19 TAC §§250.40 - 250.49
On January 5, 2001, the State Board for Educator Certification
(SBEC) proposed new 19 Texas Administrative Code Chapter 250, Subchapter D, §§250.40
- 250.49, relating to the negotiation and resolution of certain contract claims
against SBEC.
Passed in 1999 by the 76th Legislature, Chapter 2260 of the Government
Code governs the resolution of certain contract claims against the State of
Texas. Texas Section 2260.052(c) of that act requires SBEC to adopt rules
for settling breach of contract claims against the agency. The Office of the
Attorney General and the State Office of Administrative Hearings have jointly
developed model rules to guide agencies, which may modify them in conformity
with statute. SBEC's proposal modifies the model rules by allowing the parties
by agreement to apply the rules to contract claims brought by SBEC against
a contractor, rather than just to claims brought against the agency by a contractor.
The proposed rules, along with Chapter 2260 of the Government Code, would
establish for SBEC the following five-stage resolution process for breach
of contract claim and counterclaims:
1. Notice of claim or counterclaim delivered by one contracting party to
the other. (SBEC proposed rule.)
2. Negotiation of dispute just between SBEC and the contractor. (SBEC proposed
rule.)
3. Mediation facilitated by neutral third party of any unresolved issues
following negotiation. (SBEC proposed rule.)
4. Administrative Hearing before the State Office of Administrative Hearings
(SOAH) of issues left unresolved following negotiation and mediation. (Referral
to SOAH: SBEC proposed rule. Conduct of hearing: Statutory provisions and
SOAH procedural rules.)
5. Administrative decision by SOAH as to whether SBEC shall pay a pending
claim for damages of less than $250,000. SOAH's decision would not be appealable
or otherwise subject to judicial review. (Statutory provisions.) OR
Report and recommendation to the Legislature by SOAH that a pending claim
against SBEC for damages of over $250,000 either (1) should be paid; or (2)
payment and permission to sue the State should be denied. (Statutory provisions.)
No fiscal impact is anticipated for the new contract settlement rules.
SBEC has not had any contract claims filed against the agency, so it cannot
be determined at this time how much the proposed procedures would save. SBEC
expects to settle any claims that do arise within amounts already budgeted
for the contract project and to receive full value for the contracted goods
or services.
Barry Alaimo, Director of Accounting and Financial Operations, was responsible
for preparing this fiscal-impact note.
The public would benefit from the new rules by allowing SBEC to efficiently
resolve contract claims without compromising the agency operations. The public
should incur no additional costs as a result of the implementation of the
proposed rules. There will be no effect on small businesses.
Dan Junell, General Counsel, was responsible for preparing this public
benefits and costs note.
Interested persons wishing to comment on the proposed rules must submit
their comments in writing to Dan Junell, General Counsel, State Board for
Educator Certification, 1001 Trinity, Austin, Texas 78701-2603, within the
30-day comment period, which begins on the date of publication of this issue
of the
Texas Register
. The comments should
contain the following title or reference: "Comments on proposed new 19 TAC
Chapter 250, Subchapter D, relating to contract-claim resolution."
The new rules were proposed under the authority of Chapter 2260
of the Government Code, which governs the resolution of certain contract claims
against the State of Texas. Section 2260.052(c) of that act requires SBEC
to adopt rules for settling breach of contract claims against the agency.
The rules were also proposed under §21.041(b)(1) of the Education Code,
which requires SBEC to propose rules that provide for the general administration
of the agency.
No other statute, code, or article is affected by the proposed new sections.
§250.40.General.
(a)
Policy. It is the policy of the State Board for Educator
Certification that contract disputes involving the agency be resolved as fairly
and expeditiously as possible.
(b)
Purpose. The purpose of this subchapter is to establish
procedures to resolve certain contract disputes between contractors and the
State Board for Educator Certification (SBEC).
(c)
Scope and applicability. This subchapter applies to certain
breach of contract claims and counterclaims involving the State Board for
Educator Certification. This subchapter does not apply to:
(1)
contracts between SBEC and another governmental body;
(2)
contracts between a subcontractor and contractor;
(3)
a grant agreement between SBEC as grantor and a public
or private entity as grantee;
(4)
a claim for personal injury or wrongful death arising from
the breach of a contract; or
(5)
a claim or dispute with respect to which the 77th Legislature
or a previous legislature has enacted a concurrent resolution granting permission
to the contractor to bring a suit against the state or SBEC.
(d)
Legal authority. Government Code, §2260.052(c) requires
the Board to adopt rules for negotiation and mediation of certain breach of
contract claims and counterclaims involving contractors and the State of Texas.
Education Code, §21.041(a) authorizes the Board to adopt rules as necessary
for its own procedures and §21.041(b)(1) requires the Board to propose
rules for the general administration of its organic statutes, Education Code,
Chapter 21, Subchapter B.
(e)
Exclusive procedures. In accordance with Civil Practice
and Remedies Code, Chapter 107, relating to permission to sue the state, this
subchapter contains the exclusive and required prerequisites to suit for breach
of contract by a contractor against SBEC.
(1)
By written agreement of the parties, this subchapter may
be applied to a breach of contract claim brought by SBEC against a contractor.
(2)
Nothing in this subchapter precludes SBEC from initiating
a lawsuit for damages against the contractor in a court of competent jurisdiction.
(f)
Sovereign immunity. This subchapter does not waive sovereign
immunity to suit or liability.
(g)
Delivery of papers. Delivery of notices and other papers
required under this subchapter shall be made by hand delivery (courier receipt
requested), certified mail (return receipt requested), or other verifiable
delivery service.
(1)
Delivery to SBEC shall be made to the agency's executive
director.
(2)
Delivery to the contractor shall be made to the contractor's
representative designated in the contract for receipt of papers under this
subchapter or to the contractor's chief executive officer or registered agent
for delivery of service if a representative is not so designated in the contract.
§250.41.Definitions.
The following words, terms, and phrases, when used in this subchapter,
shall have the following meanings, unless the context clearly indicates otherwise.
(1)
Agency--The State Board for Educator Certification.
(2)
ALJ--An individual appointed by the chief administrative
law judge of SOAH under Government Code, §2003.041.
(3)
APA--The Administrative Procedure Act, codified as Government
Code, Chapter 2001.
(4)
Board--The State Board for Educator Certification.
(5)
Contested case--A proceeding brought pursuant to this subchapter
in which the legal rights, duties, or privileges of a party are to be determined
by the Board or SOAH or both after an opportunity for an adjudicative hearing.
(6)
Contract--A written agreement between SBEC and a contractor
by the terms of which the contractor agrees either:
(A)
to provide goods or services, by sale or by lease, to SBEC;
or
(B)
to perform a project as defined by Government Code, §2166.001,
relating to building construction and acquisition.
(7)
Contractor--Independent contractor who has entered into
a contract directly with the agency. The term does not include:
(A)
a contractor's subcontractor, officer, employee, agent,
or other person furnishing goods or services to a contractor;
(B)
an employee of SBEC or another unit of state government;
or
(C)
a student at an institution of higher education.
(8)
Day--A calendar day, unless otherwise indicated.
(9)
Dispute--A contested legal or factual issue involving a
breach of contract claim or counterclaim.
(10)
Institution of higher education--Any public technical
institute, public junior college, public senior college or university, medial
or dental unit, or other agency of higher education as defined by the Education
Code, §61.003.
(11)
Mediation--A non-adversarial approach to disputes that
seeks a collaboratively reached consensual solution to conflicts through the
assistance of a third-party neutral, who guides participants through a confidential
process designed to facilitate understanding of parties' real interests and
conscious exploration of alternative solutions.
(12)
Negotiation--A process whereby SBEC and the contractor
come together to discuss potential solutions to the dispute.
(13)
Party to the contract or Party--A contractor or SBEC;
a "neutral third party" refers to a mediator.
(14)
Representative--A person authorized to represent SBEC
or a contractor in matters arising under this subchapter.
(15)
SBEC--The State Board for Educator Certification.
(16)
SOAH--The State Office of Administrative Hearings.
§250.42.Dispute Resolution Process.
(a)
If any disputes arise relating to contracts between SBEC
and a contractor, the parties shall attempt to resolve those disputes first
by negotiation, by mediation if the parties are unable to resolve the disputes
through negotiation, and lastly by a contested hearing before SOAH if the
parties are unable to resolve the disputes by mediation.
(b)
A settlement agreement reached under this subchapter will
be final and binding on the parties. The settlement agreement shall be in
writing and signed by representatives of SBEC and the contractor with authority
to bind the parties.
(1)
The parties shall disclose their settlement approval procedures
to each other prior to negotiation or mediation.
(2)
If the settlement agreement does not resolve all issues
raised by the claim and counterclaim, the agreement shall identify the issues
that are not resolved. A partial settlement does not waive a contractor's
rights under Government Code, Chapter 2260, as to the parts of the claim that
are not resolved.
(3)
Any settlement to be paid by SBEC is subject to the availability
of funds appropriated to the agency.
(4)
The confidentiality of a final settlement agreement to
which SBEC is a signatory is governed by Government Code, Chapter 552, the
Texas Public Information Act.
(c)
The parties may act through their representatives in pursuing
resolution of a claim or counterclaim under this subchapter.
(1)
The parties shall select representatives who have knowledge
about the dispute and who are in a position to reach agreement or can credibly
recommend approval of an agreement, with the understanding that the agreement
may have to be approved by others with SBEC or the contractor or other state
officials, others with a company, corporation, or within the contracting entity.
(2)
Limitations on the settlement authority, if any, of a representative
participating in a negotiation or mediation shall be disclosed as soon as
possible by that individual to a representative of the other party.
(d)
The parties shall refrain from litigation during the resolution
process insofar as they can do so without prejudicing their legal rights.
§250.43.Required Contract Provisions.
(a)
Each contract that SBEC enters into to which these procedures
apply shall include as a term of the contract the following provisions:
(1)
Negotiation:
(A)
"Both parties agree they will first attempt to resolve
any disputes relating to this contract through negotiations pursuant to SBEC's
negotiation procedures relating to certain contract disputes."
(B)
"Both parties agree that SBEC shall file any agency counterclaim
in accordance with SBEC's above-referenced negotiation procedures."
(2)
Mediation: "Both parties agree that if they are unable
to resolve completely the dispute during negotiation, the parties shall invoke
SBEC's mediation procedures relating to certain contract disputes for the
portions of the claim that remain unresolved."
(3)
Contested case hearing: "Both parties agree that if any
unresolved issues remain following negotiation and mediation efforts, the
contractor shall request an administrative hearing in accordance with SBEC's
contested hearing procedures relating to certain contract disputes. The contractor's
failure to request such a hearing is a waiver of claim as to the unresolved
issues."
(b)
In each contract with SBEC, a contractor shall designate
a representative to receive papers delivered under this subchapter.
(c)
Even in the absence of a contractual provision to do so,
SBEC and the contractor may apply the procedures in this subchapter to resolve
a breach of contract claim if they agree in writing to do so, subject to the
limitations imposed by §250.40(c) of this title (relating to General).
§250.44.Damages.
(a)
The total amount of money recoverable on a claim for breach
of contract under these procedures may not, after deducting the amount specified
in subsection (b) of this section, exceed the balance due and owing on the
contract price, including orders for additional work, services, or goods.
(b)
Any amount owed to SBEC for work not performed or goods
not delivered under a contract or in substantial compliance with its terms
shall be deducted from the amount in subsection (a) of this section.
(c)
Any award of damages under these procedures may not include:
(1)
consequential or similar damages;
(2)
exemplary damages;
(3)
any damages based on an unjust enrichment theory;
(4)
attorney's fees; or
(5)
home office overhead.
§250.45.Notice of Claim or Counterclaim.
(a)
Notice of claim of breach of contract. To assert a breach
of contract claim against SBEC, a contractor must deliver notice of the claim
to SBEC in accordance with the provisions of this subsection or the claim
is waived. The notice of claim of breach of contract must:
(1)
be in writing;
(2)
state with particularity:
(A)
the name and address of the contractor and the contractor's
representative;
(B)
the nature of the alleged breach, including a detailed
description of each event that the contractor claims breached the contract,
the identity of any witnesses to the event, the date of each such event, and
the identity of each contract provision allegedly breached;
(C)
a description of damages that includes the amount and method
used to calculate those damages; and
(D)
the legal theory of recovery, i.e., breach of contract,
including the relationship between the alleged breach and the damages claimed;
and
(3)
be delivered to SBEC's executive director not later than
180 days after the date of the event that the contractor asserts as the basis
of the claim.
(b)
Notice of Counterclaim. SBEC may counterclaim in opposition
to or deduction from a contractor's claim of breach of a contract between
the contractor and SBEC. The notice of counterclaim under this subsection
must:
(1)
be in writing;
(2)
state with particularity:
(A)
the name and address of SBEC's representative;
(B)
the nature of the counterclaim;
(C)
a description of damages or offsets, including the amount
and method used to calculate those damages or offsets; and
(D)
the legal theory supporting the counterclaim; and
(3)
be delivered to the contractor no later than 90 days after
SBEC receives the contractor's notice of claim.
§250.46.Duty to Negotiate.
The parties shall negotiate in accordance with the timetable set forth
in §250.47 of this title (relating to Negotiation Timetable), to attempt
to resolve all claims and counterclaims filed under this chapter. No party
is obligated to settle with the other party as a result of the negotiation.
§250.47.Negotiation Timetable.
(a)
Following receipt of a contractor's notice of claim, SBEC
shall review the contractor's claim and the agency's counterclaim, if any,
and initiate negotiations with the contractor to attempt to resolve the claim
and counterclaim.
(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 SBEC receives the contractor's notice of claim.
(c)
SBEC 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 SBEC 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 applicable deadlines
set forth in subsection (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 SBEC 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 SBEC receives the contractor's
notice of claim. The agreement shall be signed by representatives of the parties
with authority to bind each respective party.
§250.48.Mediation.
(a)
Mediation timetable. SBEC and the contractor may agree
to mediate the dispute at any time before the 270th day after the date a claim
is filed under this subchapter or before the expiration of any extension agreed
to in writing by the parties to the contract.
(1)
SBEC and the contractor may mediate the dispute even after
the case has been referred to SOAH for a contested case hearing. SOAH may
also refer a contested case for mediation pursuant to its own rules and guidelines,
regardless of whether the parties have previously attempted mediation.
(2)
In setting the time period for the duration of the mediation,
SBEC and the contractor should allow enough time in which to make arrangements
with mediator and the attending representatives to schedule the mediation,
to attend and to participate in the mediation, and to complete any settlement
approval procedures necessary to achieve final settlement.
(b)
Conduct of mediation. Mediation is a consensual, confidential
process in which an impartial third person, the mediator, facilitates communication
between the parties to promote reconciliation, settlement, or understanding
among them. The mediation is nonbinding and subject to Government Code, Chapter
2009, the Governmental Dispute Resolution Act.
(c)
Qualifications, standards, and immunity of mediator. The
mediator must be acceptable to both parties, subject to the authority of SOAH
to appoint a mediator in a contested case referred to mediation. To qualify
as a mediator under this subchapter, a person must have completed a minimum
of 40 classroom hours of training in dispute resolution techniques in a course
conducted by a county alternative dispute resolution system created under
Civil Practice and Remedies Code, Chapter 152, or other dispute resolution
organization approved by SOAH.
(1)
The mediator shall be subject to the standards and duties
prescribed by Civil Practice and Remedies Code, §154.053, including the
following:
(A)
A mediator shall encourage and assist the parties in reaching
a settlement of their dispute but may not compel or coerce the parties to
enter into a settlement agreement.
(B)
Unless expressly authorized by the disclosing party, the
mediator may not disclose to either party information given in confidence
by the other and shall at all times maintain confidentiality with respect
to communications relating to the subject matter of the dispute.
(2)
SBEC and the contractor should decide whether, and to what
extent, knowledge and experience in mediation of the subject matter at issue
would be required or preferred of the mediator.
(3)
A volunteer mediator shall have, if applicable, the qualified
immunity prescribed by Civil Practice and Remedies Code, §154.055, which
provides that a person appointed to facilitate an alternative dispute resolution
procedure under this subchapter, or appointed by the parties whether before
or after the institution of formal judicial proceedings, who is a volunteer
and who does not act with wanton and willful disregard of the rights, safety,
or property of another, is immune from civil liability for any act or omission
within the course and scope of his or her duties or functions as mediator.
For purposes of this paragraph, a volunteer mediator is a person who does
not receive compensation in excess of reimbursement for expenses incurred
or a stipend intended as reimbursement for expenses incurred.
(d)
Source of Mediator. Subject to the requirements of subsection
(c) of this section, relating to qualifications, standards, and immunity of
mediator, SBEC and the contractor may obtain the services of a mediator through
an agreement with:
(1)
a governmental officer or employee or private individual
who is qualified as a mediator under this subsection;
(2)
SOAH;
(3)
the Center for Public Policy Dispute Resolution at the
University of Texas School of Law;
(4)
a county alternative dispute resolution system created
under Civil Practice and Remedies Code, Chapter 152; or
(5)
another state or federal agency or through a pooling agreement
among several governmental bodies.
(e)
Agreement to mediate. The mediation agreement shall be
in writing and executed by both parties to the contract. At a minimum, the
agreement must address the following factors:
(1)
the identity of the mediator;
(2)
the time period for the mediation;
(3)
the location of the mediation;
(4)
the allocation of costs of the mediator;
(5)
the identity of representatives who will attend the mediation
on behalf of the parties by name and position within SBEC or the contractor's
organization; and
(6)
the settlement approval process in the event the parties
reach agreement at the mediation.
(f)
Confidentiality of mediation. A mediation conducted under
this subchapter is confidential in accordance with §2009.054, Government
Code, relating to confidentiality of certain records and communications made
during alternative dispute resolution procedures. Unless the parties agree
otherwise, all matters, including the conduct and demeanor of the parties
and their counsel during the settlement process, are confidential and may
never be disclosed to anyone, including an appointing ALJ.
(g)
Each participant in the mediation, including the mediator,
is subject to the requirements of Family Code, Chapter 261, Subchapter B,
relating to reports of child abuse or neglect, and of Human Resources Code,
Chapter 48, Subchapter C, relating to reports of abuse, neglect, or exploitation
of elderly or disabled persons.
(h)
Any settlement agreement reached during a mediation shall
be signed by representatives of the contractor and the unit of state government,
and shall describe any procedures that the parties must follow to obtain final
and binding approval of the agreement.
(i)
Costs of mediation. Unless SBEC and the contractor agree
otherwise, the costs of the mediation process itself shall be divided equally
between the parties. Each party shall be 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.
§250.49.Referral to the State Office of Administrative Hearings.
(a)
If mediation does not resolve all disputed issues, the
contractor may request SBEC to refer the dispute to SOAH. On its own initiative,
with or without a request from the contractor, SBEC may refer the dispute
to SOAH. Before the dispute may be referred to SOAH for contested case proceedings,
SBEC or the contractor must determine that mediation has failed to resolve
the dispute in whole or in part and deliver written notification of such determination
to the other party.
(b)
The contractor's request under this section must be in
writing and received by SBEC within 30 days after SBEC or the contractor receives
written notification from the other party that mediation has failed to resolve
the dispute in whole or in part. The request must:
(1)
state the factual and legal basis for the claim or counterclaim;
and
(2)
request that the claim be referred to the State Office
of Administrative Hearings for a contested case hearing.
(c)
SBEC's notice of intent to refer the dispute to SOAH must
be in writing and received by the contractor within 30 days after SBEC or
the contractor receives written notification from the other party that mediation
has failed to resolve the dispute in whole or in part. The notice must:
(1)
state the factual and legal basis for the claim or counterclaim;
and
(2)
state that the matter is being referred to the State Office
of Administrative Hearings for a contested case hearing.
(d)
Within 20 days of receiving the contractor's request for
referral of the dispute to SOAH or of delivering to the contractor SBEC's
intent to refer the dispute to SOAH, SBEC shall deliver to SOAH a request
to docket the dispute for a contested case hearing. Proceedings before SOAH
shall be governed by the APA and applicable SOAH rules and procedures.
(e)
Subject to SOAH's rules, nothing in this subchapter prohibits
SBEC and the contractor from negotiating or mediating a resolution of their
dispute after the case has been referred for contested case hearing.
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 March 26, 2001.
TRD-200101756
Pamela B. Tackett
Executive Director
State Board for Educator Certification
Earliest possible date of adoption: May 6, 2001
For further information, please call: (512) 469-3011