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TITLE 37PUBLIC SAFETY AND CORRECTIONS
PART 6TEXAS DEPARTMENT OF CRIMINAL JUSTICE
CHAPTER 155REPORTS AND INFORMATION GATHERING
SUBCHAPTER CPROCEDURES FOR RESOLVING CONTRACT CLAIMS AND DISPUTES
RULE §155.31Establishing Procedures for Resolving Contract Claims and Disputes

(a) Purpose. This section is intended to serve as a guideline for the negotiation and mediation of a breach of contract claim asserted by a contractor against the Texas Department of Criminal Justice (TDCJ) under Texas Government Code Chapter 2260. This section is binding upon the TDCJ and is not intended to replace the TDCJ procedures relating to a breach of contract claim that is mandated by state or federal law, but is intended to provide procedures when none are so mandated.

(b) Policy. It is the policy of the Texas Board of Criminal Justice (TBCJ) and the TDCJ to resolve a breach of contract claim as efficiently and as expeditiously as possible, consistent with prudent stewardship of the state of Texas assets.

(c) Applicability. This section does not apply to an action of a unit of state government for which a contractor is entitled to a specific remedy pursuant to state or federal constitution or statute.

  (1) This section does not apply to a contract action proposed or taken by a unit of state government for which a contractor receiving Medicaid funds under that contract is entitled by state statute or rule to a hearing conducted in accordance with Texas Government Code Chapter 2001.

  (2) This section does not apply to contracts:

    (A) between a unit of state government and the federal government or its agencies, another state, or another nation;

    (B) between two or more units of state government;

    (C) between a unit of state government and a local governmental body, or a political subdivision of another state;

    (D) between a subcontractor and a contractor;

    (E) subject to Texas Transportation Code §201.112;

    (F) within the exclusive jurisdiction of state or local regulatory bodies;

    (G) within the exclusive jurisdiction of federal courts or regulatory bodies; or

    (H) that are solely and entirely funded by federal grant monies other than for a project defined in subsection (d)(9) of this section.

(d) Definitions. The following words and terms, when used in this section, shall have the following meaning, unless the context clearly indicates otherwise.

  (1) Claim is a demand for damages by the contractor based upon the TDCJ's alleged breach of the contract.

  (2) Contract is a written contract between the TDCJ 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 TDCJ; or

    (B) to perform a project as defined by Texas Government Code §2166.001.

  (3) Contractor is an independent contractor who has entered into a contract directly with the TDCJ. The term does not include:

    (A) the contractor's subcontractor, officer, employee, agent, or other person who furnishes 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.

  (4) Counterclaim is a demand by the TDCJ arising out of the contract.

  (5) Day is a calendar day. If an act is required to occur on a date that falls on a Saturday, Sunday, or holiday, the first working day that follows shall be counted as the required day for purpose of that act.

  (6) Event is 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 TDCJ to timely pay for goods and services;

      (ii) the failure of the TDCJ to pay the balance due and owing on the contract price, including orders for additional work, after deducting any amount owed the TDCJ 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) the final rejection of the goods or services tendered by the contractor, in whole or in part;

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

      (vi) the 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;

      (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) the suspension, cancellation, or termination of the contract;

      (vii) the rejection by the TDCJ, in whole or in part, of the "work," as defined by the contract, tendered by the contractor;

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

      (ix) the withholding liquidated damages from final payment to the contractor; or

      (x) the 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.

  (7) Executive Director is the chief administrative officer responsible for the day-to-day operations of the TDCJ.

  (8) Parties means the TDCJ and the contractor who have entered into a contract in connection with which a breach of contract claim has been filed under this section.

  (9) Project as defined in Texas Government Code §2166.001, is 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.

  (10) Services means the furnishing of skilled or unskilled labor or consulting or professional work, or a combination thereof, excluding the labor of an employee of a unit of state government.

(e) Prerequisites to Suit. The procedures contained in this section are exclusive and required prerequisites to suit under Texas Civil Practice & Remedies Code Chapter 107 and Texas Government Code Chapter 2260.

(f) Notice of Breach of Contract Claim.

  (1) A contractor, asserting a breach of contract claim under Texas Government Code Chapter 2260 shall file notice of the claim as provided by this subsection.

  (2) The notice of claim shall:

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

    (B) be delivered by hand, certified mail return receipt requested, or other verifiable delivery service, to the TDCJ Director of Contracts and Procurement, Two Financial Plaza, Suite 474, Huntsville, Texas 77340; and

    (C) state in detail:

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

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

      (iii) the legal theory of recovery, such as breach of contract, including the causal relationship between the alleged breach and the damages claimed.

  (3) In addition to the mandatory contents of the notice of claim as required by paragraph (2) of this subsection, the contractor may submit supporting documentation or other tangible evidence to facilitate the TDCJ's evaluation of the contractor's claim.

  (4) 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.

(g) Agency Counterclaim.

  (1) The TDCJ, asserting a counterclaim under Texas Government Code Chapter 2260, shall file notice of the counterclaim as provided by this subsection.

  (2) The notice of counterclaim shall:

    (A) be in writing;

    (B) 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 breach of contract claim; and

    (C) state in detail:

      (i) the nature of the counterclaim;

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

      (iii) the legal theory supporting the counterclaim.

  (3) In addition to the mandatory contents of the notice of counterclaim required by paragraph (2) of this subsection, the TDCJ may submit supporting documentation or other tangible evidence to facilitate the contractor's evaluation of the TDCJ's counterclaim.

  (4) The notice of counterclaim shall be delivered to the contractor no later than 60 days after the TDCJ's receipt of the contractor's notice of claim.

  (5) Nothing herein precludes the TDCJ from initiating a lawsuit for damages against the contractor in a court of competent jurisdiction.

(h) Contract Disputes.

  (1) To every extent possible, a dispute with a contractor should be resolved during the course of the contract. However, after completion of a contract, or when required for orderly performance prior to completion, if a resolution of a contractor's dispute has not been reached by the appropriate TDCJ division, the contractor should file a Notice of Breach of Contract Claim with the director of Contracts and Procurement per the requirements in subsection (f) of this section.

  (2) The executive director shall name the members and chairman of a Contract Dispute Committee (the committee), which will serve at the executive director's request. It shall be the responsibility of the committee to gather information, study relevant facts and documentation, meet with contractors and, if requested, to resolve any disputes between a TDCJ division and the contractor, as set forth by the claim.

  (3) The committee shall secure detailed reports and recommendations from the appropriate TDCJ division and may confer with TDCJ personnel, other persons, and outside entities that it deems appropriate.

  (4) The committee shall then afford the contractor an opportunity for a meeting or hearing to discuss the claim and to provide the contractor an opportunity to present additional relevant information and respond to information the committee has received from the appropriate TDCJ division.

  (5) The committee chairman shall give written notice of the committee's proposed disposition of the claim to the contractor and the appropriate TDCJ division. If that disposition is acceptable, the contractor shall advise the committee chairman in writing within 20 days of the date such notice is received, and the committee chairman shall forward the agreed disposition to the executive director for a final and binding order on the claim. If the contractor or TDCJ division is dissatisfied with the proposal of the committee, either party may appeal to the executive director.

(i) Appeal to the Executive Director.

  (1) An aggrieved contractor or TDCJ division may file a written appeal of the committee's decision to the executive director within 20 days of the receipt of the committee's decision. The contractor's appeal shall be submitted in writing and signed by the contractor or the contractor's authorized representative and delivered by hand, certified mail return receipt requested, or other verifiable delivery service to the TDCJ Executive Director, P.O. Box 99, Huntsville, Texas 77342. The TDCJ division's appeal shall be in writing and signed by the appropriate division director. The executive director or designee may uphold, reverse, or modify the decision of the committee.

  (2) The executive director or designee shall give written notice of the disposition of the claim to the contractor and the appropriate TDCJ division. If that disposition is acceptable to the contractor, the contractor shall advise the executive director, in writing, within 20 days of the date such notice is received. The TDCJ division shall have no right to object to the disposition of the claim or dispute made by the executive director or designee.

Cont'd...

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