TITLE 37.PUBLIC SAFETY AND CORRECTIONS

Part 3. TEXAS YOUTH COMMISSION

Chapter 97. SECURITY AND CONTROL

Subchapter A. SECURITY AND CONTROL

37 TAC §97.9, §97.10

The Texas Youth Commission (TYC) proposes amendment to §97.9, concerning searches and new §97.10, concerning Entry Searches. The amendment to §97.9 will add the word Youth to the title to distinguish between the rules that effect procedures for searching Texas Youth Commission (TYC) for contraband from other search procedures. Amendment also requires that when body cavity searches are necessary to detect contraband carried by a TYC youth, the services of medical staff in local clinics and hospitals will be sought rather than using services of medical personnel with whom TYC contracts directly for services. New §97.10 regarding entry searches, establishes procedures whereby visitors to TYC facilities will be asked to submit to a search for contraband to detect and prevent contraband from entering the facility. The rule states the methods that will be used for searching, a list of items prohibited from entering the facility, and possible disposition of contraband found.

Terry Graham, Assistant Deputy Executive Director for Financial Support, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Graham also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be increased protection of youth and staff in TYC facilities and to the general public. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. No private real property rights are affected by adoption of this rule.

Comments on the proposal may be submitted to Gail Graham, Policy and Manuals Manager, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, Texas, 78765.

The amendment and new section are proposed under the Human Resources Code, §61.045, which provides the Texas Youth Commission with the authority to be responsible for the welfare, custody, and rehabilitation of youth committed to TYC.

The proposal implements the Human Resource Code, §61.034.

Youth Search.

(a)-(e)

(No change.)

(f)

Body cavity searches refers to manual or instrument inspection of body cavities including the vagina or rectum, but excluding the mouth. Body cavity searches:

(1)-(2)

(No change.)

(3)

shall be conducted only by off-site medical personnel , who are not part of the facility's health care staff ; and

(4)

(No change.)

(g)

(No change.)

§97.10.Entry Searches.

(a)

Purpose. The purpose of this rule is to establish rules for conducting searches at the entry point of Texas Youth Commission facilities to prevent the introduction of prohibited items.

(b)

Any person entering a secure facility may be asked to submit to a search of his/her person and of any property he/she is bringing into the facility.

(c)

Search will be conducted in a reasonable manner and use the least intrusive method possible as determined by the circumstances.

(d)

Entry searches may be conducted by one or more of the following methods:

(1)

use of metal detectors (walk-through or wand);

(2)

use of trained detection dogs;

(3)

visual or touch inspection of property;

(4)

requiring pockets to be emptied; or

(5)

pat-down body search by a person of the same gender outside the person's clothing.

(e)

Any person who refuses to be searched may be prohibited from entering the facility and may be subject to other administration action, as appropriate.

(f)

Any person who refuses to have his/her personal property searched may be prohibited from taking such property into the facility and may be subject to other administrative action, as appropriate.

(g)

Any item that is, or appears to be, a prohibited item may be seized.

(h)

Seized items may be turned over to a law enforcement agency for identification or disposition.

(i)

If personal property is seized, the agency will determine within 24 hours (or the next business day if on a weekend or holiday), whether the item(s) will be retained as evidence for an administrative investigation, turned over to a law enforcement agency for disposition, or returned to the person from whom the property was seized and will so notify such person.

(j)

The following items are prohibited in secure facilities except with specific permission from the facility administrator:

(1)

Weapons of any type as defined in Section 46.01 of the Texas Penal code, including guns and knives, as well as personal defense items such as pepper spray;

(2)

Pornographic materials in any form;

(3)

Tobacco products;

(4)

Lighters or matches;

(5)

Alcohol or illegal drugs (employees taking prescription or non-prescription medication(s) may bring in the amount needed during the work day and are responsible for its safekeeping);

(6)

Metal nail files or nail clippers;

(7)

Glass containers;

(8)

Personal tools;

(9)

Cameras or video equipment; or

(10)

Any other item perceived by searching staff to be dangerous. The item will be referred to the superintendent or designee for consideration.

(k)

The above list of prohibited items will be prominently posted at each entrance to a secure facility.

(l)

Items on the prohibited list may be seized during entry searches.

(m)

Individual facilities may not add items to the prohibited list. Requests to include additional items on the list must be made in writing to the deputy executive director and include a justification for designating an item as prohibited. Any additions to the list will be applicable to all agency residential facilities.

(n)

Detection dogs will be used in a manner that preserves personal dignity.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 19, 2000.

TRD-200004299

Steve Robinson

Executive Director

Texas Youth Commission

Earliest possible date of adoption: July 30, 2000

For further information, please call: (512) 424-6244

Chapter 99. GENERAL PROVISIONS

Subchapter C. MISCELLANEOUS

37 TAC §99.51

The Texas Youth Commission (TYC) proposes an amendment to §99.51, concerning Death of a Youth. The amendment to the section will correct the position title from youth rights administrator to chief of complaint resolution and correct other minor edits.

Terry Graham, Assistant Deputy Executive Director for Financial Support, has determined that for the first five-year period the section is in effect there will be no fiscal implications for state or local government as a result of enforcing or administering the section.

Mr. Graham also has determined that for each year of the first five years the section is in effect the public benefit anticipated as a result of enforcing the section will be more accurate information made available to the public. There will be no effect on small businesses. There is no anticipated economic cost to persons who are required to comply with the section as proposed. No private real property rights are affected by adoption of this rule.

Comments on the proposal may be submitted to Gail Graham, Policy and Manuals Manager, Texas Youth Commission, 4900 North Lamar, P.O. Box 4260, Austin, Texas, 78765.

The amendment is proposed under the Human Resources Code, §61.045, which provides the Texas Youth Commission with the authority to be responsible for the welfare, custody, and rehabilitation of youth committed to TYC.

The proposed amendment implements the Human Resource Code, §61.034.

§99.51.Death of a Youth.

(a)

Purpose. The purpose of this rule [ rules ] is to establish a procedure whereby TYC staff respond to the authorities and the family in the event of the death of a youth while in TYC jurisdiction.

(b)

(No change.)

(c)

On the death of a youth residing in a TYC residential facility, the following actions will be taken.

(1)

The following should be notified immediately:

(A)-(D)

(No change.)

(E)

the chief of complaint resolution [ youth rights administrator ].

(2)

(No change.)

(3)

An autopsy will be sought by TYC staff who work with the medical examiner and the family as needed to arrange an autopsy;

(4)

(No change.)

(d)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 19, 2000.

TRD-200004300

Steve Robinson

Executive Director

Texas Youth Commission

Earliest possible date of adoption: July 30, 2000

For further information, please call: (512) 424-6244

Part 5. TEXAS BOARD OF PARDONS AND PAROLES

Chapter 146. REVOCATION OF PAROLE OR MANDATORY SUPERVISION

37 TAC §§146.3, 146.6-146.8

The Policy Board of the Texas Board of Pardons and Paroles proposes amendments to 37 TAC §§146.3, 146.6(c), 146.7(d), and 146.8(c) concerning revocation of parole or mandatory supervision. The amendment is proposed for the purpose of substituting up-to-date terminology to correct all references to "director of paroles, hearings, and clemency" to "board administrator." The new terminology is proposed in order to comply with House Bill 1386, §5, Acts of the 75th Legislature, Regular Session, 1997 (effective September 1, 1997), amending §6A, Article 42.18, Code of Criminal Procedure (re-codified into §508.040, Government Code) that requires the Policy Board to hire a board administrator.

Gerald Garrett, Chair of the Policy Board, has determined that for the first five-year period the amended rules are in effect, there will be no fiscal implications for state or local government.

Chairman Garrett has also determined that for each year of the first five years the proposed amended rules are in effect, the public benefit anticipated as a result of enforcing the amended rules will be that the rule language will reflect the statutory language.

There will be no effect on small businesses or micro-businesses. There is no anticipated economic cost to persons required to comply with the amended rules as proposed.

Comments should be directed to Laura McElroy, General Counsel, Texas Board of Pardons and Paroles, 209 West 14th Street, 5th Floor, Austin, Texas, 78701, or to the following electronic mail address: laura.mcelroy@tdcj.state.tx.us. Written comments from the public should be received within 30 days of the publication of the proposed amended rules.

The amendments are proposed under §508.036, Government Code, which grants the Policy Board the power to promulgate rules relating to the decision-making process used by the Board and parole panels.

There is no cross-reference to the proposed amended rules.

§146.3.Right to Counsel.

The board administrator [ director of paroles, hearings, and clemency ] or the designee of the board administrator [ director of paroles, hearings, and clemency ], shall weigh the following factors in determining whether the releasee is to be appointed an attorney:

(1)-(3)

(No change.)

§146.6.Scheduling of Preliminary Hearing.

(a)-(b)

(No change.)

(c)

If the hearings section receives a request for a preliminary hearing later than the seventh calendar day following the provisions described in subsection (a)(1) of this section, the hearings section shall require the requestor to submit the scheduling request directly to the board administrator [ director of paroles, hearings, and clemency ], along with a written explanation of the delay.

(d)-(e)

(No change.)

§146.7.Preliminary Hearing.

(a)-(c)

(No change.)

(d)

If the parole panel or designee of the board finds that there is no probable cause to proceed to a revocation hearing or does not schedule a revocation hearing, the parole panel or designee of the board shall collect, prepare, and forward to a parole panel, or to the board administrator [ director of paroles, hearings, and clemency ] if the hearing was held pursuant to the Interstate Compact Agreement, the following information:

(1)-(3)

(No change.)

(e)-(f)

(No change.)

§146.8.Scheduling of Revocation Hearing.

(a)-(b)

(No change.)

(c)

If the hearings section receives a request for a revocation hearing later than the seventh calendar day following the provisions described in subsection (b)(1) of this section, the hearings section shall require the requestor to submit the scheduling request directly to the board administrator [ director of paroles, hearings, and clemency ], along with a written explanation of the delay.

(d)-(f)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 19, 2000.

TRD-200004289

Laura McElroy

General Counsel

Texas Board of Pardons and Paroles

Earliest possible date of adoption: July 30, 2000

For further information, please call: (512) 463-1883

Chapter 150. MEMORANDUM OF UNDERSTANDING AND BOARD POLICY STATEMENTS

Subchapter A. PUBLISHED POLICIES OF THE BOARD

37 TAC §150.56

The Policy Board of the Texas Board of Pardons and Paroles proposes an amendment to 37 TAC §150.56 concerning policies pertaining to the administration of the agency. The amendment is proposed for the purpose of substituting up-to-date terminology to correct all references to "board" to "policy board." The new terminology is proposed in order to comply with House Bill 1386, §5, Acts of the 75th Legislature, Regular Session, 1997 (effective September 1, 1997), amending §6A, Article 42.18, Code of Criminal Procedure (re-codified into §508.036, Government Code) that creates a six-member policy board.

Gerald Garrett, Chair of the Policy Board, has determined that for the first five-year period the amended rule is in effect, there will be no fiscal implications for state or local government.

Chairman Garrett has also determined that for each year of the first five years the proposed amended rule is in effect, the public benefit anticipated as a result of enforcing the amended rule will be that the rule language will reflect the statutory language.

There will be no effect on small businesses or micro-businesses. There is no anticipated economic cost to persons required to comply with the amended rule as proposed.

Comments should be directed to Laura McElroy, General Counsel, Texas Board of Pardons and Paroles, 209 West 14th Street, 5th Floor, Austin, Texas, 78701, or to the following electronic mail address: laura.mcelroy@tdcj.state.tx.us. Written comments from the public should be received within 30 days of the publication of the proposed amended rule.

The amendment is proposed under §508.036, Government Code, which grants the Policy Board the power to promulgate rules relating to the decision-making process used by the Board and parole panels.

There is no cross-reference to the proposed amended rule.

§150.56.Policies Pertaining to the Administration of the Agency.

(a)

The policy board has overall managerial responsibility for developing, promulgating, and investigating policies on parole, mandatory supervision, and the overall operation and administration of the agency.

(b)

The chairperson of the board or the chairperson's designee acts as the agency's liaison to the legislature. The policy board shall have final approval over all proposed legislation before being submitted to the legislature.

(c)

(No change.)

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 19, 2000.

TRD-200004288

Laura McElroy

General Counsel

Texas Board of Pardons and Paroles

Earliest possible date of adoption: July 30, 2000

For further information, please call: (512) 463-1883

Part 12. TEXAS MILITARY FACILITIES COMMISSION

Chapter 379. ADMINISTRATIVE RULES

37 TAC §§379.17-379.39

The Texas Military Facilities Commission (Commission) proposes new §§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). 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 and 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, §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.

Lydia Cruz, Director of Accounting and Administration, has determined that for each year of the first five years that the proposed rules are in effect that the additional estimated cost to the Commission expected as a result of enforcing or administering the rules will be zero because the rules impose no additional burden on anyone. The estimated reductions in costs to the Commission as a result of enforcing or administering the rules will be zero because the rules impose no additional burden on anyone. The estimated loss or increase in revenue to the Commission as a result of enforcing or administering the rules will be zero because the rules impose no additional burden on anyone.

Ms. Cruz has also determined that for each year of the first five years that the proposed rules are in effect, the benefit to the public will be the more timely and efficient resolution of contract disputes between contractors and the Commission. The legislature by enacting Chapter 2260 has determined that such process, with the potential to recover monetary damages for proven contractual breaches, is of public benefit.

The proposed rules will have no adverse economic effect on small or large businesses and/or persons that contract with the Commission. In the past, sovereign immunity prevented breach of contract claims against the Commission and the only process available to the public for resolution of such a claim was to seek and obtain legislative consent to sue. Chapter 2260 and these proposed rules will provide a process by which claims for breach of contract and counterclaims can be asserted and resolved.

The negotiation provisions themselves will impose no economic cost to persons required to comply with the proposed rules because they do not require the use of any particular negotiation mode or method. The proposed rules require only that the parties negotiate to resolve their dispute, and the mode or method of negotiation can be as simple or as complex as the parties decide. The proposed rules specify that absent an agreement to the contrary, the parties are responsible for costs they individually incur in a negotiation or other alternative dispute resolution process.

Similarly, the mediation provisions themselves will impose no economic cost to persons required to comply with the proposed rules unless the parties choose to mediate. If the parties do so, the rules specify that, absent an agreement to the contrary, the parties will share the costs of the mediator and each will be responsible for whatever additional costs they decide to incur for items such as document reproduction, attorneys' fees, experts' fees and consultants' fees.

The Commission requests comments on the proposed rules from any interested person. Comments may be submitted, in writing, no later than 30 days after the date of publication of this notice to Julie Wright, Texas Military Facilities Commission, P.O. Box 5426, Austin, Texas, 78763-5426.

The new sections are proposed 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.

There is no other code, article, or statute affected by these new sections.

§379.17.Definitions.

The following words and terms, when used in this chapter, shall have the following meaning, unless the context clearly indicates otherwise.

(1)

Executive Director--The chief administrator of the Commission.

(2)

Claim--A demand for damages by a contractor based upon the Commission's alleged breach of the contract.

(3)

Commission--The Texas Military Facilities Commission.

(4)

Contract--A written contract between the Commission and a contractor by the terms of which the contractor agrees either:

(A)

to provide goods or services, by sale or lease, to or for the Commission; or

(B)

to perform a project as defined by Government Code, §2166.001.

(5)

Contractor--An independent contractor who has entered into a contract directly with the Commission. The term does not include:

(A)

the contractor's subcontractor, officer, employee, agent or other person furnishing goods or services to a contractor;

(B)

an employee of the Commission.

(6)

Counterclaim--A demand by the Commission based upon the contractor's claim.

(7)

Day--A calendar day. If an act is required to occur on a day falling on a Saturday, Sunday, or holiday, the first working day which is not one of these days shall be counted as the required day.

(8)

Event--An act or omission or a series of acts or omissions giving rise to a claim. The following list contains illustrative examples of events, subject to the specific terms of the contract:

(A)

Examples of events in the context of a contract for goods or services:

(i)

the failure of the Commission to timely pay for goods and services;

(ii)

the failure to pay the balance due and owing on the contract price, including orders for additional work, after deducting any amount owed the Commission for work not performed under the contract or in substantial compliance with the contract terms;

(iii)

the suspension, cancellation, or termination of the contract;

(iv)

final rejection of the goods or services tendered by the contractor, in whole or in part;

(v)

repudiation of the entire contract prior to or at the outset of performance by the contractor;

(vi)

withholding liquidated damages from final payment to the contractor.

(B)

Examples of events in the context of a project:

(i)

the failure to timely pay the unpaid balance of the contract price following final acceptance of the project;

(ii)

the failure to make timely progress payments required by the contract;

(iii)

the failure to pay the balance due and owing on the contract price, including orders for additional work, after deducting work not performed under the contract or in substantial compliance with the contract terms;

(iv)

the failure to grant time extensions to which the contractor is entitled under the terms of the contract;

(v)

the failure to compensate the contractor for occurrences for which the contract provides a remedy;

(vi)

suspension, cancellation or termination of the contract;

(vii)

rejection by the Commission, in whole or in part, of the "work", as defined by the contract, tendered by the contractor;

(viii)

repudiation of the entire contract prior to or at the outset of performance by the contractor;

(ix)

withholding liquidated damages from final payment to the contractor;

(x)

refusal, in whole or in part, of a written request made by the contractor in strict accordance with the contract to adjust the contract price, the contract time, or the scope of work.

(C)

The lists in subparagraphs (A) and (B) of this paragraph should not be considered exhaustive but are merely illustrative in nature.

(9)

Goods--Supplies, materials or equipment.

(10)

Mediation--A consensual process in which a neutral third person facilitates communication to promote reconciliation, settlement, or understanding.

(11)

Negotiation--A consensual bargaining process in which the parties attempt to resolve a claim and/or counterclaim.

(12)

Parties--The designation of the Commission and a contractor after a claim of breach of contract has been filed under this chapter.

(13)

Project--A building construction project that is financed wholly or partly by a specific appropriation, bond issue or federal money, including the construction of:

(A)

a building, structure, or appurtenant facility or utility, including the acquisition and installation of original equipment and original furnishing; and

(B)

an addition to, or alteration, modification, rehabilitation or repair of an existing building, structure, or appurtenant facility or utility.

(14)

Services--The furnishing of skilled or unskilled labor or consulting or professional work, or a combination thereof, excluding the labor of an employee of the Commission.

§379.18.Prerequisites to Suit.

The procedures contained in this chapter are exclusive and required prerequisites to suit under the Civil Practice and Remedies Code, Chapter 107, and the Government Code, Chapter 2260.

§379.19.Sovereign Immunity.

This chapter does not waive the Commission's sovereign immunity to suit or liability.

§379.20.Notice of Claim of Breach of Contract.

(a)

A contractor asserting a claim for breach of contract shall file notice as provided by this section.

(b)

The notice of claim shall:

(1)

be in writing and signed by the contractor or the contractor's authorized representative;

(2)

be delivered by hand, certified mail return receipt requested, or other verifiable delivery service, to the Commission's representative designated in the contract to receive a notice of claim of breach of contract. If no person is designated in the contract, the notice shall be delivered to the executive director, and

(3)

state in detail:

(A)

the nature of the alleged breach of contract, including the date of the event that the contractor asserts as the basis of the claim and each contractual provision allegedly breached;

(B)

a description of damages that resulted from the alleged breach, including the amount and method used to calculate those damages; and

(C)

the legal theory of recovery, i.e., breach of contract, including the causal relationship between the alleged breach and the damages claimed.

(c)

In addition to the mandatory contents of the notice of claim, the contractor may submit supporting documentation or other tangible evidence to facilitate the Commission's evaluation of the contractor's claim.

(d)

The notice of claim shall be delivered no later than 180 days after the date of the event that the contractor asserts as the basis of the claim.

§379.21.Agency Counterclaim.

(a)

The Commission shall file notice of a counterclaim as provided by this section.

(b)

The notice of counterclaim shall:

(1)

be in writing;

(2)

be delivered by hand, certified mail return receipt requested or other verifiable delivery service to the contractor or representative of the contractor who signed the notice of claim of breach of contract; and

(3)

state in detail:

(A)

the nature of the counterclaim;

(B)

a description of damages or offsets sought, including the amount and method used to calculate those damages or offsets; and

(C)

the legal theory supporting the counterclaim.

(c)

In addition to the mandatory contents of the notice of counterclaim, the Commission may submit supporting documentation or other tangible evidence to facilitate the contractor's evaluation of the Commission's counterclaim.

(d)

The Commission shall delivered the notice of the counterclaim to the contractor no later than 90 days after the Commission's receipt of the contractor's notice of claim.

(e)

Nothing herein precludes the Commission from initiating a lawsuit for damages against the contractor in a court of competent jurisdiction.

§379.22.Request for Voluntary Disclosure of Additional Information.

(a)

Upon the filing of a claim or counterclaim, the parties may request to review and copy information in the possession or custody or subject to the control of the other party that pertains to the contract claimed to have been breached, including, without limitation:

(1)

accounting records;

(2)

correspondence, including, without limitation, correspondence between the Commission and outside consultants it utilized in preparing its bid solicitation or any part thereof or in administering the contract, and correspondence between the contractor and its subcontractors, material men, and vendors;

(3)

schedules;

(4)

the parties' internal memoranda;

(5)

documents created by the contractor in preparing its offer and documents created by the Commission in analyzing the offers it received in response to the solicitation.

(b)

This section applies to all information in the parties' possession regardless of the manner in which it is recorded, including, without limitation, paper and electronic media.

(c)

The parties may seek additional information directly from third parties, including, without limitation, the Commission's third party consultants and the contractor's subcontractors.

(d)

Nothing in this section requires any party to disclose the requested information or any matter that is privileged under Texas law.

(e)

Material submitted pursuant to this subsection and claimed to be confidential by the contractor shall be handled pursuant to the requirements of the Public Information Act.

§379.23.Duty to Negotiate.

The parties shall negotiate in accordance with the timetable set forth in §379.30 of this title (relating to Mediation Timetable) to attempt to resolve all claims and counterclaims. No party is obligated to settle as a result of the negotiation.

§379.24.Timetable.

(a)

Following receipt of a contractor's notice of claim, the Commission's executive director or the director's designated representative shall review the contractor's claim(s) and the counterclaim(s), if any, and initiate negotiations with the contractor to attempt to resolve the claim(s) and counterclaim(s).

(b)

Subject to subsection (c) of this section, the parties shall begin negotiations within a reasonable period of time, not to exceed 60 days following the later of:

(1)

the date of termination of the contract;

(2)

the completion date, or substantial completion date in the case of construction projects, in the original contract; or

(3)

the date the Commission receives the contractor's notice of claim.

(c)

The Commission may delay negotiations until after the 180th day after the date of the event giving rise to the claim of breach of contract by:

(1)

delivering written notice to the contractor that the commencement of negotiations will be delayed; and

(2)

delivering written notice to the contractor when the Commission is ready to begin negotiations.

(d)

The parties may conduct negotiations according to an agreed schedule as long as they begin negotiations no later than the deadlines set forth in subsections (b) or (c) of this section, whichever is applicable.

(e)

Subject to subsection (f) of this section, the parties shall complete the negotiations that are required by this chapter as a prerequisite to a contractor's request for contested case hearing no later than 270 days after the Commission receives the contractor's notice of claim.

(f)

The parties may agree in writing to extend the time for negotiations on or before the 270th day after the Commission receives the contractor's notice of claim. The agreement shall be signed by representatives of the parties with authority to bind each respective party and shall provide for the extension of the statutory negotiation period until a date certain. The parties may enter into a series of written extension agreements that comply with the requirements of this section.

(g)

The contractor may request a contested case hearing before the State Office of Administrative Hearings ("SOAH") pursuant to §379.29 of this title (relating to Request for Contested Case Hearing) after the 270th day after the Commission receives the contractor's notice of claim, or the expiration of any extension agreed to under subsection (f) of this section.

(h)

The parties may agree to mediate the dispute at any time before the 270th day after the Commission receives the contractor's notice of claim or before the expiration of any extension agreed to by the parties pursuant to subsection (f) of this section.

(i)

Nothing in this section is intended to prevent the parties from agreeing to commence negotiations earlier than the deadlines established in subsections (b) and (c) of this section, or from continuing or resuming negotiations after the contractor requests a contested case hearing before SOAH.

§379.25.Conduct of Negotiation.

(a)

A negotiation under this subchapter may be conducted by any method, technique, or procedure agreed upon by the parties, including, without limitation, negotiation in person, by telephone, by correspondence, by video conference, or by any other method that permits the parties to identify their respective positions, discuss their respective differences, confer with their respective advisers, exchange offers of settlement, and settle.

(b)

The parties may conduct negotiations with the assistance of one or more neutral third parties. If the parties choose to mediate their dispute, the mediation shall be conducted in accordance with this chapter.

(c)

To facilitate the meaningful evaluation and negotiation of the claim(s) and any counterclaim(s), the parties may exchange relevant documents that support their respective claims, defenses, counterclaims or positions.

(d)

Material submitted pursuant to this subsection and claimed to be confidential by the contractor shall be handled pursuant to the requirements of the Public Information Act.

§379.26.Settlement Approval Procedures.

The parties' settlement approval procedures shall be disclosed prior to, or at the beginning of, negotiations. To the extent possible, the parties shall select negotiators who are knowledgeable about the subject matter of the dispute, who are in a position to reach agreement, and who can credibly recommend approval of an agreement.

§379.27.Settlement Agreement.

(a)

A settlement agreement may resolve an entire claim or any designated and severable portion of a claim.

(b)

To be enforceable, a settlement agreement must be in writing and signed by the parties or their authorized representatives.

(c)

A partial settlement does not waive a parties' rights under the Government Code, Chapter 2260, as to remaining claims or counterclaims.

§379.28.Costs of Negotiation.

Unless the parties agree otherwise, each party shall be responsible for its own costs incurred in connection with a negotiation, including, without limitation, the costs of attorney's fees, consultant's fees and expert's fees.

§379.29.Request for Contested Case Hearing.

(a)

If a claim for breach of contract is not resolved in its entirety through negotiation, mediation or other assisted negotiation process in accordance with this chapter on or before the 270th day after the Commission receives the notice of claim, or after the expiration of any extension agreed to by the parties pursuant to §379.24(f) of this title (relating to Timetable), the contractor may file a request with the Commission for a contested case hearing before SOAH.

(b)

A request for a contested case hearing shall state the legal and factual basis for the claim and shall be delivered to the executive director or other person designated in the contract to receive notice within a reasonable time after the 270th day or the expiration of any written extension agreed to pursuant to §379.24(f) of this title.

(c)

The Commission shall forward the contractor's request for contested case hearing to SOAH within a reasonable period of time, not to exceed thirty days, after receipt of the request.

(d)

The parties may agree to submit the case to SOAH before the 270th day after the notice of claim is received by the Commission if they have achieved a partial resolution of the claim or if an impasse has been reached in the negotiations and proceeding to a contested case hearing would serve the interests of justice.

§379.30.Mediation Timetable.

(a)

The contractor and Commission may agree to mediate the dispute at any time before the 270th day after the Commission receives a notice of claim of breach of contract, or before the expiration of any extension agreed to by the parties in writing.

(b)

A contractor and the Commission may mediate the dispute even after the case has been referred to SOAH for a contested case. SOAH may also refer a contested case for mediation pursuant to its own rules and guidelines, whether or not the parties have previously attempted mediation.

§379.31.Conduct of Mediation.

(a)

A mediator may not impose his or her own judgment on the issues for that of the parties. The mediator must be acceptable to both parties.

(b)

The mediation is subject to the provisions of the Governmental Dispute Resolution Act, Government Code, Chapter 2009.

(c)

To facilitate a meaningful opportunity for settlement, the parties shall, to the extent possible, select representatives who are knowledgeable about the dispute, who are in a position to reach agreement, or who can credibly recommend approval of an agreement.

§379.32.Qualifications and Immunity of the Mediator.

The mediator shall possess the qualifications required under Civil Practice and Remedies Code, §154.052, be subject to the standards and duties prescribed by Civil Practice and Remedies Code, §154.053 and have the qualified immunity prescribed by Civil Practice and Remedies Code, §154.055, if applicable.

§379.33.Confidentiality of Mediation and Final Settlement Agreement.

(a)

A mediation conducted under this section is confidential in accordance with Government Code, §2009.054.

(b)

The confidentiality of a final settlement agreement that is reached as a result of the mediation is governed by Government Code, Chapter 552.

§379.34.Costs of Mediation.

Unless the contractor and the Commission agree otherwise, each party is responsible for its own costs incurred in connection with the mediation, including costs of document reproduction for documents requested by such party, attorney's fees, and consultant or expert fees. The costs of the mediation process itself shall be divided equally between the parties.

§379.35.Settlement Approval Procedures.

The parties' settlement approval procedures shall be disclosed by the parties prior to the mediation. To the extent possible, the parties shall select representatives who are knowledgeable about the subject matter of the dispute, who are in a position to reach agreement, and who can credibly recommend approval of an agreement.

§379.36.Initial Settlement Agreement.

Any settlement agreement reached during the mediation shall be signed by authorized representatives of the parties and shall describe any procedures required to be followed in connection with the approval of a final settlement agreement.

§379.37.Final Settlement Agreement.

(a)

A final settlement agreement reached during, or as a result of mediation, that resolves an entire claim or any designated and severable portion of a claim shall be in writing and signed by the authorized representatives of the parties.

(b)

If the settlement agreement does not resolve all issues raised by the claim and counterclaim, the agreement shall identify the unresolved issues.

(c)

A partial settlement does not waive a contractor's rights under the Government Code, Chapter 2260, as to unresolved claims.

§379.38.Referral to the State Office of Administrative Hearings.

If mediation does not resolve all issues raised by the claim, the contractor may request that the claim be referred to SOAH.

§379.39.Use of Assisted Negotiation Processes.

Any of the following methods, or a combination of these methods, or any assisted negotiation process agreed to by the parties, may be used in seeking resolution of disputes or other controversy arising under Government Code, Chapter 2260. If the parties agree to use an assisted negotiation procedure, they should agree in writing to a detailed description of the process prior to engaging in the process.

(1)

Mediation.

(2)

Early evaluation by a third-party neutral.

(A)

This a confidential conference where the parties and their counsel present the factual and legal bases of their claim and receive a non-binding assessment by an experienced neutral with subject-matter expertise or with significant experience in the substantive area of law involved in the dispute.

(B)

After summary presentations, the third-party neutral identifies areas of agreement for possible stipulations, assesses the strengths and weaknesses of each party's position, and estimates, if possible, the likelihood of liability and the dollar range of damages that appear reasonable to him or her.

(C)

This is a less complicated procedure than the mini-trial, described in paragraph (4) of this section. It may be appropriate for only some issues in dispute, for example, where there are clear-cut differences over the appropriate amount of damages.

(3)

Neutral fact-finding by an expert.

(A)

In this process, a neutral third-party expert studies a particular issue and reports findings on that issue. The process usually occurs after most discovery in the dispute has been completed and the significance of particular technical or scientific issues is apparent.

(B)

The parties may agree in writing that the fact-finding will be binding on them in later proceedings (and entered into as a stipulation in the dispute if the matter proceeds to contested case hearing), or that it will be advisory in nature, to be used only in further settlement discussions between representatives of the parties.

(4)

Mini-trial.

(A)

A mini-trial is generally a summary proceeding before a representative of upper management from each party, with authority to settle, and a third-party neutral selected by agreement of the parties. A mini-trial is usually divided into three phases: a limited information exchange phase, the actual hearing, and post-hearing settlement discussions. No written or oral statement made in the proceeding may be used as evidence or an admission in any other proceeding.

(B)

The information exchange stage shall be sufficient for each party to understand and appreciate the key issues involved in the case. At a minimum, the parties shall exchange key exhibits, introductory statements, and a summary of witness's testimony.

(C)

At the hearing, representatives of the parties shall present a summary of the anticipated evidence and any legal issues that must be decided before the case can be resolved. The third-party neutral presides over the presentation and may question witnesses and counsel, as well as comment on the arguments and evidence. Each party may put on abbreviated direct and cross-examination testimony

(D)

Settlement discussions, facilitated by the third-party neutral, shall take place after the hearing. The parties may ask the neutral to formally evaluate the evidence and arguments and give an advisory opinion as to the issues in the case. If the parties cannot reach an agreed resolution to the dispute, either side may declare the mini-trial terminated and proceed to resolve the dispute by other means.

This agency hereby certifies that the proposal has been reviewed by legal counsel and found to be within the agency's legal authority to adopt.

Filed with the Office of the Secretary of State, on June 19, 2000.

TRD-200004287

Jerry D. Malcolm

Executive Director

Texas Military Facilities Commission

Earliest possible date of adoption: July 30, 2000

For further information, please call: (512) 406-6971