By: Wilson H.B. No. 1062 73R4242 DWS-D A BILL TO BE ENTITLED 1-1 AN ACT 1-2 relating to purchases by utilities from certain disadvantaged 1-3 businesses. 1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-5 SECTION 1. Article V, Public Utility Regulatory Act (Article 1-6 1446c, Vernon's Texas Civil Statutes), is amended by adding Section 1-7 36A to read as follows: 1-8 Sec. 36A. (a) A utility shall ensure that small businesses 1-9 receive at least 25 percent of the value of the total purchases of 1-10 goods and services that the utility makes. The utility shall 1-11 divide the purchases into contract units of economically feasible 1-12 production runs to promote offers from small businesses. In 1-13 designating purchases the utility shall: 1-14 (1) vary the included purchases so that a variety of 1-15 goods and services produced by different small businesses are 1-16 obtained; and 1-17 (2) designate small business purchases in a manner 1-18 that will encourage proportional distribution of awards among the 1-19 geographical regions served by the utility. To promote the 1-20 geographical distribution of small business purchases, the utility 1-21 may designate a portion of the small business purchases for bidders 1-22 from a specified postal zip code zone or other geographical region 1-23 specified by the utility. The failure of the utility to designate 1-24 a purchase does not prohibit small businesses from seeking the 2-1 purchase. 2-2 (b) The commission shall adopt rules defining "small 2-3 business" for purposes of this section. The definition shall 2-4 recognize the differences among industries caused by the size of 2-5 the market for goods or services and the relative size and market 2-6 share of the competitors operating in those markets and shall 2-7 establish different size standards for various types of businesses. 2-8 The definition of "small business" in Section 481.101, Government 2-9 Code, applies to this section until the commission adopts rules 2-10 with a new definition. 2-11 (c) The utility shall establish a program for purchasing 2-12 goods and services from small targeted group businesses. The 2-13 program shall attempt to ensure, for each category of goods or 2-14 services purchased, that the percentage of purchasing from each 2-15 type of small targeted group business is proportional to the 2-16 representation of that targeted group business among all businesses 2-17 in the area served by the utility. 2-18 (d) The commission shall develop a program for designating 2-19 small targeted group businesses. The commission shall designate a 2-20 business as a small targeted group business if it is majority owned 2-21 and operated by women, persons with a disability, or specific 2-22 minorities and the commission determines that there is a 2-23 statistical disparity between the percentage of purchasing by 2-24 utilities from businesses owned by such persons and from other 2-25 businesses in the state. The commission shall review its 2-26 designation of small targeted group businesses every two years and 2-27 may revoke or extend a designation. In addition to those 3-1 designations, a business may be designated as a small targeted 3-2 group business if the commission determines that inclusion is 3-3 necessary to remedy discrimination against the owner based on race, 3-4 gender, or disability. 3-5 (e) If a small targeted group business is capable of 3-6 performing a purchase contract contemplated by a utility, the 3-7 utility shall make the purchase from the small targeted group 3-8 business unless the price offered by the small targeted group 3-9 business is more than six percent greater than the lowest price 3-10 offered by a capable business that is not a small targeted group 3-11 business. If more than one small targeted group business qualifies 3-12 under this subsection, the utility shall make the purchase from the 3-13 capable small targeted group business offering the lowest price. 3-14 (f) The utility, as a condition of entering a construction 3-15 contract or a contract for consultant, professional, or technical 3-16 services, shall require the prime contractor to subcontract a 3-17 portion of the contract, determined by standards established by 3-18 commission rule, to small targeted group businesses. The 3-19 commission shall establish a procedure for granting waivers from 3-20 the subcontracting requirement if qualified small targeted group 3-21 businesses are not reasonably available. The utility shall 3-22 establish financial penalties, under standards established by 3-23 commission rule, for prime contractors who fail to meet the 3-24 requirements. The subcontracting requirements of this subsection 3-25 do not apply to a prime contractor that is a small targeted group 3-26 business. 3-27 (g) The commission shall designate a business as located in 4-1 an economically disadvantaged area if: 4-2 (1) it is located in an area of the state in which the 4-3 aggregate family income is less than 70 percent of the aggregate 4-4 family income for the state; 4-5 (2) it is located in an area designated as an urban 4-6 renewal area under Chapter 374, Local Government Code; or 4-7 (3) it is a rehabilitation facility or work activity 4-8 program. 4-9 (h) The commission may designate an area as an economically 4-10 disadvantaged area if the commission determines that the 4-11 designation would further the purposes of this section. A small 4-12 business is eligible for the economically disadvantaged area 4-13 preference if the owner of the business resides or is employed in a 4-14 designated area. The commission shall review its determinations 4-15 annually. 4-16 (i) If a business from an economically disadvantaged area is 4-17 capable of performing a purchase contract contemplated by a 4-18 utility, the utility shall make the purchase from that business 4-19 unless the price offered by that business is more than four percent 4-20 greater than the lowest price offered by a capable business that is 4-21 not from an economically disadvantaged area. If more than one 4-22 business from an economically disadvantaged area qualifies under 4-23 this subsection, the utility shall make the purchase from the 4-24 capable business from an economically disadvantaged area offering 4-25 the lowest price. 4-26 (j) At least 75 percent of the value of the subcontracts 4-27 awarded to small targeted group businesses under Subsection (f) of 5-1 this section must be performed by the business to which the 5-2 subcontract is awarded or by another small targeted group business. 5-3 (k) The utility shall submit to the commission an annual 5-4 report on the implementation of this section. The report must 5-5 include the following information: 5-6 (1) the total dollar value and number of purchases 5-7 from small businesses and the total number of small businesses from 5-8 which purchases were made; 5-9 (2) the total dollar value and number of purchases 5-10 from small targeted group businesses, the total number and value 5-11 of these purchases from each type of small targeted group business 5-12 in each purchasing category, and the percentages of the total 5-13 utility purchasing for each purchasing category the figures 5-14 represent; and 5-15 (3) the total dollar value and number of purchases 5-16 from small businesses in economically disadvantaged areas, the 5-17 total number and value of these purchases from each business and to 5-18 all businesses within each economically disadvantaged area in each 5-19 purchasing category, and the percentages of the total utility 5-20 purchasing for each purchasing category the figures represent. 5-21 SECTION 2. Article IV, Gas Utility Regulatory Act (Article 5-22 1446e, Vernon's Texas Civil Statutes), is amended by adding Section 5-23 4.11 to read as follows: 5-24 Sec. 4.11. PURCHASES FROM DISADVANTAGED BUSINESSES. (a) A 5-25 utility shall ensure that small businesses receive at least 25 5-26 percent of the value of the total purchases of goods and services 5-27 that the utility makes. The utility shall divide the purchases 6-1 into contract units of economically feasible production runs to 6-2 promote offers from small businesses. In designating purchases 6-3 the utility shall: 6-4 (1) vary the included purchases so that a variety of 6-5 goods and services produced by different small businesses are 6-6 obtained; and 6-7 (2) designate small business purchases in a manner 6-8 that will encourage proportional distribution of awards among the 6-9 geographical regions served by the utility. To promote the 6-10 geographical distribution of small business purchases, the utility 6-11 may designate a portion of the small business purchases for bidders 6-12 from a specified postal zip code zone or other geographical region 6-13 specified by the utility. The failure of the utility to designate 6-14 a purchase does not prohibit small businesses from seeking the 6-15 purchase. 6-16 (b) The commission shall adopt rules defining "small 6-17 business" for purposes of this section. The definition shall 6-18 recognize the differences among industries caused by the size of 6-19 the market for goods or services and the relative size and market 6-20 share of the competitors operating in those markets and shall 6-21 establish different size standards for various types of businesses. 6-22 The definition of "small business" in Section 481.101, Government 6-23 Code, applies to this section until the commission adopts rules 6-24 with a new definition. 6-25 (c) The utility shall establish a program for purchasing 6-26 goods and services from small targeted group businesses. The 6-27 program shall attempt to ensure, for each category of goods or 7-1 services purchased, that the percentage of purchasing from each 7-2 type of small targeted group business is proportional to the 7-3 representation of that targeted group business among all businesses 7-4 in the area served by the utility. 7-5 (d) The commission shall develop a program for designating 7-6 small targeted group businesses. The commission shall designate a 7-7 business as a small targeted group business if it is majority owned 7-8 and operated by women, persons with a disability, or specific 7-9 minorities and the commission determines that there is a 7-10 statistical disparity between the percentage of purchasing by 7-11 utilities from businesses owned by such persons and from other 7-12 businesses in the state. The commission shall review its 7-13 designation of small targeted group businesses every two years and 7-14 may revoke or extend a designation. In addition to those 7-15 designations, a business may be designated as a small targeted 7-16 group business if the commission determines that inclusion is 7-17 necessary to remedy discrimination against the owner based on race, 7-18 gender, or disability. 7-19 (e) If a small targeted group business is capable of 7-20 performing a purchase contract contemplated by a utility, the 7-21 utility shall make the purchase from the small targeted group 7-22 business unless the price offered by the small targeted group 7-23 business is more than six percent greater than the lowest price 7-24 offered by a capable business that is not a small targeted group 7-25 business. If more than one small targeted group business qualifies 7-26 under this subsection, the utility shall make the purchase from the 7-27 capable small targeted group business offering the lowest price. 8-1 (f) The utility, as a condition of entering a construction 8-2 contract or a contract for consultant, professional, or technical 8-3 services, shall require the prime contractor to subcontract a 8-4 portion of the contract, determined by standards established by 8-5 commission rule, to small targeted group businesses. The 8-6 commission shall establish a procedure for granting waivers from 8-7 the subcontracting requirement if qualified small targeted group 8-8 businesses are not reasonably available. The utility shall 8-9 establish financial penalties, under standards established by 8-10 commission rule, for prime contractors who fail to meet the 8-11 requirements. The subcontracting requirements of this subsection 8-12 do not apply to a prime contractor that is a small targeted group 8-13 business. 8-14 (g) The commission shall designate a business as located in 8-15 an economically disadvantaged area if: 8-16 (1) it is located in an area of the state in which the 8-17 aggregate family income is less than 70 percent of the aggregate 8-18 family income for the state; 8-19 (2) it is located in an area designated as an urban 8-20 renewal area under Chapter 374, Local Government Code; or 8-21 (3) it is a rehabilitation facility or work activity 8-22 program. 8-23 (h) The commission may designate an area as an economically 8-24 disadvantaged area if the commission determines that the 8-25 designation would further the purposes of this section. A small 8-26 business is eligible for the economically disadvantaged area 8-27 preference if the owner of the business resides or is employed in a 9-1 designated area. The commission shall review its determinations 9-2 annually. 9-3 (i) If a business from an economically disadvantaged area is 9-4 capable of performing a purchase contract contemplated by a 9-5 utility, the utility shall make the purchase from that business 9-6 unless the price offered by that business is more than four percent 9-7 greater than the lowest price offered by a capable business that is 9-8 not from an economically disadvantaged area. If more than one 9-9 business from an economically disadvantaged area qualifies under 9-10 this subsection, the utility shall make the purchase from the 9-11 capable business from an economically disadvantaged area offering 9-12 the lowest price. 9-13 (j) At least 75 percent of the value of the subcontracts 9-14 awarded to small targeted group businesses under Subsection (f) of 9-15 this section must be performed by the business to which the 9-16 subcontract is awarded or by another small targeted group business. 9-17 (k) The utility shall submit to the commission an annual 9-18 report on the implementation of this section. The report must 9-19 include the following information: 9-20 (1) the total dollar value and number of purchases 9-21 from small businesses and the total number of small businesses from 9-22 which purchases were made; 9-23 (2) the total dollar value and number of purchases 9-24 from small targeted group businesses, the total number and value of 9-25 these purchases from each type of small targeted group business in 9-26 each purchasing category, and the percentages of the total utility 9-27 purchasing for each purchasing category the figures represent; and 10-1 (3) the total dollar value and number of purchases 10-2 from small businesses in economically disadvantaged areas, the 10-3 total number and value of these purchases from each business and to 10-4 all businesses within each economically disadvantaged area in each 10-5 purchasing category, and the percentages of the total utility 10-6 purchasing for each purchasing category the figures represent. 10-7 SECTION 3. Subchapter E, Chapter 13, Water Code, is amended 10-8 by adding Section 13.141 to read as follows: 10-9 Sec. 13.141. PURCHASES FROM DISADVANTAGED BUSINESSES. (a) 10-10 A utility shall ensure that small businesses receive at least 25 10-11 percent of the value of the total purchases of goods and services 10-12 that the utility makes. The utility shall divide the purchases 10-13 into contract units of economically feasible production runs to 10-14 promote offers from small businesses. In designating purchases the 10-15 utility shall: 10-16 (1) vary the included purchases so that a variety of 10-17 goods and services produced by different small businesses are 10-18 obtained; and 10-19 (2) designate small business purchases in a manner 10-20 that will encourage proportional distribution of awards among the 10-21 geographical regions served by the utility. To promote the 10-22 geographical distribution of small business purchases, the utility 10-23 may designate a portion of the small business purchases for bidders 10-24 from a specified postal zip code zone or other geographical region 10-25 specified by the utility. The failure of the utility to designate 10-26 a purchase does not prohibit small businesses from seeking the 10-27 purchase. 11-1 (b) The commission shall adopt rules defining "small 11-2 business" for purposes of this section. The definition shall 11-3 recognize the differences among industries caused by the size of 11-4 the market for goods or services and the relative size and market 11-5 share of the competitors operating in those markets and shall 11-6 establish different size standards for various types of businesses. 11-7 The definition of "small business" in Section 481.101, Government 11-8 Code, applies to this section, until the commission adopts rules 11-9 with a new definition. 11-10 (c) The utility shall establish a program for purchasing 11-11 goods and services from small targeted group businesses. The 11-12 program shall attempt to ensure, for each category of goods or 11-13 services purchased, that the percentage of purchasing from each 11-14 type of small targeted group business is proportional to the 11-15 representation of that targeted group business among all businesses 11-16 in the area served by the utility. 11-17 (d) The commission shall develop a program for designating 11-18 small targeted group businesses. The commission shall designate a 11-19 business as a small targeted group business if it is majority owned 11-20 and operated by women, persons with a disability, or specific 11-21 minorities and the commission determines that there is a 11-22 statistical disparity between the percentage of purchasing by 11-23 utilities from businesses owned by such persons and from other 11-24 businesses in the state. The commission shall review its 11-25 designation of small targeted group businesses every two years and 11-26 may revoke or extend a designation. In addition to those 11-27 designations, a business may be designated as a small targeted 12-1 group business if the commission determines that inclusion is 12-2 necessary to remedy discrimination against the owner based on race, 12-3 gender, or disability. 12-4 (e) If a small targeted group business is capable of 12-5 performing a purchase contract contemplated by a utility, the 12-6 utility shall make the purchase from the small targeted group 12-7 business unless the price offered by the small targeted group 12-8 business is more than six percent greater than the lowest price 12-9 offered by a capable business that is not a small targeted group 12-10 business. If more than one small targeted group business qualifies 12-11 under this subsection, the utility shall make the purchase from the 12-12 capable small targeted group business offering the lowest price. 12-13 (f) The utility, as a condition of entering a construction 12-14 contract or a contract for consultant, professional, or technical 12-15 services, shall require the prime contractor to subcontract a 12-16 portion of the contract, determined by standards established by 12-17 commission rule, to small targeted group businesses. The 12-18 commission shall establish a procedure for granting waivers from 12-19 the subcontracting requirement if qualified small targeted group 12-20 businesses are not reasonably available. The utility shall 12-21 establish financial penalties, under standards established by 12-22 commission rule, for prime contractors who fail to meet the 12-23 requirements. The subcontracting requirements of this subsection 12-24 do not apply to a prime contractor that is a small targeted group 12-25 business. 12-26 (g) The commission shall designate a business as located in 12-27 an economically disadvantaged area if: 13-1 (1) it is located in an area of the state in which the 13-2 aggregate family income is less than 70 percent of the aggregate 13-3 family income for the state; 13-4 (2) it is located in an area designated as an urban 13-5 renewal area under Chapter 374, Local Government Code; or 13-6 (3) it is a rehabilitation facility or work activity 13-7 program. 13-8 (h) The commission may designate an area as an economically 13-9 disadvantaged area if the commission determines that the 13-10 designation would further the purposes of this section. A small 13-11 business is eligible for the economically disadvantaged area 13-12 preference if the owner of the business resides or is employed in a 13-13 designated area. The commission shall review its determinations 13-14 annually. 13-15 (i) If a business from an economically disadvantaged area is 13-16 capable of performing a purchase contract contemplated by a 13-17 utility, the utility shall make the purchase from that business 13-18 unless the price offered by that business is more than four percent 13-19 greater than the lowest price offered by a capable business that is 13-20 not from an economically disadvantaged area. If more than one 13-21 business from an economically disadvantaged area qualifies under 13-22 this subsection, the utility shall make the purchase from the 13-23 capable business from an economically disadvantaged area offering 13-24 the lowest price. 13-25 (j) At least 75 percent of the value of the subcontracts 13-26 awarded to small targeted group businesses under Subsection (f) of 13-27 this section must be performed by the business to which the 14-1 subcontract is awarded or by another small targeted group business. 14-2 (k) The utility shall submit to the commission an annual 14-3 report on the implementation of this section. The report must 14-4 include the following information: 14-5 (1) the total dollar value and number of purchases 14-6 from small businesses and the total number of small businesses from 14-7 which purchases were made; 14-8 (2) the total dollar value and number of purchases 14-9 from small targeted group businesses, the total number and value of 14-10 these purchases from each type of small targeted group business in 14-11 each purchasing category, and the percentages of the total utility 14-12 purchasing for each purchasing category the figures represent; and 14-13 (3) the total dollar value and number of purchases 14-14 from small businesses in economically disadvantaged areas, the 14-15 total number and value of these purchases from each business and to 14-16 all businesses within each economically disadvantaged area in each 14-17 purchasing category, and the percentages of the total utility 14-18 purchasing for each purchasing category the figures represent. 14-19 SECTION 4. (a) This Act applies only to a purchase made on 14-20 or after January 1, 1994. 14-21 (b) Before January 1, 1994: 14-22 (1) the Public Utility Commission of Texas shall adopt 14-23 rules under Section 36A, Public Utility Regulatory Act (Article 14-24 1446c, Vernon's Texas Civil Statutes), as added by this Act; 14-25 (2) the Railroad Commission of Texas shall adopt rules 14-26 under Section 4.11, Gas Utility Regulatory Act (Article 1446e, 14-27 Vernon's Texas Civil Statutes), as added by this Act; and 15-1 (3) the Texas Water Commission shall adopt rules under 15-2 Section 13.141, Water Code, as added by this Act. 15-3 SECTION 5. This Act takes effect September 1, 1993. 15-4 SECTION 6. The importance of this legislation and the 15-5 crowded condition of the calendars in both houses create an 15-6 emergency and an imperative public necessity that the 15-7 constitutional rule requiring bills to be read on three several 15-8 days in each house be suspended, and this rule is hereby suspended.