CONTRACTOR PERFORMANCE.

(a) The commission shall adopt rules to:

(1) establish a range of contract remedies to be included in all low-bid highway improvement contracts, including enforceable corrective action plans and criteria for prohibiting contractors with significant project completion delays from bidding on new projects, and develop a process and criteria for when to apply each contract remedy;

(2) develop and implement a schedule for liquidated damages that accurately reflects the costs associated with project completion delays, including administrative and travel delays; and

(3) develop a contractor performance evaluation process and an evaluation tool that:

(A) allows for the review of contractor bidding capacity to ensure that contractors meet each quality, safety, and timeliness standard established by the commission; and

(B) contains criteria for modifying a contractor's bidding capacity for competitively bid highway improvement contracts when appropriate.

(b) In developing the rules required by Subsection (a)(1), the commission must:

(1) consult with industry contractors; and

(2) consider contract remedies used by:

(A) other state agencies; and

(B) departments of transportation in other states.

(c) The rules adopted under Subsection (a)(2) must:

(1) include criteria for identifying projects that have a significant impact on the traveling public; and

(2) require the department to calculate project-specific liquidated damages for projects described by Subdivision (1) that reflect the true cost of travel delays.

(d) In developing the evaluation tool required by Subsection (a)(3), the commission must consult with industry contractors.

(e) The rules adopted under Subsection (a)(3) must:

(1) provide for a process for contractors to appeal the contractors' evaluations; and

(2) include criteria for the use of the evaluations by the department to address contractor performance problems.

(f) Rules adopted under this section must require:

(1) contractual provisions providing for the consideration of sufficient time; and

(2) the department to consider any events outside a contractor's control before assessing a penalty against the contractor.