(1) If agreed to by the claimant and the contracting agency, the State Claims Board shall have the authority to consider, ascertain, adjust, compromise, settle, determine, or allow any contract claim. Upon receipt of a contract claim, the Risk Manager shall immediately notify the claimant and the contracting agency of the option of having the dispute submitted to the State Claims Board.

(2) If the claimant and the contracting agency agree to submit the dispute to the State Claims Board as provided in subsection (1) of this section, the board shall resolve such dispute in the manner provided under the State Miscellaneous Claims Act. For claims submitted to the board under this subsection, the contracting agency shall provide the board with all documents and information relating to the claim which the contracting agency obtained during its investigation.

(3) If either the claimant or the contracting agency notifies the Risk Manager in writing within ninety days after mailing of the notice required in subsection (1) of this section that the claimant or the contracting agency objects to the submission of the dispute to the State Claims Board, the board shall have no further jurisdiction over the claim and the claimant may initiate an action in the district court of Lancaster County. The action in the district court of Lancaster County must be filed with the district court within two years after the date the Risk Manager receives the written notification of objection or the claim shall be forever barred.