H.B. No. 2310
    1-1                                AN ACT
    1-2  relating to contracts between governmental entities and certain
    1-3  disadvantaged businesses; providing a civil penalty.
    1-5        SECTION 1.  DEFINITIONS.  In this Act:
    1-6              (1)  "Contractor" means a person who submits a bid for
    1-7  a public contract.  The term includes a general contractor, a prime
    1-8  contractor, and a subcontractor.
    1-9              (2)  "Disadvantaged business" has the meaning assigned
   1-10  by Section 1.02, State Purchasing and General Services Act (Article
   1-11  601b, Vernon's Texas Civil Statutes).  In addition, for the purpose
   1-12  of this Act, the owners of a disadvantaged business must
   1-13  participate in the control, operation, and management in a manner
   1-14  proportionate to their ownership so that the business is clearly
   1-15  controlled by the socially disadvantaged owners.
   1-16              (3)  "Governmental entity" means a state agency or
   1-17  political subdivision of this state.
   1-18              (4)  "Person" means an individual, partnership,
   1-19  association, corporation, or other private legal entity.
   1-20              (5)  "Political subdivision" means a county,
   1-21  municipality, school district, or other special district or
   1-22  authority of this state.
   1-23              (6)  "Public contract" means a purchasing contract or
    2-1  public works contract awarded by a governmental entity.
    2-2              (7)  "State agency" means a board, commission, office,
    2-3  department, or other agency in the executive, judicial, or
    2-4  legislative branch of state government.  The term includes an
    2-5  institution of higher education as defined by Section 61.003,
    2-6  Education Code.
    2-7        SECTION 2.  APPLICATION.  This Act applies to each public
    2-8  contract entered into by a governmental entity and a contractor in
    2-9  which the contractor claims to be a disadvantaged business.
   2-10        SECTION 3.  PROHIBITED ACT.  A contractor may not claim
   2-11  disadvantaged business status in bidding on a public contract
   2-12  unless the contractor meets the definition of a disadvantaged
   2-13  business and that contractor will personally execute the terms of
   2-14  the contract.
   2-15        SECTION 4.  SPECIFIC REQUIREMENTS.  To qualify as a
   2-16  contractor claiming disadvantaged business status under this Act:
   2-17              (1)  the general contractor will perform all of the
   2-18  estimating and contract administration functions with the employees
   2-19  of that contractor;
   2-20              (2)  subcontractors will perform all of their work of
   2-21  their trade with their own employees, or, if the subcontractor uses
   2-22  an employee leasing firm for the purpose of providing salary and
   2-23  benefit administration, with employees who in all other respects
   2-24  are supervised and perform on the job as if they were employees of
   2-25  the subcontractor; and
    3-1              (3)  a prime contractor who intends to subcontract
    3-2  specific trades may do so if the dollar value of the subcontracts
    3-3  does not exceed 75 percent of the original value of the contract,
    3-4  and all work in the trade of the prime contractor is accomplished
    3-5  by employees of that contractor, or, if the prime contractor uses
    3-6  an employee leasing firm for the purposes of salary and benefit
    3-7  administration, with employees who in all other respects are
    3-8  supervised and perform on the job as if they were employees of the
    3-9  prime contractor.
   3-10        SECTION 5.  CIVIL PENALTY.  (a)  The attorney general or a
   3-11  district, county, or city attorney may institute an action in
   3-12  district court to recover a civil penalty against a person who
   3-13  claims disadvantaged business status and the general contractor who
   3-14  knowingly contracts with a person claiming the disadvantaged
   3-15  business status in violation of Section 3 of this Act.
   3-16        (b)  A civil penalty assessed under this section may not
   3-17  exceed $1,000 for each violation and may not exceed $100,000, in
   3-18  aggregate, for all violations arising from a single action.  Each
   3-19  day of violation constitutes a separate violation for purposes of
   3-20  penalty assessment.
   3-21        (c)  A civil penalty recovered in an action brought by the
   3-22  attorney general shall be deposited in the state treasury.  A civil
   3-23  penalty recovered in an action brought by a political subdivision
   3-24  shall be deposited in the general fund of that political
   3-25  subdivision.
    4-1        (d)  A civil penalty under this section is in addition to any
    4-2  other criminal, civil, or administrative penalty assessed by this
    4-3  state or a political subdivision to which a person in violation of
    4-4  Section 3 of this Act may be liable.
    4-5        SECTION 6.  EFFECTIVE DATE; SAVING PROVISION.  This Act takes
    4-6  effect September 1, 1993, and applies only to a public contract
    4-7  that is entered into on or after that date.  A public contract
    4-8  entered into before September 1, 1993, is governed by the law in
    4-9  effect on the date that the contract was entered into, and the
   4-10  former law is continued in effect for that purpose.
   4-11        SECTION 7.  EMERGENCY.  The importance of this legislation
   4-12  and the crowded condition of the calendars in both houses create an
   4-13  emergency and an imperative public necessity that the
   4-14  constitutional rule requiring bills to be read on three several
   4-15  days in each house be suspended, and this rule is hereby suspended.