1-1 By: Turner of Harris (Senate Sponsor - West) H.B. No. 2310 1-2 (In the Senate - Received from the House May 17, 1993; 1-3 May 19, 1993, read first time and referred to Committee on State 1-4 Affairs; May 26, 1993, reported favorably by the following vote: 1-5 Yeas 8, Nays 0; May 26, 1993, sent to printer.) 1-6 COMMITTEE VOTE 1-7 Yea Nay PNV Absent 1-8 Harris of Dallas x 1-9 Rosson x 1-10 Carriker x 1-11 Henderson x 1-12 Leedom x 1-13 Lucio x 1-14 Luna x 1-15 Nelson x 1-16 Patterson x 1-17 Shelley x 1-18 Sibley x 1-19 West x 1-20 Whitmire x 1-21 A BILL TO BE ENTITLED 1-22 AN ACT 1-23 relating to contracts between governmental entities and certain 1-24 disadvantaged businesses; providing a civil penalty. 1-25 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: 1-26 SECTION 1. DEFINITIONS. In this Act: 1-27 (1) "Contractor" means a person who submits a bid for 1-28 a public contract. The term includes a general contractor, a prime 1-29 contractor, and a subcontractor. 1-30 (2) "Disadvantaged business" has the meaning assigned 1-31 by Section 1.02, State Purchasing and General Services Act (Article 1-32 601b, Vernon's Texas Civil Statutes). In addition, for the purpose 1-33 of this Act, the owners of a disadvantaged business must 1-34 participate in the control, operation, and management in a manner 1-35 proportionate to their ownership so that the business is clearly 1-36 controlled by the socially disadvantaged owners. 1-37 (3) "Governmental entity" means a state agency or 1-38 political subdivision of this state. 1-39 (4) "Person" means an individual, partnership, 1-40 association, corporation, or other private legal entity. 1-41 (5) "Political subdivision" means a county, 1-42 municipality, school district, or other special district or 1-43 authority of this state. 1-44 (6) "Public contract" means a purchasing contract or 1-45 public works contract awarded by a governmental entity. 1-46 (7) "State agency" means a board, commission, office, 1-47 department, or other agency in the executive, judicial, or 1-48 legislative branch of state government. The term includes an 1-49 institution of higher education as defined by Section 61.003, 1-50 Education Code. 1-51 SECTION 2. APPLICATION. This Act applies to each public 1-52 contract entered into by a governmental entity and a contractor in 1-53 which the contractor claims to be a disadvantaged business. 1-54 SECTION 3. PROHIBITED ACT. A contractor may not claim 1-55 disadvantaged business status in bidding on a public contract 1-56 unless the contractor meets the definition of a disadvantaged 1-57 business and that contractor will personally execute the terms of 1-58 the contract. 1-59 SECTION 4. SPECIFIC REQUIREMENTS. To qualify as a 1-60 contractor claiming disadvantaged business status under this Act: 1-61 (1) the general contractor will perform all of the 1-62 estimating and contract administration functions with the employees 1-63 of that contractor; 1-64 (2) subcontractors will perform all of their work of 1-65 their trade with their own employees, or, if the subcontractor uses 1-66 an employee leasing firm for the purpose of providing salary and 1-67 benefit administration, with employees who in all other respects 1-68 are supervised and perform on the job as if they were employees of 2-1 the subcontractor; and 2-2 (3) a prime contractor who intends to subcontract 2-3 specific trades may do so if the dollar value of the subcontracts 2-4 does not exceed 75 percent of the original value of the contract, 2-5 and all work in the trade of the prime contractor is accomplished 2-6 by employees of that contractor, or, if the prime contractor uses 2-7 an employee leasing firm for the purposes of salary and benefit 2-8 administration, with employees who in all other respects are 2-9 supervised and perform on the job as if they were employees of the 2-10 prime contractor. 2-11 SECTION 5. CIVIL PENALTY. (a) The attorney general or a 2-12 district, county, or city attorney may institute an action in 2-13 district court to recover a civil penalty against a person who 2-14 claims disadvantaged business status and the general contractor who 2-15 knowingly contracts with a person claiming the disadvantaged 2-16 business status in violation of Section 3 of this Act. 2-17 (b) A civil penalty assessed under this section may not 2-18 exceed $1,000 for each violation and may not exceed $100,000, in 2-19 aggregate, for all violations arising from a single action. Each 2-20 day of violation constitutes a separate violation for purposes of 2-21 penalty assessment. 2-22 (c) A civil penalty recovered in an action brought by the 2-23 attorney general shall be deposited in the state treasury. A civil 2-24 penalty recovered in an action brought by a political subdivision 2-25 shall be deposited in the general fund of that political 2-26 subdivision. 2-27 (d) A civil penalty under this section is in addition to any 2-28 other criminal, civil, or administrative penalty assessed by this 2-29 state or a political subdivision to which a person in violation of 2-30 Section 3 of this Act may be liable. 2-31 SECTION 6. EFFECTIVE DATE; SAVING PROVISION. This Act takes 2-32 effect September 1, 1993, and applies only to a public contract 2-33 that is entered into on or after that date. A public contract 2-34 entered into before September 1, 1993, is governed by the law in 2-35 effect on the date that the contract was entered into, and the 2-36 former law is continued in effect for that purpose. 2-37 SECTION 7. EMERGENCY. The importance of this legislation 2-38 and the crowded condition of the calendars in both houses create an 2-39 emergency and an imperative public necessity that the 2-40 constitutional rule requiring bills to be read on three several 2-41 days in each house be suspended, and this rule is hereby suspended. 2-42 * * * * * 2-43 Austin, 2-44 Texas 2-45 May 26, 1993 2-46 Hon. Bob Bullock 2-47 President of the Senate 2-48 Sir: 2-49 We, your Committee on State Affairs to which was referred H.B. 2-50 No. 2310, have had the same under consideration, and I am 2-51 instructed to report it back to the Senate with the recommendation 2-52 that it do pass and be printed. 2-53 Harris of 2-54 Dallas, Chairman 2-55 * * * * * 2-56 WITNESSES 2-57 No witnesses appeared on H.B. No. 2310.