bill bars no-damages-for-delay clauses in government contracts

The text as introduced · 499 words

89R3521 AJA-F

By: Leach
H.B. No. 2463

A BILL TO BE ENTITLED

AN ACT

relating to the award of compensatory damages caused by certain

delays under governmental construction contracts.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subchapter Z, Chapter 2252, Government Code, is

amended by adding Section 2252.911 to read as follows:

Sec. 2252.911. COMPENSATORY DAMAGES CAUSED BY GOVERNMENTAL

DELAYS IN CONSTRUCTION CONTRACTS. (a) In this section:

(1) "Compensatory damages" means the costs actually

incurred by a contractor as a result of delay in the schedule that

could not be reasonably mitigated by the contractor. The term does

not include:

(A) special damages;

(B) consequential damages;

(C) home office overhead, except overhead costs

for labor as defined in the applicable construction contract;

(D) profit or markup on indirect costs;

(E) the costs of performing additional work that

are separately agreed to by the governmental entity and contractor

in a construction contract; or

(F) indirect costs not related to the project in

the applicable construction contract.

(2) "Contractor" means a person engaged in the

business of developing, constructing, fabricating, repairing,

altering, or remodeling improvements to real property.

(3) "Governmental entity" means:

(A) the state;

(B) a municipality, county, public school

district, or special-purpose district or authority;

(C) a district, county, or justice of the peace

court;

(D) a board, commission, department, office, or

other agency in the executive branch of state government, including

an institution of higher education as defined by Section 61.003,

Education Code;

(E) the legislature or a legislative agency; or

(F) the Supreme Court of Texas, the Texas Court

of Criminal Appeals, a court of appeals, or the State Bar of Texas

or another judicial agency having statewide jurisdiction.

(b) A provision of a construction contract between a

governmental entity and a contractor may not prohibit the award of

compensatory damages to the contractor for a delay to the extent

that the delay is caused solely by the governmental entity or by a

party for which the governmental entity is responsible.

(c) This section does not restrict, limit, or prohibit the

inclusion of a contract provision in a construction contract

prescribing requirements or conditions that must be met by a

contractor to seek recovery of compensatory damages, including

requirements or conditions relating to notice, justification, or a

duty to mitigate or for demonstrating or proving the actual cost or

schedule impact of a delay.

(d) This section may not be waived. A purported waiver of

this section in violation of this subsection is void.

(e) This section does not apply to a construction contract:

(1) for services related to recovery or relief from a

natural disaster involving the repair or renovation of a residence;

or

(2) that is subject to Section 201.112, Transportation

Code.

SECTION 2. Section 2252.911, Government Code, as added by

this Act, applies only to a construction contract entered into on or

after the effective date of this Act.

SECTION 3. This Act takes effect September 1, 2025.