THE TEXAS CONTRACT DISPUTES PROCESS: CONTESTED CASE PROCEDURES

1. THE INITIAL LEGISLATION
• WHO MAY AVAIL THEMSELVES TO THIS CHAPTER
• WHO IS EXCLUDED FROM THIS CHAPTER
• NEGOTIATION PROCEDURE
• CONTESTED CASE HEARING
• WHEN WILL THIS PROCEDURE APPLY?

Abstract

The 1999 Texas Legislature enacted a procedure that is designed to process contractor claims against state agencies arising from state contracts, including construction contracts but excluding Department of Transportation contracts. The legislature acted following a series of court decisions, both in the Texas Supreme Court and in various Courts of Appeals, that threatened the state's long-standing reliance on the doctrine of sovereign immunity to protect itself from contract claims. Immediately after the legislature acted, the Austin Courts of Appeals reached similar determinations in four cases, permitting contractors that had completed their performance but not been paid in full to litigate against state agencies. Prior to the enactment of this legislation, and subject to these cases, a contractor with a contract or breach of contract claim had two alternatives: it could file suit in District Court and battle the state's claim the it is immune from suit or it could petition the legislature for permission to sue the state. Neither option typically afforded the aggrieved claimant much relief. Since 1999, the Supreme Court decided the cases of Texas Department of Transportation v. Aer-Aerotron, Inc., 39 S.W.3d 220 (Tex. 2001) and General Services Commission v. Little-Tex Insulation Company, Inc., 39 S.W.3d 591 (Tex. 2001). These cases make clear that an aggrieved contractor's only remedy lies in the contested case proceeding.

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