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.