(a) Following receipt of a contractor's notice of claim, the chief administrative officer of the unit of state government or other designated representative shall review the contractor's claim and the unit's counterclaim, if any, and initiate negotiations with the contractor to attempt to resolve the claim and counterclaim.
(b) Subject to subsection (c) of this section, the parties shall begin negotiations within a reasonable period of time, not to exceed 60 calendar days following the later of:
  (1) the date of termination of the contract;
  (2) the completion date, or substantial completion date in the case of construction projects, in the original contract; or
  (3) the date the unit of state government receives the contractor's notice of claim.
(c) The unit of state government may delay negotiations until after the 180th day after the date of the event giving rise to the claim of breach of contract by:
  (1) delivering written notice to the contractor that the commencement of negotiations will be delayed; and
  (2) delivering written notice to the contractor when the unit is ready to begin negotiations.
(d) The parties may conduct negotiations according to an agreed schedule as long as they begin negotiations no later than the applicable deadlines set forth in subsections (b) or (c) of this section, whichever is applicable.
(e) Subject to subsection (f) of this section, the parties shall complete the negotiations that are required by this chapter as a prerequisite to a contractor's request for contested case hearing no later than 270 days after the unit of state government receives the contractor's notice of claim.
(f) The parties may agree in writing to extend the time for negotiations on or before the 270th day after the unit of state government receives the contractor's notice of claim. The agreement shall be signed by representatives of the parties with authority to bind each respective party.
(g) The contractor may request a contested case hearing before the State Office of Administrative Hearings (SOAH) pursuant to §71.107 of this subchapter (relating to Request for Contested Case Hearing) after the 270th day after the unit receives the contractor's notice of claim, or the expiration of any extension agreed to under subsection (f) of this section.
(h) The parties may agree to mediate the dispute at any time before the 270th day after the unit of state government receives the contractor's notice of claim or before the expiration of any extension agreed to by the parties pursuant to subsection (f) of this section. Sections 71.111, 71.113, 71.115, 71.117, 71.119, 71.121, 71.123, and 71.125 of this subchapter shall govern the mediation.
(i) Nothing in this section is intended to prevent the parties from commencing negotiations earlier than the deadlines established in subsections (b) and (c) of this section, or from continuing or resuming negotiations after the contractor requests a contested case hearing before SOAH.

Source Note: The provisions of this §71.97 adopted to be effective April 9, 2002, 27 TexReg 2813