexible to permit the parties
to structure a negotiation or mediation in a manner that is most appropriate
for a particular dispute regardless of such variables as the size or organization
of the Commission, or the contract's complexity, subject matter, dollar amount,
or method and time of performance.
Section 379.17 defines terms as they relate to this chapter. Section 379.18
provides that the procedures are prerequisites to filing suit under Civil
Practice & Remedies Code, Chapter 107 and Government Code, Chapter 2260.
Section 379.19 advises that the state has not waived sovereign immunity to
suit or to liability.
Section 379.20 sets out the requirements and procedures of the notice of
claim of breach of contract that contractor must assert. Section 379.21 sets
out the requirements and procedures of the counterclaim that the unit of state
government must assert. Section 379.22 addresses the disclosure of additional
information. Section 379.23 announces that the parties must negotiate to settle
the dispute. Section 379.24 provides a timetable as it relates the negotiations
between the contractor and the Commission. Section 379.25 describes how the
parties may conduct the negotiation. Section 379.26 addresses the parties'
settlement approval procedures. Section 379.27 announces the requirements
of any resulting settlement agreement. Section 379.28 states how the costs
of negotiations shall be handled by the parties. In the event, the breach
of contract claim is not resolved in its entirety, Section 379.29 specifies
the process by which a contractor may seek resolution of the dispute by SOAH.
Section 379.30 set out the mediation timetable. Section 379.31 describes the
conduct of the mediation. Section 379.32 discusses the qualifications, immunities,
and duties of a mediator. Section 379.33 pertains to the confidentiality of
a mediation and any resulting final settlement agreement. Section 379.34 states
how the costs of mediation shall be handled by the parties. Section 379.35
addresses the parties settlement approval procedures. Section 379.36 details
the handling of any resulting settlement agreement. Section 379.37 states
that a final settlement agreement must comply with the provisions of §379.27
of this chapter. Section 379.38 provides that if mediation does not resolve
the dispute the contractor may request that the claim be referred to SOAH
in accordance with §379.29 of this chapter. Section 379.39 summaries
the use of assisted negotiation processes.
No comments were received regarding adoption of the new sections.
The new sections are adopted under Government Code, Chapter 2260,
Resolution of Certain Contract Claims against the State, §2260.052, which
authorizes the Commission to adopt rules deemed necessary or advisable to
effectuate Chapter 2260.
This agency hereby certifies that the adoption has been reviewed
by legal counsel and found to be a valid exercise of the agency's legal authority.
Filed with the Office of
the Secretary of State on July 31, 2000.
TRD-200005290
Jerry D. Malcolm
Executive Director
Texas Military Facilities Commission
Effective date: August 20, 2000
Proposal publication date: June 30, 2000
For further information, please call: (512) 406-6971