1. (a) Mediation Timetable.

   1. (1) The contractor and the Board may agree to mediate the dispute at any time before the 270th day after the Board receives a notice of claim of breach of contract, or before the expiration of any extension agreed to by the parties in writing.
   2. (2) A contractor and the Board may mediate the dispute even after the case has been referred to SOAH for a contested case. SOAH may also refer a contested case for mediation pursuant to its own rules and guidelines, whether or not the parties have previously attempted mediation.

2. (b) Conduct of Mediation.

   1. (1) Mediation is a consensual process in which an impartial third party, the mediator, facilitates communication between the parties to promote reconciliation, settlement, or understanding among them. A mediator may not impose his or her own judgment on the issues for that of the parties. The mediator must be acceptable to both parties.
   2. (2) The mediation is subject to the provisions of the Governmental Dispute Resolution Act, Government Code, Chapter 2009. For purposes of this subchapter, "mediation" is assigned the meaning set forth in the Civil Practice and Remedies Code, §154.023.
   3. (3) To facilitate a meaningful opportunity for settlement, the parties shall, to the extent possible, select representatives who are knowledgeable about the dispute, who are in a position to reach agreement, or who can credibly recommend approval of an agreement.

3. (c) Agreement to Mediate.

   1. (1) Parties may agree to use mediation as an option to resolve a breach of contract claim at the time they enter into the contract and include a contractual provision to do so. The parties may mediate a breach of contract claim even absent a contractual provision to do so if both parties agree.

   2. (2) Any agreement to mediate should include consideration of the following factors:

      1. (A) The source of the mediator. Potential sources of mediators include governmental officers or employees who are qualified as mediators under §154.052, Civil Practice and Remedies Code, private mediators, SOAH, the Center for Public Policy Dispute Resolution at The University of Texas School of Law, an alternative dispute resolution system created under Chapter 152, Civil Practice and Remedies Code, or another state or federal agency or through a pooling agreement with several state agencies. Before naming a mediator source in a contract, the parties should contact the mediator source to be sure that it is willing to serve in that capacity. In selecting a mediator, the parties should use the qualifications set forth in subsection (d) of this section.
      2. (B) The time period for the mediation. The parties should allow enough time in which to make arrangements with the mediator and attending parties to schedule the mediation, to attend and participate in the mediation, and to complete any settlement approval procedures necessary to achieve final settlement. While this time frame can vary according to the needs and schedules of the mediator and parties, it is important that the parties allow adequate time for the process.
      3. (C) The location of the mediation.
      4. (D) Allocation of costs of the mediator.
      5. (E) The identification of representatives who will attend the mediation on behalf of the parties, if possible, by name or position within the governmental unit or contracting entity.
      6. (F) The settlement approval process in the event the parties reach agreement at the mediation.

4. (d) Qualifications and Immunity of the Mediator.

   1. (1) The mediator shall possess the qualifications required under Civil Practice and Remedies Code, §154.052, be subject to the standards and duties prescribed by Civil Practice and Remedies Code, §154.053, and have the qualified immunity prescribed by Civil Practice and Remedies Code, §154.055, if applicable.
   2. (2) The parties should decide whether, and to what extent, knowledge of the subject matter and experience in mediation would be advisable for the mediator.
   3. (3) The parties should obtain from the prospective mediator the ethical standards that will govern the mediation.

5. (e) Confidentiality of Mediation and Final Settlement Agreement.

   1. (1) A mediation conducted under this section is confidential in accordance with Government Code, §2009.054.
   2. (2) The confidentiality of a final settlement agreement to which the Board is a signatory that is reached as a result of the mediation is governed by Government Code, Chapter 552.
6. (f) Costs of Mediation. Unless the contractor and Board agree otherwise, 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. The costs of the mediation process itself shall be divided equally between the parties.
7. (g) Settlement Approval Procedures. The parties' settlement approval procedures shall be disclosed by the parties prior to the mediation. To the extent possible, the parties shall select representatives who are knowledgeable about the subject matter of the dispute, who are in a position to reach agreement, and who can credibly recommend approval of an agreement.
8. (h) Initial Settlement Agreement. Any settlement agreement reached during the mediation shall be signed by the representatives of the contractor and the unit of state government, and shall describe any procedures required to be followed by the parties in connection with final approval of the agreement.

9. (i) Final Settlement Agreement.

   1. (1) A final settlement agreement reached during, or as a result of mediation, that resolves an entire claim or any designated and severable portion of a claim shall be in writing and signed by representatives of the contractor and the Board who have authority to bind each respective party.
   2. (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.
   3. (3) A partial settlement does not waive a contractor's rights under the Government Code, Chapter 2260, as to the parts of the claim that are not resolved.
10. (j) Referral to the State Office of Administrative Hearings. If mediation does not resolve all issues raised by the claim, the contractor may request that the claim be referred to SOAH by the Board. Nothing in these rules prohibits the contractor and the Board from mediating their dispute after the case has been referred for contested case hearing, subject to the rules of SOAH.

Source Note:The provisions of this §1.46 adopted to be effective November 23, 2000, 25 TexReg 11382.