TITLE 43. TRANSPORTATION

PART 1. TEXAS DEPARTMENT OF TRANSPORTATION

CHAPTER 9. CONTRACT AND GRANT MANAGEMENT

SUBCHAPTER A. GENERAL

The Texas Department of Transportation (department) proposes the repeal of §9.4, a new §9.4, and amendments to §§9.2, 9.6, and 9.8, concerning procedures generally applicable to contract and grant management.

EXPLANATION OF PROPOSED AMENDMENTS, REPEAL, AND NEW SECTIONS

This rulemaking provides a new dispute resolution process for the department's design-build projects that are entered into under Transportation Code, Chapter 223, Subchapter F.

Amendments to §9.2, Contract Claim Procedure, provide that a claim concerning a design-build contract authorized by Subchapter F, Chapter 223 of the Transportation Code will be processed under the design-build claim process proposed in new TAC §9.4.

Section 9.4, Civil Rights-Title VI Compliance, is repealed. The substance of §9.4 is combined with and added to §9.8, Enhanced Contract and Performance Monitoring, in order to make a section within Chapter 9, Subchapter A, available for the new rule.

New §9.4, Design-Build Contract Claim Procedure, provides a new procedure for the processing and resolution of a claim under Transportation Code, §201.112, that arises under certain design-build contracts. Under the procedure the claim must be brought by a design-build contractor for a remedy under a design-build contract entered into under Transportation Code, Chapter 223, Subchapter F and administered by the department.

Subsection (f) of the new section details the new procedure. The procedure permits a design-build contractor, after completing the informal dispute resolution process, to file a contract claim request to be evaluated by the executive director. Subsection (f)(2) provides the requirements of a complete contract claim request, the process for filing the contract claim request, and the actions to be taken by the department after receipt of the contract claim request. Subsection (f)(3) sets out the executive director's responsibilities in evaluating and resolving a contract claim request. Subsection (f)(3) further provides the steps to be taken after the executive director gives a written decision on the contract claim request and provides a process for the design builder, if it objects to the executive director's decision on the contract claim, to request a contested case hearing to litigate the contract claim request. Subsection (f)(4) addresses the executive director's responsibilities if a contested case hearing is held. Subsection (f)(6) provides that if there is clear and convincing evidence that a person practiced, or attempted, fraud related to a claim, the claim is forfeited.

Amendments to §9.6, Contract Claim Procedure for Comprehensive Development Agreements and Certain Design-Build Contracts, clarify that §9.6 applies only to a design-build contract that is entered into under Transportation Code, Chapter 223, Subchapter E, and only if such a contract is for a specified amount. The amendments to §9.6 do not change the procedure currently applicable to those contracts.

Amendments to §9.8, Enhanced Contract and Performance Monitoring, add to that section the substance of §9.4, Design-Build Contract Claim Procedure, which is repealed by this rulemaking. The heading of §9.8 is conformed to reflect that addition.

FISCAL NOTE

Stephen Stewart, Chief Financial Officer, has determined, in accordance with Government Code, §2001.024(a)(4), that for each of the first five years in which the proposed rules are in effect, there will be no fiscal implications for state or local governments as a result of the department's or Texas Transportation Commission's (commission) enforcing or administering the proposed rules.

LOCAL EMPLOYMENT IMPACT STATEMENT

Greg Snider, Alternative Delivery Division Director, has determined that there will be no significant impact on local economies or overall employment as a result of enforcing or administering the proposed rules and therefore, a local employment impact statement is not required under Government Code, §2001.022.

PUBLIC BENEFIT

Greg Snider has determined, as required by Government Code, §2001.024(a)(5), that for each year of the first five years in which the proposed rules are in effect, the public benefit anticipated as a result of enforcing or administering the rules will be an improved alignment of the design-build informal and formal dispute resolution procedures resulting in a streamlined and expedited dispute resolution process for design-build projects.

COSTS ON REGULATED PERSONS

Greg Snider has also determined, as required by Government Code, §2001.024(a)(5), that for each year of that period there are no anticipated economic costs for persons, including a state agency, special district, or local government, required to comply with the proposed rules and therefore, Government Code, §2001.0045, does not apply to this rulemaking.

ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities, as defined by Government Code, §2006.001, and therefore, an economic impact statement and regulatory flexibility analysis are not required under Government Code, §2006.002.

GOVERNMENT GROWTH IMPACT STATEMENT

Greg Snider has considered the requirements of Government Code, §2001.0221 and anticipates that the proposed rules will have no effect on government growth. He expects that during the first five years that the rule would be in effect:

(1) it would not create or eliminate a government program;

(2) its implementation would not require the creation of new employee positions or the elimination of existing employee positions;

(3) its implementation would not require an increase or decrease in future legislative appropriations to the agency;

(4) it would not require an increase or decrease in fees paid to the agency;

(5) it would not create a new regulation;

(6) it would not expand, limit, or repeal an existing regulation;

(7) it would not increase or decrease the number of individuals subject to its applicability; and

(8) it would not positively or adversely affect this state's economy.

TAKINGS IMPACT ASSESSMENT

Greg Snider has determined that a written takings impact assessment is not required under Government Code, §2007.043.

SUBMITTAL OF COMMENTS

Any person that is required to comply with the proposed rule or any other interested person may provide information related to the cost, benefit, or effect of the proposed rule, including any applicable data, research, or analysis, or may submit written comments on the repeal of §9.4, the adoption of new §9.4, and the amendments to §§9.2, 9.6, and 9.8. The information or comments must be submitted to Rule Comments, General Counsel Division, Texas Department of Transportation, 125 East 11th Street, Austin, Texas 78701-2483 or to RuleComments@txdot.gov with the subject line "DB Dispute Resolution." The deadline for receipt of comments is 5:00 p.m. on February 2, 2026. In accordance with Transportation Code, §201.811(a)(5), a person who submits comments must disclose, in writing with the comments, whether the person does business with the department, may benefit monetarily from the proposed amendments, or is an employee of the department.

43 TAC §§9.2, 9.4, 9.6, 9.8

STATUTORY AUTHORITY

The new rule and amendments are proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING

Transportation Code, Chapter 223, Subchapters E and F.

§9.2. Contract Claim Procedure.

(a) Applicability. A claim shall satisfy the requirements in paragraphs (1) - (3) of this subsection.

(1) The claim is under a contract entered into and administered by the department, acting in its own capacity or as an agent of a local government, under one of the following statutes:

(A) Transportation Code, §22.018 (concerning the designation of the department as agent in contracting and supervising for aviation projects);

(B) Transportation Code, §391.091 (concerning erection and maintenance of specific information logo, major area shopping guide, and major agricultural interest signs);

(C) Transportation Code, Chapter 223 (concerning bids and contracts for highway projects), subject to the provisions of subsection (c) of this section; or

(D) Government Code, Chapter 2254, Subchapters A and B (concerning professional or consulting services).

(2) The claim is for compensation, or for a time extension, or any other remedy.

(3) The claim is brought by a prime contractor.

(b) Pass-through claim; claim and counter claim.

(1) A prime contractor may make a claim on behalf of a subcontractor only if the prime contractor is liable to the subcontractor on the claim.

(2) Only a prime contractor may submit a claim to begin a claim proceeding under this section. After a claim proceeding has begun the department may make a counter claim.

(3) This section does not abrogate the department's authority to file a claim in a court of competent jurisdiction. The procedure for the department to file a claim in a court of competent jurisdiction, including the deadline to file a claim, is set by other law.

(c) Claim concerning comprehensive development agreement or [~~certain~~] design-build contracts. A claim under a comprehensive development agreement (CDA) [~~entered into under Transportation Code, Chapter 223, Subchapter E,~~] or under a design-build to which [~~contract, as defined in~~] §9.6 of this subchapter (relating to Contract Claim Procedure for Comprehensive Development Agreements and Certain Design-Build Contracts) applies, may be processed under this section if the parties agree to do so in the CDA or design-build contract, or if the CDA or design-build contract does not specify otherwise. However, if the CDA or such a design-build contract specifies that a claim procedure authorized by §9.6 of this subchapter applies, then any claim arising under the CDA[,] or design-build contract shall be processed and resolved in accordance with the claim procedure authorized by §9.6 of this subchapter and not by this section. This section does not apply to a claim under a design-build contract to which §9.4 of this subchapter (relating to Design-Build Contract Claim Procedure) applies. Such a claim may be processed only under §9.4 of this subchapter.

(d) Definitions. The following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise[, except that when used in subsection (c) of this section, the terms claim, comprehensive development agreement, CDA, and design-build contract shall have the meanings given such terms stated in §9.6 of this subchapter].

(1) Claim--A claim for compensation, for a time extension, or for any other remedy arising from a dispute, disagreement, or controversy concerning respective rights and obligations under the contract.

(2) Commission--The Texas Transportation Commission.

(3) Committee--The Contract Claim Committee.

(4) Department--The Texas Department of Transportation.

(5) Department office--The department district or[,] division that is[~~, or office~~] responsible for the administration of the contract.

(6) Department office director--The chief administrative officer of the responsible department office; the officer shall be a district engineer or[,] division director[~~, or office director~~].

(7) District--One of the 25 districts of the department.

(8) Executive director--The executive director of the Texas Department of Transportation.

(9) Prime contractor--An individual, partnership, corporation, or other business entity that is a party to a written contract with the state of Texas which is entered into and administered by the department under Transportation Code, §22.018, §391.091, Chapter 223, or Government Code, Chapter 2254, Subchapters A and B.

(10) Project--The portion of a contract that can be separated into a distinct facility or work unit from the other work in the contract.

(e) Contract claim committee. The executive director or the director's designee shall name the members and chair of a committee or committees to serve at the executive director's or designee's pleasure. The chair may add members to the committee, including one or more district engineers who will be assigned to the committee on a rotating basis, with a preference, if possible, for district engineers of districts that do not have a current contractual relationship with the prime contractor involved in a contract claim.

(f) Negotiated resolution. To every extent possible, disputes between a prime contractor and the department's project engineer should be resolved during the course of the contract.

(g) Procedure.

(1) Exclusive procedure. Except as provided in subsection (c) of this section, a prime contractor shall file a claim under the procedure in this subsection. A claim filed by the prime contractor must be considered first by the committee before the claim is considered in a contested case hearing.

(2) Filing claim.

(A) The prime contractor shall file a claim after completion of the contract or when required for orderly performance of the contract. For a claim resulting from the enforcement of a warranty, a prime contractor shall file the claim no later than one year after expiration of the warranty period. For all other types of claims, a prime contractor shall file the claim no later than one year after the earlier of the date that the department sends to the contractor notice:

(i) that the contractor is in default;

(ii) that the department terminates the contract; or

(iii) notice of final acceptance of the project that is the subject of the contract.

(B) To file a claim, a prime contractor shall file a contract claim request and a detailed report that provides the basis for the claim. The detailed report shall include relevant facts of the claim, cost or other data supporting the claim, a description of any additional compensation requested, and documents supporting the claim. For a request for additional compensation, the prime contractor may not use a method, however denominated, by which the amount requested is determined by subtracting the contractor's bid prices from the contractor's actual performance costs. The prime contractor shall file the claim with the department's construction division, the department engineer under whose administration the contract was or is being performed, or the committee.

(C) A claim filed by a prime contractor shall include a certification as follows: I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the contractor believes the department is liable; and that I am duly authorized to certify the claim on behalf of the contractor.

(D) A defective certification shall not deprive the department of jurisdiction over the claim. Prior to the entry by the department of a final decision on the claim the department shall require a defective certification to be corrected.

(E) The construction division or department engineer shall forward the contract claim request and detailed report to the committee.

(F) The deadline for the department to file a counter claim is 45 days before the committee holds an informal meeting under paragraph (3) of this subsection.

(3) Evaluation of claim by the committee.

(A) The committee's responsibility is to gather information, study the relevant issues, and meet informally with the prime contractor if requested. The committee shall attempt to resolve the claim.

(B) The committee shall secure detailed reports and recommendations from the responsible department office and may confer with any other department office deemed appropriate by the committee. The committee shall give the prime contractor the opportunity to submit a responsive report and recommendation concerning a counter claim filed by the department.

(C) If the department disputes the prime contractor's claim, the committee shall afford the prime contractor an opportunity for a meeting to informally discuss the disputed matters and to provide the prime contractor an opportunity to present relevant information and respond to information the committee has received from the department office. The committee chair, in the chair's sole discretion, may reschedule a meeting. Proceedings before the committee are an attempt to mutually resolve a claim without litigation and are not admissible for any purpose in a formal administrative hearing provided in subparagraph (D)(ii) of this paragraph. All oral communications, reports, or other written documentation prepared by department staff in connection with the analysis of a claim are part of the attempt to mutually resolve a claim without litigation and are also not admissible for any purpose in a formal administrative hearing provided in subparagraph (D)(ii) of this paragraph.

(D) The committee chair shall give written notice of the committee's decision on the claim to the department and prime contractor. The department and prime contractor are presumed to receive the decision three days after it is sent by United States mail.

(i) If the prime contractor does not object to the committee's decision, the prime contractor shall file a written statement with the committee's chair stating that the prime contractor does not object. The prime contractor shall file the statement no later than 20 days after receipt of the committee's decision. The chair shall then prepare a document showing the settlement of the claim including, when required, payment to the prime contractor, and the prime contractor's release of all claims under the contract. The prime contractor shall sign it. The executive director may approve the settlement or may request the commission to approve the settlement by issuance of an order. The executive director shall then implement the resolution of the claim. If contemplated in the committee's decision, the executive director shall expend funds as specified in the decision. If contemplated in the committee's decision, the executive director shall order the prime contractor to make payment to the department.

(ii) If the prime contractor objects to the committee's decision the prime contractor shall file a petition with the executive director no later than 20 days after receipt of the committee's decision requesting an administrative hearing to litigate the claim under the provisions of §§1.21 et seq. of this title (relating to Procedures in Contested Cases).

(iii) If the prime contractor fails to file a written petition under clause (ii) of this subparagraph within 20 days of receipt of the committee's decision, the prime contractor waives his right to a contested case hearing. All further litigation of claims on the project or contract by the prime contractor shall be barred by the doctrines of issue and claim preclusion. The chair shall then prepare an order implementing the resolution of the claim under the committee's decision and stating that further litigation on the claim is prohibited. The executive director shall then issue the order and implement the resolution of the claim. If contemplated in the committee's decision, the executive director shall expend funds as specified in the decision. If contemplated in the committee's decision, the executive director shall order the prime contractor to make payment to the department.

(4) Decision after contested case hearing. This paragraph applies if a contested case hearing has been held on a claim. The administrative law judge's proposal for decision shall be submitted to the executive director for adoption. The executive director may change a finding of fact or conclusion of law made by the administrative law judge or may vacate or modify an order issued by the administrative law judge. The executive director shall provide a written statement containing the reason and legal basis for any change.

(5) This section does not abrogate the department's authority to enforce in a court of competent jurisdiction a final department order issued under the section.

(h) Claim forfeiture. A claim against the department shall be forfeited to the department by any person who corruptly practices or attempts to practice any fraud against the department in the proof, statement, establishment, or allowance thereof. In such cases the department shall specifically find such fraud or attempt and render judgment of forfeiture. This subsection applies only if there is clear and convincing evidence that a person knowingly presented a false claim for the purpose of getting paid for the claim.

(i) Relation of contract claim proceeding and sanction proceeding.

(1) Except as provided in paragraphs (2) and (3) of this subsection, the processing of a contract claim under this section is a separate proceeding.

(2) If a contested issue arises that is relevant both to a contract claim proceeding and a sanction proceeding concerning the same contract, the issue shall be resolved in the proceeding that the executive director refers first for a contested case hearing under Chapter 1, Subchapter E of this title (relating to Procedures in Contested Cases). If the issue is decided in the first proceeding that decision shall apply to and be binding in all subsequent department proceedings.

(3) This paragraph applies to a contract under which the parties agreed to submit questions which may arise to the decision of a department engineer. If a dispute under the contract leads to a contract claim proceeding or sanction proceeding, the engineer's decision shall be upheld unless it was based on fraud, misconduct, or such gross mistake as would imply bad faith or failure to exercise an honest judgment.

§9.4. Design-Build Contract Claim Procedure.

(a) Purpose. This section provides the procedure for the processing and resolution of a claim under Transportation Code, §201.112, that arises under a design-build contract.

(b) Applicability. To use the procedure under this section, the claim must be:

(1) made under a design-build contract entered into and administered by the department, acting in its own capacity or as an agent of a local government or transportation corporation, under Transportation Code, Chapter 223, Subchapter F;

(2) for compensation, a time extension, or any other remedy; and

(3) brought by a design-build contractor.

(1) A design-build contractor may make a claim on behalf of a subcontractor only if the design-build contractor is liable to the subcontractor on the claim, and the claim is actionable by the design-build contractor against the department and arises from work, materials, or other services provided or to be provided under the design-build contract.

(2) The department may make a counter claim against the design-build contractor.

(4) This section does not affect or impede the department's or the design-build contractor's rights to seek judicial relief in connection with the following types of actions or proceedings, and the claim procedures and provisions in this section do not apply to such an action:

(A) equitable relief that the department is permitted to seek to the extent allowed by law; or

(B) other matters or disputes expressly excluded from the dispute resolution procedures authorized by this section, as specified in the design-build contract.

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

(1) Claim--A claim for compensation, time extension, or other contract modification, or any other dispute under the design-build contract.

(2) Contested case hearing--A binding administrative law hearing held before an administrative law judge of the State Office of Administrative Hearings in which the legal rights, duties, or privileges of a party are to be determined.

(3) Department--The Texas Department of Transportation.

(4) Department office--The department division, which may be specified in the design-build contract, that is responsible for the administration or oversight of the design-build contract.

(5) Department office director--The division director who is responsible for the department office.

(6) Design-build contract--An agreement with a design-build contractor for a highway project entered into under Transportation Code, Chapter 223, Subchapter F, that includes both design and construction services for the construction, expansion, extension, related capital maintenance, rehabilitation, alteration, or repair of the highway project.

(7) Design-build contractor--A partnership, corporation, or other legal entity or team that enters into a design-build contract with the department.

(8) District--One of the 25 districts of the department.

(9) Executive director--The executive director of the Texas Department of Transportation.

(e) Negotiated resolution. To every extent possible, disputes between a design-build contractor and the department should be resolved during the course of the contract.

(f) Procedure. For a claim to be considered under the procedure provided by this section, a design-build contractor must file a contract claim request in accordance with this subsection.

(1) Exclusive procedure. A claim must be considered first through the informal dispute resolution process set forth in the design-build contract before the claim may be considered by the executive director under this section and must be considered by the executive director under this section before the claim may be considered in a contested case hearing.

(2) Filing contract claim request.

(A) The design-build contractor may file a contract claim request after the completion of the informal dispute resolution process if that process does not timely resolve the dispute.

(B) The contract claim request must include a detailed report that provides the basis for the claim. The detailed report must include relevant facts of the claim, cost or other data supporting the claim, a description of any additional compensation or time extension requested, and documents supporting the claim. For a request for additional compensation, the design-build contractor may not use a method, however denominated, by which the amount requested is determined by subtracting the design-build contractor's proposal prices from the design-build contractor's actual performance costs. The design-build contractor must file the contract claim request with the department office director.

(C) A contract claim request filed by a design-build contractor must include a certification as follows: I certify that the claim is made in good faith; that the supporting data are accurate and complete to the best of my knowledge and belief; that the amount requested accurately reflects the contract adjustment for which the design-build contractor believes the department is liable; and that I am duly authorized to certify the claim on behalf of the design-build contractor.

(D) A defective certification does not deprive the department of jurisdiction over the claim. Prior to the entry by the department of a final decision on the claim the department will require a defective certification to be corrected.

(E) The department office director will forward the contract claim request to the executive director not later than the seventh day after the date on which a complete contract claim request is received by the department.

(F) The department may file a counter claim not later than the 21st day after the date on which a complete contract claim request is received by the department. Not later than the 21st day after the design-build contractor receives notice of the counter claim, the design-build contractor shall submit to the executive director a responsive report and recommendation concerning the counter claim.

(3) Evaluation of claim by the executive director.

(A) The executive director's responsibility is to gather information, study the relevant issues, and meet with the design-build contractor, if requested. The executive director will attempt to resolve the claim.

(B) The executive director will secure detailed reports and recommendations from the department office and may confer with any other department personnel deemed appropriate by the executive director.

(C) If the department disputes the design-build contractor's claim, the executive director will give the design-build contractor an opportunity for a meeting to discuss the disputed matters, present relevant information, and respond to information that the executive director has received from the department. Proceedings before the executive director are an attempt to mutually resolve a claim without litigation and are not admissible for any purpose in a contested case hearing provided in subparagraph (D)(ii) of this paragraph. All oral communications, reports, or other written documentation prepared by department staff in connection with the analysis of a claim are part of the attempt to mutually resolve a claim without litigation and are also not admissible for any purpose in a contested case hearing provided in subparagraph (D)(ii) of this paragraph.

(D) The executive director will give written notice of the executive director's decision on the contract claim request to the department office director and design-build contractor. The department office director and design-build contractor are presumed to receive the notice on the third day after the day on which the notice is mailed.

(i) If the design-build contractor does not object to the decision, the design-build contractor shall file with the executive director not later than the 20th day after the date of receipt of the notice under this subparagraph a written statement that the design-build contractor does not object. The executive director will then prepare a document showing the settlement of the contract claim request, including, when required, payment to the design-build contractor, and providing for the design-build contractor's release of all claims under the contract. The design-build contractor shall sign that document. The executive director may request the commission to approve the settlement by issuance of an order. The executive director will then implement the resolution of the contract claim request. If contemplated in the decision, the executive director will expend funds as specified in the decision or will order the design-build contractor to make payment to the department.

(ii) If the design-build contractor objects to the decision, the design-build contractor may file with the executive director not later than the 20th day after the date of receipt of the decision a petition requesting a contested case hearing to litigate the contract claim request under §§1.21 et seq. of this title (relating to Procedures in Contested Cases).

(iii) If the design-build contractor fails to file a written petition within the period prescribed by clause (ii) of this subparagraph, the design-build contractor waives the right to a contested case hearing. All further litigation of claims on the project or contract by the design-build contractor are barred by the doctrines of issue and claim preclusion. The executive director will then prepare an order implementing the resolution of the contract claim request under the decision and stating that further litigation on the contract claim request is prohibited. The executive director will issue the order and implement the resolution of the contract claim request. If contemplated in the decision, the executive director will expend funds as specified in the decision or will order the design-build contractor to make payment to the department.

(4) Decision after contested case hearing. This paragraph applies if a contested case hearing has been held on a contract claim request. The administrative law judge's proposal for decision will be submitted to the executive director for adoption. The executive director may change a finding of fact or conclusion of law made by the administrative law judge or may vacate or modify an order issued by the administrative law judge. The executive director shall provide a written statement containing the reason and legal basis for any change.

(5) Final order enforcement. This section does not abrogate the department's authority to enforce in a court of competent jurisdiction a final department order issued under the section.

(6) Claim forfeiture. If there is clear and convincing evidence that a person, for the purpose of getting paid for a claim against the department, knowingly practices, or attempts to practice, any fraud against the department in the proof, statement, establishment, or allowance of the claim, the claim shall be forfeited to the department by that person. In such a case the executive director will specifically find such a fraud or attempt and render judgment of forfeiture.

(g) Delegation by executive director. The executive director may delegate to an employee of the department any duty required of, or authority granted to, the executive director under this section except for the preparation of an order under subsection (f)(3)(D)(iii) or modification of an administrative law judge's proposal for decision under subsection (f)(4) of this section.

§9.6. Contract Claim Procedure for Comprehensive Development Agreements and Certain Design-Build Contracts.

(a) Purpose. This section concerns processing and resolution of a claim under Transportation Code, §201.112 that arises under a comprehensive development agreement (CDA) or design-build contract, as defined by subsection (c) of this section.

(b) Applicability.

(1) The executive director may enter into a CDA or a design-build contract to which this section applies containing a claim procedure and provisions authorized by this section. When a claim arises under a CDA or design-build contract containing a claim procedure authorized by this section, the requirements of this section apply, §9.2 of this subchapter (relating to Contract Claim Procedure) does not apply, and the parties shall follow the claim procedure contained in the CDA or design-build contract and shall be bound by the outcome of the claim procedure. If a CDA or design-build contract does not contain a claim procedure authorized by this section, either by express reference to this section or by inclusion of provisions required or permitted by this section, then a claim under the agreement shall be processed and resolved under §9.2 of this subchapter.

(2) The claim procedure and provisions authorized by this section may be applied to claims that arise under the CDA or design-build contract, related agreements that collectively constitute a CDA or design-build contract, or other agreements entered into with or for the benefit of the department in connection with the CDA or design-build contract. A CDA or design-build contract shall identify the related agreements and any other agreements to which the claim procedure and provisions apply.

(3) This section and §9.2 of this subchapter do not affect or impede the department's or the developer's or design-build contractor's rights to seek judicial relief in connection with the following types of actions or proceedings, and the claim procedures and provisions in this section or in §9.2 of this subchapter do not apply to such actions:

(A) equitable relief that the department is permitted to seek to the extent allowed by law;

(B) mandamus action that a developer or design-build contractor is permitted to bring against the department or the executive director under Government Code, §22.002(c);

(C) mandamus relief sought by a developer under Transportation Code, §223.208(e) (relating to termination compensation and related security obligations); or

(D) other matters or disputes expressly excluded from the dispute resolution procedures authorized by this section, as specified in the CDA or design-build contract or other related agreement between the department and the developer or design-build contractor that is part of the CDA or design-build contract.

(c) Definitions. The following words and terms, when used in this chapter, shall have the following meanings, unless the context clearly indicates otherwise.

(1) Claim--A claim for compensation, or other dispute, disagreement, or controversy concerning respective rights, obligations, and remedies under the CDA or design-build contract, or under related agreements that collectively constitute a CDA or design-build contract or other agreements entered into with or for the benefit of the department in connection with the CDA or design-build contract, including any alleged breach or failure to perform.

(2) Comprehensive development agreement (CDA)--An agreement with a developer that, at a minimum, provides for the design and construction, reconstruction, extension, expansion, or improvement of a project described in Transportation Code, §223.201(a), and may also provide for the financing, acquisition, maintenance, or operation of such a project. A CDA is also authorized under Transportation Code, §91.054 (rail facilities). A CDA includes related agreements that collectively constitute a CDA or other agreements entered into with or for the benefit of the department in connection with the CDA.

(3) Department--The Texas Department of Transportation.

(4) Design-build contract--An agreement with a design-build contractor that is entered into under Transportation Code, Chapter 223, Subchapter E and that is for a highway project with estimated total project costs of $500 million or more that includes both design and construction services for the construction, expansion, extension, related capital maintenance, rehabilitation, alteration, or repair of the highway project.

(5) Design-build contractor--A partnership, corporation, or other legal entity or team that enters into a design-build contract with the department.

(6) Developer--The private entity or entities that enter into a CDA with the department.

(7) Disputes board--A group of one or more individuals appointed under the terms of a CDA or design-build contract to fairly and impartially consider and decide a claim between the department and a developer or design-build contractor.

(8) Disputes board error--One or more of the following actions:

(A) a disputes board acted beyond the limits of its authority established under subsection (b)(3) of this section;

(B) a disputes board failed, in any material respect, to properly follow or apply the procedure for handling, hearing and deciding a claim established under the CDA or design-build contract and the failure prejudiced the rights of a party;

(C) a disputes board decision was procured by, or there was evident partiality by a disputes board member due to a conflict of interest (which may be defined in the CDA or design-build contract), misconduct (which may be defined in the CDA or design-build contract), corruption, or fraud; or

(D) any other error that the parties agree may be the subject of a contested case hearing, as set out in the CDA or design-build contract.

(9) Executive director--The executive director of the Texas Department of Transportation.

(10) Party--The department, or a developer or design-build contractor who has entered into a CDA or design-build contract with the department. The department and the developer or design-build contractor are together referred to as the "parties."

(11) SOAH--State Office of Administrative Hearings.

(d) Mandatory requirements. A CDA or design-build contract that authorizes the use of a claim procedure authorized by this section shall include (or incorporate by reference) provisions substantially consistent with the provisions in this subsection, but such provisions need not apply to claims excluded from the claim procedure under subsection (b)(3) of this section.

(1) A claim under the CDA or design-build contract that is not resolved by the informal dispute resolution process set forth in the CDA or design-build contract shall be referred to a disputes board for rendering of a disputes board decision on the claim.

(2) The processing of a claim shall include a mandatory informal dispute resolution process, such as mediation, and a mandatory dispute resolution procedure using a disputes board.

(3) The party making a claim shall include in its notice of the claim a certification by an authorized or designated representative to the effect that:

(A) the claim is made in good faith;

(B) to the current knowledge of the party, except as to matters stated in the notice of claim as being unknown or subject to discovery, the supporting data is reasonably believed by the party to be accurate and complete, and the description of the claim contained in the certification accurately reflects the amount of money or other right, remedy, or relief to which the party asserting the claim reasonably believes it is entitled; and

(4) The certification required under paragraph (3) of this subsection, if defective, shall not deprive a disputes board of jurisdiction over the claim. Prior to the entry by the disputes board of a final decision on the claim, the disputes board shall require a defective certification to be corrected.

(e) Permissive requirements. A CDA or design-build contract that provides for a claim procedure authorized by this section may include (or incorporate by reference) any or all of the provisions in this subsection, or provisions substantially consistent with them, and other terms and conditions regarding claim resolution that are not contrary to the mandatory requirements of this section.

(1) The executive director shall adopt the decision of a disputes board as a ministerial act, subject to a party's right to request a contested case hearing in accordance with the terms of the CDA or design-build contract as to whether disputes board error occurred.

(2) A decision by a disputes board, upon completion of the procedure required in Transportation Code, §201.112, this section, and in the CDA or design-build contract, is final, conclusive, binding upon, and enforceable against the parties, subject to any appeals allowed by the CDA or design-build contract or this section.

(3) A disputes board, upon issuing a decision on a claim, is authorized to direct that an award be paid from the proceeds of any trust or other pool of project funds that the CDA or design-build contract provides shall be available for payment of such claims.

(4) The executive director's discretion or actions in connection with the resolution of a claim are limited or may be purely ministerial in certain circumstances, including:

(A) adoption of the disputes board's decision absent disputes board error;

(B) referral of a disputes board decision to SOAH to determine whether disputes board error occurred; and

(5) Certain claims may be categorized and treated by the parties as expedited claims, and informal resolution procedures shall be expedited for such claims.

(6) Certain claims may be categorized and treated by the parties as small claims, and informal resolution procedures shall be expedited for such claims.

(7) The parties may execute a related disputes board agreement, or similar agreement, which shall be part of the CDA or design-build contract and which may govern all aspects of the creation of and procedures to be followed by a disputes board.

(8) The evidence presented to a SOAH administrative law judge in a hearing regarding a claim, and to the Travis County District Court in any appeal, may include: the disputes board's written findings of fact, conclusions of law, and decision; any written dissenting findings, recommendation, or opinions of a disputes board member; all submissions to the disputes board by the parties; and an independent engineer's written evaluations, opinions, findings, reports, recommendations, objections, decisions, certifications, or other determinations, if any, delivered to the parties pursuant to the CDA or design-build contract and related to the claim under consideration.

(9) Certain decisions, orders, or determinations of the executive director may be deemed to have been issued as of a certain date, or after a prescribed number of days, and setting out the parameters of the deemed decision, order, or determination.

(10) The parties are authorized and required to comply with all or certain categories of interim orders of the disputes board, including discovery and procedural orders.

(11) Except as agreed to by the parties in writing, a disputes board shall have no power to alter or modify any terms or provisions of the CDA or design-build contract, or to render any award that, by its terms or effects, would alter or modify any term or provision of the CDA or design-build contract. Notwithstanding the prior sentence, a disputes board decision that contains error in interpretation or application of a term or provision of the CDA or design-build contract but does not otherwise purport to alter or modify terms or provisions of the CDA or design-build contract may not be appealed on grounds of such error; and such error does not deprive the disputes board of power or authority over the claim.

(12) A developer's claim for termination compensation, or to enforce the department's security obligations that secure payment of termination compensation, is not to be resolved under any dispute resolution procedure in the CDA. Rather, a developer may exercise its rights under Transportation Code, §223.208(e) (relating to Terms of Private Participation) by seeking mandamus against the department.

(13) At all times during the processing of a contract claim, the developer or design-build contractor and its subcontractors shall continue with the performance of the work and their obligations, including any disputed work or obligations, diligently and without delay, in accordance with the CDA or design-build contract, except to the extent enjoined by order of a court or otherwise ordered or approved by the department in its sole discretion.

(f) Pass-through claim. A CDA or design-build contract may provide that a developer or design-build contractor who is a party to a CDA or design-build contract with the department may make a claim on behalf of a subcontractor. In order to make such a claim the developer or design-build contractor must be liable to the subcontractor on the claim.

(g) Mandatory requirements concerning disputes board. A CDA or design-build contract that authorizes the use of a disputes board shall include (or incorporate by reference) provisions substantially consistent with the provisions in this subsection.

(1) A disputes board is not a supervisory, advisory, or facilitating body and has no role other than as expressly described in the CDA or design-build contract, including, if applicable, any disputes board agreement.

(2) A disputes board member shall not have a financial interest in the CDA or design-build contract, in any contract or the facility that is the subject of the CDA or design-build contract, or in the outcome of any claim decided under the CDA or design-build contract, except for payments to that member for services on the disputes board. Any person appointed as a disputes board member shall disclose to the parties any circumstances likely to give rise to justifiable doubt as to such disputes board member's impartiality or independence, including any bias or any financial or personal interest in the result of the dispute resolution or any past or present relationship with the parties or their representatives, or developer's subcontractors and affiliates.

(3) The scope of a SOAH contested case hearing on an appeal of a disputes board decision is limited solely to whether disputes board error occurred.

(h) Punitive damages. A disputes board shall have no power or jurisdiction to award punitive damages.

(i) Permissive requirements concerning disputes board. A CDA or design-build contract that authorizes the use of a disputes board may include (or incorporate by reference) any or all of the provisions in this subsection, or provisions substantially consistent with them, and other terms and conditions regarding the disputes board that are not contrary to the specific requirements of this section.

(1) Each party shall endeavor to have a standing list of candidates from which to select a disputes board member. The CDA or design-build contract may specify the qualifications to be a board member, the procedure by which a party nominates a person to the list of candidates, and the method by which the other party may review and object to a proposed candidate. All disputes board members are chosen from the list of candidates of the department or of the developer or design-build contractor.

(2) A disputes board conducts its proceedings in accordance with procedural rules specified in the CDA or design-build contract. The disputes board may allow for discovery similar to that allowed under the Texas Rules of Civil Procedure, and the admission of evidence conforming to the Texas Rules of Evidence, but may allow for exceptions to or deviations from such requirements and rules.

(3) The parties may jointly modify the procedure applicable to the disputes board's proceedings, under the provisions of the CDA or design-build contract.

(4) During the period that a disputes board member is serving on a disputes board, neither party may communicate ex parte with that member. A party may not communicate ex parte with a person on its list of candidates to be a disputes board member regarding the substance of a dispute.

(5) Each party is responsible for paying one-half the costs of all facilities, fees, support services costs, and other expenses of a disputes board.

(6) A disputes board does not have the authority to order that one party compensate the other party for attorney's fees and expenses.

(j) Permissive requirements on a contested case hearing. A CDA or design-build contract that authorizes the use of a contract claim procedure authorized by this section may include (or incorporate by reference) any or all of the provisions in this subsection, or provisions substantially consistent with them, and other terms and conditions regarding a contested case hearing that are not contrary to the specific requirements of this section.

(1) The executive director's referral of a developer's request to SOAH for a contested case hearing as to whether a decision by a disputes board was affected by disputes board error is a purely ministerial act.

(2) If a determination is made after a contested case hearing that disputes board error occurred, the dispute shall be remanded to a disputes board for further consideration, except that if the error is lack of authority to hear the claim, the decision of the disputes board shall be vacated.

(3) The executive director's issuance of a final order following a contested case hearing is a purely ministerial act, and that if by inaction the executive director does not issue a final order within the time frame established by the CDA or design-build contract, then a final order in a form recommended by the administrative law judge shall be deemed to be automatically issued.

(4) As allowed by Government Code, §2001.144 and §2001.145, an order issued by the executive director after a contested case hearing is final on the date issued and no motion for rehearing is required to appeal the final order.

(5) An executive director's order remanding a dispute to a disputes board, or an executive director's order implementing a disputes board decision following a contested case hearing before SOAH, are subject to judicial review under Government Code, Chapter 2001, under the substantial evidence rule. Review is limited to whether disputes board error occurred.

(k) Other department rules on a contested case hearing.

(1) The parties may agree in the CDA or design-build contract to adopt, modify or not follow procedural provisions, deadlines, evidentiary rules, and any other matters set out in Chapter 1, Subchapter E of this title (relating to Procedures in Contested Cases).

(2) In the event of any conflict or difference between the procedures set out in this section or a CDA or design-build contract, and in Chapter 1, Subchapter E, of this title, the procedures in this section or the CDA or design-build contract shall govern with respect to any proceeding before SOAH.

(3) In the event of an appeal to SOAH of a disputes board decision:

(A) the department shall present a copy of this section to SOAH as a written statement of applicable rules or policies, under Government Code, §2001.058(c); and

(B) the parties shall request that the administrative law judge modify and supplement SOAH contested case procedures as necessary or appropriate, and consider this section, consistent with 1 TAC §155.3 (relating to Application and Construction of this Chapter).

(C) the parties shall provide the administrative law judge with a stipulation that the substantive provisions, scope of review, and procedural provisions of this section and the CDA or design-build contract shall apply to and govern the contested case proceeding before SOAH, consistent with 1 TAC §155.417 (relating to Stipulations).

(l) Mandamus relief. Nothing in this section shall restrict a developer's or design-build contractor's rights to seek mandamus relief pursuant to Government Code, §22.002(c) if the executive director fails to perform one or more of the ministerial acts set out in this section and included in the CDA or design-build contract as a ministerial act, or any other act specified in the CDA or design-build contract as a ministerial act.

(m) Confidential information.

(1) The parties may agree that, with respect to the mandatory informal dispute resolution process required under subsection (d)(2) of this section, communications between the parties to resolve a dispute, and all documents and other written materials furnished to a party or exchanged between the parties during any such informal resolution procedure, shall be considered confidential and not subject to disclosure by either party.

(2) The parties may agree that with respect to a proceeding before the disputes board, an administrative hearing before an administrative law judge, or a judicial proceeding in court, either or both parties may request a protective order to prohibit disclosure to third persons of information that the party believes is a trade secret, proprietary, or otherwise entitled to confidentiality under applicable law.

§9.8. Enhanced Contract and Performance Monitoring; Civil Rights-Title VI Compliance.

(a) The department shall monitor and report to the Texas Transportation Commission, on a quarterly basis, the performance and status of each contract, other than a low-bid construction and maintenance contract, that is valued at $50 million or more or that the department determines constitutes a high-risk to the department.

(b) The department immediately shall notify the commission of any serious issue or risk that is identified in a contract and that has not been reported in a quarterly report provided under subsection (a) of this section.

(c) Subsections (a) and (b) of this [~~This~~] section do [~~does~~] not apply to a memorandum of understanding, interagency contract, interlocal agreement, or contract for which there is not a cost.

(d) The department will conduct annual Title VI reviews of its special emphasis program areas (planning, project development, right-of-way, construction and research) and Title VI reviews of cities, counties, consultant contractors, suppliers, universities, colleges, planning agencies, and other subrecipients of Federal-aid highway funds to determine the effectiveness of program area activities at all levels in accordance with Title 42, United States Code, Section 2000d, et seq., and with Title 23, Code of Federal Regulations, Part 200.

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 16, 2025.

TRD-202504661

Becky Blewett

Deputy General Counsel

Texas Department of Transportation

Earliest possible date of adoption: February 1, 2026

For further information, please call: (512) 298-8987

43 TAC §9.4

STATUTORY AUTHORITY

The repeal is proposed under Transportation Code, §201.101, which provides the Texas Transportation Commission (commission) with the authority to establish rules for the conduct of the work of the department.

CROSS REFERENCE TO STATUTES IMPLEMENTED BY THIS RULEMAKING Transportation Code, Chapter 223, Subchapters E and F.

§9.4. Civil Rights-Title VI Compliance.