1. (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.

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

   1. (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. (2) for compensation, a time extension, or any other remedy; and
   3. (3) brought by a design-build contractor.

3. (c) Pass-through claim; claim and counter claim.

   1. (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. (2) The department may make a counter claim against the design-build contractor.
   3. (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.

   4. (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:

      1. (A) equitable relief that the department is permitted to seek to the extent allowed by law; or
      2. (B) other matters or disputes expressly excluded from the dispute resolution procedures authorized by this section, as specified in the design-build contract.

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

   1. (1) Claim--A claim for compensation, time extension, or other contract modification, or any other dispute under the design-build contract.
   2. (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. (3) Department--The Texas Department of Transportation.
   4. (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. (5) Department office director--The division director who is responsible for the department office.
   6. (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. (7) Design-build contractor--A partnership, corporation, or other legal entity or team that enters into a design-build contract with the department.
   8. (8) District--One of the 25 districts of the department.
   9. (9) Executive director --The executive director of the Texas Department of Transportation.
5. (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.

6. (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. (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. (2) Filing contract claim request.

      1. (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.
      2. (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.
      3. (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.
      4. (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.
      5. (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.
      6. (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. (3) Evaluation of claim by the executive director.

      1. (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.
      2. (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.
      3. (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.

      4. (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.

         1. (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.
         2. (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).
         3. (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. (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. (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. (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.
7. (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.

Source Note:The provisions of this §9.4 adopted to be effective April 14, 2026, 51 TexReg 2406.