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.
   1-26        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.