CHAPTER 2260. RESOLUTION OF CERTAIN CONTRACT CLAIMS AGAINST THE STATE
GOVERNMENT CODE
TITLE 10. GENERAL GOVERNMENT
SUBTITLE F. STATE AND LOCAL CONTRACTS AND FUND MANAGEMENT
CHAPTER 2260. RESOLUTION OF CERTAIN CONTRACT CLAIMS AGAINST THE
STATE
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 2260.001. DEFINITIONS. In this chapter:
(1) "Contract" means a written contract between a unit of state
government and a contractor for goods or services, or for a
project as defined by Section 2166.001. The term does not include
a contract subject to Section 201.112, Transportation Code.
(2) "Contractor" means an independent contractor who has entered
into a contract directly with a unit of state government. 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 a unit of state government; or
(C) a student at an institution of higher education.
(3) "Institution of higher education" has the meaning assigned
by Section 61.003, Education Code.
(4) "Unit of state government" means the state or an agency,
department, commission, bureau, board, office, council, court, or
other entity that is in any branch of state government and that
is created by the constitution or a statute of this state,
including a university system or institution of higher education.
The term does not include a county, municipality, court of a
county or municipality, special purpose district, or other
political subdivision of this state.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.002. APPLICABILITY. This chapter does not apply to:
(1) a claim for personal injury or wrongful death arising from
the breach of a contract; or
(2) a contract executed or awarded on or before August 30, 1999.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999. Amended by Acts 2001, 77th Leg., ch. 1422, Sec. 14.07, eff.
Sept. 1, 2001.
Sec. 2260.003. DAMAGES. (a) The total amount of money
recoverable on a claim for breach of contract under this chapter
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;
(2) the amount or fair market value of orders or requests for
additional work made by a unit of state government to the extent
that the orders or requests for additional work were actually
performed; and
(3) any delay or labor-related expense incurred by the
contractor as a result of an action of or a failure to act by the
unit of state government or a party acting under the supervision
or control of the unit of state government.
(b) Any amount owed the unit of state government for work not
performed under a contract or in substantial compliance with its
terms shall be deducted from the amount in Subsection (a).
(c) Any award of damages under this chapter may not include:
(1) consequential or similar damages, except delays or
labor-related expenses described by Subsection (a)(3);
(2) exemplary damages;
(3) any damages based on an unjust enrichment theory;
(4) attorney's fees; or
(5) home office overhead.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999. Amended by Acts 2001, 77th Leg., ch. 1272, Sec. 8.01, eff.
June 15, 2001; Acts 2001, 77th Leg., ch. 1422, Sec. 14.08, eff.
Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 1, eff. September 1, 2005.
Sec. 2260.004. REQUIRED CONTRACT PROVISION. (a) Each unit of
state government that enters into a contract to which this
chapter applies shall include as a term of the contract a
provision stating that the dispute resolution process used by the
unit of state government under this chapter must be used to
attempt to resolve a dispute arising under the contract.
(b) The attorney general shall provide assistance to a unit of
state government in developing the contract provision required by
this section.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.005. EXCLUSIVE PROCEDURE. Subject to Section
2260.007, the procedures contained in this chapter are exclusive
and required prerequisites to suit in accordance with Chapter
107, Civil Practice and Remedies Code. This chapter does not
prevent a contractor sued by a unit of state government from
asserting a counterclaim or right of offset against the unit of
state government in the court in which the unit of state
government files the suit.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999. Amended by Acts 2001, 77th Leg., ch. 1158, Sec. 72, eff.
June 15, 2001; Acts 2001, 77th Leg., ch. 1272, Sec. 8.02, eff.
June 15, 2001; Acts 2001, 77th Leg., ch. 1422, Sec. 14.09, eff.
Sept. 1, 2001.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 2, eff. September 1, 2005.
Sec. 2260.006. SOVEREIGN IMMUNITY. This chapter does not waive
sovereign immunity to suit or liability.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.007. LEGISLATIVE AUTHORITY RETAINED; INTERPRETATION OF
CHAPTER. (a) Notwithstanding Section 2260.005, the legislature
retains the authority to deny or grant a waiver of immunity to
suit against a unit of state government by statute, resolution,
or any other means the legislature may determine appropriate.
(b) This chapter does not and may not be interpreted to:
(1) divest the legislature of the authority to grant permission
to sue a unit of state government on the terms, conditions, and
procedures that the legislature may specify in the measure
granting the permission;
(2) require that the legislature, in granting or denying
permission to sue a unit of state government, comply with this
chapter; or
(3) limit in any way the effect of a legislative grant of
permission to sue a unit of state government unless the grant
itself provides that this chapter may have that effect.
Added by Acts 2001, 77th Leg., ch. 1158, Sec. 73, eff. June 15,
2001; Acts 2001, 77th Leg., ch. 1272, Sec. 8.03, eff. June 15,
2001; Acts 2001, 77th Leg., ch. 1422, Sec. 14.10, eff. Sept. 1,
2001. Amended by Acts 2003, 78th Leg., ch. 1276, Sec. 9.021, eff.
Sept. 1, 2003.
SUBCHAPTER B. NEGOTIATION OF CLAIM
Sec. 2260.051. CLAIM FOR BREACH OF CONTRACT; NOTICE. (a) A
contractor may make a claim against a unit of state government
for breach of a contract between the unit of state government and
the contractor. The unit of state government may assert a
counterclaim against the contractor.
(b) A contractor must provide written notice to the unit of
state government of a claim for breach of contract not later than
the 180th day after the date of the event giving rise to the
claim.
(c) The notice must state with particularity:
(1) the nature of the alleged breach;
(2) the amount the contractor seeks as damages; and
(3) the legal theory of recovery.
(d) A unit of state government must assert, in a writing
delivered to the contractor, any counterclaim not later than the
60th day after the date of notice under Subsection (b). A unit
of state government that does not comply with this subsection
waives the right to assert the counterclaim.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 3, eff. September 1, 2005.
Sec. 2260.052. NEGOTIATION. (a) The chief administrative
officer or, if designated in the contract, another officer of the
unit of state government shall examine the claim and any
counterclaim and negotiate with the contractor in an effort to
resolve them. The negotiation must begin not later than the
120th day after the date the claim is received.
(b) Repealed by Acts 2005, 79th Leg., Ch. 988, Sec. 8, eff.
September 1, 2005.
(c) Each unit of state government with rulemaking authority
shall develop rules to govern the negotiation and mediation of a
claim under this section. If a unit of state government does not
have rulemaking authority, that unit shall follow the rules
adopted by the attorney general. A model rule for negotiation and
mediation under this chapter shall be provided for voluntary
adoption by units of state government through the coordinated
efforts of the State Office of Administrative Hearings and the
office of the attorney general.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 4, eff. September 1, 2005.
Acts 2005, 79th Leg., Ch.
988, Sec. 8, eff. September 1, 2005.
Sec. 2260.053. PARTIAL RESOLUTION OF CLAIM. (a) If the
negotiation under Section 2260.052 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 not resolved.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.054. PAYMENT OF CLAIM FROM APPROPRIATED FUNDS. A unit
of state government may pay a claim resolved in accordance with
this subchapter only from money appropriated to it for payment of
contract claims or for payment of the contract that is the
subject of the claim. If money previously appropriated for
payment of contract claims or payment of the contract is
insufficient to pay the claim or settlement, the balance of the
claim may be paid only from money appropriated by the legislature
for payment of the claim.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.055. INCOMPLETE RESOLUTION. If a claim is not
entirely resolved under Section 2260.052 on or before the 270th
day after the date the claim is filed with the unit of state
government, unless the parties agree in writing to an extension
of time, the contractor may file a request for a hearing under
Subchapter C.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.056. MEDIATION. (a) Before the 120th day after the
date the claim is filed with the unit of state government and
before the expiration of any extension of time under Section
2260.055, the parties may agree to mediate a claim made under
this chapter.
(b) The mediation shall be conducted in accordance with rules
adopted under Section 2260.052(c).
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 5, eff. September 1, 2005.
SUBCHAPTER C. CONTESTED CASE HEARING
Sec. 2260.101. DEFINITION. In this subchapter, "office" means
the State Office of Administrative Hearings.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.102. REQUEST FOR HEARING. (a) If a contractor is not
satisfied with the results of negotiation with a unit of state
government under Section 2260.052, the contractor may file a
request for a hearing with the unit of state government.
(b) The request must:
(1) state the factual and legal basis for the claim; and
(2) request that the claim be referred to the State Office of
Administrative Hearings for a contested case hearing.
(c) On receipt of a request under Subsection (a), the unit of
state government shall refer the claim to the State Office of
Administrative Hearings for a contested case hearing under
Chapter 2001, Government Code, as to the issues raised in the
request.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.103. HEARING FEE. (a) The chief administrative law
judge of the office may set a fee for a hearing before the office
under this subchapter.
(b) The chief administrative law judge of the office shall set
the fee in an amount that:
(1) is not less than $250; and
(2) allows the office to recover all or a substantial part of
its costs in holding hearings.
(c) The chief administrative law judge of the office by rule may
establish a graduated fee scale, increasing the fee in relation
to the amount in controversy.
(d) The office may:
(1) assess the fee against the party who does not prevail in the
hearing; or
(2) apportion the fee against the parties in an equitable
manner.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.104. HEARING. (a) An administrative law judge of the
office shall conduct a hearing in accordance with the procedures
adopted by the chief administrative law judge of the office.
(b) Within a reasonable time after the conclusion of the
hearing, the administrative law judge shall issue a written
decision containing the administrative law judge's findings and
recommendations.
(c) The administrative law judge shall base the decision on the
pleadings filed with the office and the evidence received.
(d) The decision must include:
(1) the findings of fact and conclusions of law on which the
administrative law judge's decision is based; and
(2) a summary of the evidence.
(e) In a contested case hearing under this subchapter:
(1) the decision may not be appealed except for abuse of
discretion; and
(2) the state agency may not change the finding of fact or
conclusion of law, nor vacate or modify an order as provided in
Section 2001.058(e).
(f) Subchapter G, Chapter 2001, does not apply to a hearing
under this section.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 6, eff. September 1, 2005.
Sec. 2260.105. PAYMENT OF CLAIM. (a) The unit of state
government shall pay the amount of the claim or part of the claim
if:
(1) the administrative law judge finds, by a preponderance of
the evidence, that under the laws of this state the claim or part
of the claim is valid; and
(2) the total amount of damages, after taking into account any
counterclaim, is less than $250,000.
(a-1) The unit of state government shall pay that part of the
claim that is less than $250,000 if:
(1) the administrative law judge finds, by a preponderance of
the evidence, that under the laws of this state the claim or part
of the claim is valid; and
(2) the total amount of the damages, after taking into account
any counterclaim, equals or exceeds $250,000.
(b) A unit of state government shall pay a claim under this
subchapter from money appropriated to it for payment of contract
claims or for payment of the contract that is the subject of the
claim. If money previously appropriated for payment of contract
claims or payment of the contract is insufficient to pay the
claim, the balance of the claim may be paid only from money
appropriated by the legislature for payment of the claim.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Amended by:
Acts 2005, 79th Leg., Ch.
988, Sec. 7, eff. September 1, 2005.
Sec. 2260.1055. REPORT AND RECOMMENDATION TO LEGISLATURE. (a)
If, after a hearing, the administrative law judge determines that
a claim involves damages of $250,000 or more, the administrative
law judge shall issue a written report containing the
administrative law judge's findings and recommendations to the
legislature.
(b) The administrative law judge may recommend that the
legislature:
(1) appropriate money to pay the claim or part of the claim if
the administrative law judge finds, by a preponderance of the
evidence, that under the laws of this state the claim or part of
the claim is valid; or
(2) not appropriate money to pay the claim and that consent to
suit under Chapter 107, Civil Practice and Remedies Code, be
denied.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.106. PREJUDGMENT INTEREST. Chapter 304, Finance Code,
applies to a judgment awarded to a claimant under this chapter,
except that the applicable rate of interest may not exceed six
percent.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.107. EXECUTION ON STATE PROPERTY NOT AUTHORIZED. This
chapter does not authorize execution on property owned by the
state or a unit of state government.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.
Sec. 2260.108. DEFENSE BY ATTORNEY GENERAL. (a) The attorney
general shall defend a unit of state government in a contested
case hearing covered by this chapter.
(b) The attorney general may settle or compromise the portion of
a claim that may result in state liability under this chapter.
Added by Acts 1999, 76th Leg., ch. 1352, Sec. 9, eff. Aug. 30,
1999.