Sec. 5. (a) If a breach of contract occurs under section 4 of this chapter, the public agency shall suspend all payments to the contractor under that contract unless it determines that the contractor made a good faith effort to avoid the breach but was unable to do so.

     (b) If the public agency determines that the contractor did not act to avoid the breach, it may:

(1) rescind the contract and recover all amounts paid under it if the breach occurs under section 4(1) of this chapter;

(2) recover all amounts paid to the contractor under the contract that were intended for expenditure with a disadvantaged business enterprise or a women owned business enterprise if the breach occurred under section 4(2) of this chapter; or

(3) employ any legal or administrative remedies that the agency prescribes by rule or in the contract.

As added by P.L.70-1987, SEC.1. Amended by P.L.71-1989, SEC.1.