Bill > HB2463

This bill adds a new section to the Texas Government Code that addresses compensatory damages in governmental construction contracts. The bill defines "compensatory damages" as costs actually incurred by a contractor due to project delays that could not be reasonably mitigated, explicitly excluding special damages, consequential damages, home office overhead (except labor costs), profit, markup, additional work costs, and unrelated indirect costs. It broadly defines "governmental entity" to include state agencies, municipalities, courts, and other public bodies, and "contractor" as someone engaged in construction-related work. The legislation prohibits construction contracts from preventing contractors from receiving compensatory damages when delays are solely caused by the governmental entity or its representatives. The bill allows contracts to include provisions about how contractors must seek and prove such damages, such as notice and mitigation requirements. Importantly, the provision cannot be waived, and any attempt to do so would be void. The bill does not apply to contracts for disaster recovery residential repairs or certain transportation-related contracts. The new provisions will only apply to construction contracts entered into on or after the effective date of September 1, 2025.

Government Affairs

https://capitol.texas.gov/BillLookup/History.aspx?LegSess=89R&Bill=HB2463