By: Lucio, West, Rosson S.B. No. 224
A BILL TO BE ENTITLED
AN ACT
1-1 relating to the treatment of small businesses and historically
1-2 underutilized businesses by state governmental entities; providing
1-3 penalties.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. SHORT TITLE. This Act may be cited as the Small
1-6 Business Assistance Act.
1-7 SECTION 2. LEGISLATIVE FINDINGS AND INTENT. The legislature
1-8 finds that an indispensable element of the American economic system
1-9 is free and vigorous competition and that the preservation and
1-10 expansion of economic competition is essential to the economic
1-11 well-being of this state and of the United States. The legislature
1-12 further finds that the continuing vitality of small businesses and
1-13 historically underutilized businesses is of utmost importance to
1-14 economic competition and that it is the policy of this state to
1-15 ensure economic competition by assisting small businesses and
1-16 historically underutilized businesses to the greatest extent
1-17 possible. It is the intent of the legislature, by this Act, to
1-18 provide that assistance to small businesses and historically
1-19 underutilized businesses and, by doing so, to promote economic
1-20 competition to the benefit of all persons in this state.
1-21 SECTION 3. DEFINITIONS. In this Act:
1-22 (1) "Commission" means the General Services
1-23 Commission.
1-24 (2) "Department" means the Texas Department of
2-1 Commerce.
2-2 (3) "Financial institution" means a state or federally
2-3 chartered bank, savings bank, savings and loan association, or
2-4 credit union in this state.
2-5 (4) "Historically underutilized business" means:
2-6 (A) a corporation formed for the purpose of
2-7 making a profit in which at least 51 percent of all classes of the
2-8 shares of stock or other equitable securities is owned by one or
2-9 more persons who are socially disadvantaged because of their
2-10 identification as members of certain groups, including black
2-11 Americans, Hispanic Americans, women, Asian Pacific Americans, and
2-12 American Indians, who have suffered the effects of discriminatory
2-13 practices or similar insidious circumstances over which they have
2-14 no control. Those persons must have proportionate interest and
2-15 demonstrate active participation in the control, operation, and
2-16 management of the corporation's affairs;
2-17 (B) a sole proprietorship formed for the purpose
2-18 of making a profit that is 100 percent owned, operated, and
2-19 controlled by a person described by Paragraph (A) of this
2-20 subdivision;
2-21 (C) a partnership formed for the purpose of
2-22 making a profit in which 51 percent of the assets and interest in
2-23 the partnership is owned by one or more persons described by
2-24 Paragraph (A) of this subdivision. Those persons must have
2-25 proportionate interest and demonstrate active participation in the
2-26 control, operation, and management of the partnership's affairs; or
2-27 (D) a joint venture in which each entity in the
3-1 joint venture is a historically underutilized business under this
3-2 subdivision.
3-3 (5) "Small business" means a corporation, partnership,
3-4 sole proprietorship, or other legal entity that:
3-5 (A) is formed for the purpose of making a
3-6 profit, is independently owned and operated, and has fewer than 100
3-7 employees or less than $1 million in annual gross receipts; or
3-8 (B) otherwise qualifies as a small business
3-9 under the standards of the United States Small Business
3-10 Administration.
3-11 (6) "State governmental entity" means:
3-12 (A) a state agency;
3-13 (B) an institution of higher education, as
3-14 defined by Section 61.003, Education Code;
3-15 (C) an entity expressly created by statute and
3-16 having statewide jurisdiction; or
3-17 (D) another entity issuing a bond or other
3-18 obligation on behalf of the state or on behalf of an entity listed
3-19 in Paragraph (A) or (B) of this subdivision.
3-20 (7) "Supplier contract" means a contract between a
3-21 small business or historically underutilized business and a prime
3-22 contractor under which the small business or historically
3-23 underutilized business is directly involved in the manufacture or
3-24 distribution of the supplies or materials or otherwise warehouses
3-25 and ships the supplies.
3-26 (8) "Women-owned business" means:
3-27 (A) a corporation formed for the purpose of
4-1 making a profit in which at least 51 percent of all classes of the
4-2 shares of stock or other equitable securities is owned by one or
4-3 more women and in which women have a proportionate interest and
4-4 demonstrate active participation in the control, operation, and
4-5 management of the corporation's affairs;
4-6 (B) a sole proprietorship formed for the purpose
4-7 of making a profit that is 100 percent owned, operated, and
4-8 controlled by a woman;
4-9 (C) a partnership formed for the purpose of
4-10 making a profit in which 51 percent of the assets and interest in
4-11 the partnership is owned by one or more women and in which women
4-12 have a proportionate interest and demonstrate active participation
4-13 in the control, operation, and management of the partnership's
4-14 affairs; or
4-15 (D) a joint venture in which each entity in the
4-16 joint venture is a women-owned business under this subdivision.
4-17 SECTION 4. EXCLUSION AS HISTORICALLY UNDERUTILIZED BUSINESS.
4-18 (a) A business is not a historically underutilized business if an
4-19 owner of the business has a personal net worth of more than
4-20 $750,000, unless the department determines that the person has
4-21 demonstrated that the person is a socially disadvantaged individual
4-22 described by Section 481.101(1)(A), Government Code, and its
4-23 subsequent amendments.
4-24 (b) For the purposes of this section, "personal net worth"
4-25 has the meaning assigned by the regulations of the United States
4-26 Small Business Administration in 13 C.F.R. Section 124.106 and its
4-27 subsequent amendments.
5-1 SECTION 5. DUTIES OF STATE GOVERNMENTAL ENTITIES. (a) Each
5-2 state governmental entity shall make a good faith effort to assist
5-3 historically underutilized businesses to receive not less than 35
5-4 percent of the total value of each contract award for construction
5-5 and the purchase of supplies, materials, services, and equipment
5-6 that the state governmental entity expects to make.
5-7 (b) Each state governmental entity shall keep statistical
5-8 data and other records on the number of contracts awarded by the
5-9 state governmental entity and each operating division of the state
5-10 governmental entity to small businesses or historically
5-11 underutilized businesses.
5-12 (c) Each state governmental entity shall report to the
5-13 commission the total number and dollar amount of contracts,
5-14 subcontracts, and supplier contracts paid to small businesses and
5-15 historically underutilized businesses. These reports shall be made
5-16 quarterly according to guidelines established by the commission.
5-17 SECTION 6. DUTIES OF GENERAL SERVICES COMMISSION. (a) The
5-18 commission shall certify businesses that are historically
5-19 underutilized businesses. As part of its certification procedures,
5-20 the commission shall approve a municipal program that certifies
5-21 historically underutilized businesses under substantially the same
5-22 definition prescribed by this Act and shall certify businesses
5-23 certified by the municipality as historically underutilized
5-24 businesses under this Act.
5-25 (b) The commission shall compile a directory of businesses
5-26 certified as historically underutilized businesses under Subsection
5-27 (a) of this section. The commission shall update the directory at
6-1 least semiannually in the most cost-efficient format and provide a
6-2 copy of the directory to each state agency semiannually. The
6-3 commission and state agencies shall use the directory in
6-4 determining awards of state purchasing and public works contracts.
6-5 (c) The commission shall compile and analyze the reports
6-6 submitted under Subsection (c) of Section 5 of this Act and submit
6-7 a report based on the analysis to the presiding officer and each
6-8 member of each house of the legislature each fiscal year.
6-9 (d) The commission shall offer assistance and training to
6-10 small businesses and historically underutilized businesses
6-11 regarding state procurement procedures. The commission shall
6-12 advise small businesses and historically underutilized businesses
6-13 of the availability of state contracts and advise small businesses
6-14 and historically underutilized businesses to enter the businesses'
6-15 names on the state's bid list.
6-16 (e) The commission shall work with public and private
6-17 entities to establish a method to provide information on contracts
6-18 and requests for proposals to the public in a timely and efficient
6-19 manner.
6-20 (f) The commission shall electronically post bid
6-21 solicitations with the department for dissemination through the
6-22 Texas Marketplace or another appropriate method of dissemination.
6-23 (g) To increase participation of small businesses and
6-24 historically underutilized businesses in state purchasing term
6-25 contracts, the commission shall attempt to purchase items that are
6-26 not the same or essentially similar under separate contracts.
6-27 Contracts should be reviewed to determine if it is feasible and if
7-1 a reasonable opportunity exists for a small business and
7-2 historically underutilized business to perform any part of the
7-3 contract. The commission may award one or more parts of a contract
7-4 to more than one bidder.
7-5 (h) The commission shall make a good faith effort to assist
7-6 historically underutilized businesses to receive not less than 35
7-7 percent of the total value of each contract award for construction
7-8 and the purchase of supplies, materials, services, and equipment
7-9 that the commission makes for a state agency.
7-10 (i) The commission shall report to the governor, lieutenant
7-11 governor, and speaker of the house of representatives during each
7-12 fiscal year the level of implementation of the participation goals
7-13 during the preceding fiscal year. If the participation goals are
7-14 not being met, the commission and each state agency not meeting its
7-15 goals shall report the reasons for the inability to meet the goals.
7-16 SECTION 7. DUTIES OF TEXAS DEPARTMENT OF COMMERCE. (a) The
7-17 department shall:
7-18 (1) examine the role of small businesses and
7-19 historically underutilized businesses in the state's economy and
7-20 the contribution of small businesses and historically underutilized
7-21 businesses in generating economic activity, expanding employment
7-22 opportunities, promoting exports, stimulating innovation and
7-23 entrepreneurship, and bringing new and untested products and
7-24 services to the marketplace;
7-25 (2) serve as the principal advocate in the state on
7-26 behalf of small businesses and historically underutilized
7-27 businesses and provide advice in the consideration of
8-1 administrative requirements and legislation that affect small
8-2 businesses and historically underutilized businesses;
8-3 (3) evaluate the effectiveness of efforts of state
8-4 agencies and other entities to assist small businesses and
8-5 historically underutilized businesses and make appropriate
8-6 recommendations to assist the development and strengthening of
8-7 small business and historically underutilized business enterprise;
8-8 (4) identify specific instances in which regulations
8-9 inhibit small business and historically underutilized business
8-10 development and to the extent possible identify conflicting state
8-11 policy goals;
8-12 (5) determine the availability of financial and other
8-13 resources to small businesses and historically underutilized
8-14 businesses and recommend methods for:
8-15 (A) increasing the availability of equity
8-16 capital and other forms of financial assistance to small businesses
8-17 and historically underutilized businesses;
8-18 (B) generating markets for the goods and
8-19 services of small businesses and historically underutilized
8-20 businesses;
8-21 (C) providing more effective education,
8-22 training, and management and technical assistance to small
8-23 businesses and historically underutilized businesses; and
8-24 (D) providing assistance to small businesses and
8-25 historically underutilized businesses in complying with federal,
8-26 state, and local laws;
8-27 (6) describe the reasons for small business and
9-1 historically underutilized business successes and failures,
9-2 ascertain the related factors that are particularly important in
9-3 this state, and recommend actions for increasing the success rate
9-4 of small businesses and historically underutilized businesses;
9-5 (7) serve as a focal point for receiving complaints
9-6 and suggestions concerning state government policies and activities
9-7 that affect small businesses and historically underutilized
9-8 businesses;
9-9 (8) assist with the resolution of problems among state
9-10 agencies and small businesses and historically underutilized
9-11 businesses;
9-12 (9) develop and advocate proposals for changes in
9-13 state policies and activities that adversely affect small
9-14 businesses and historically underutilized businesses;
9-15 (10) provide to legislative committees and state
9-16 agencies information on the effects of proposed policies or actions
9-17 that affect small businesses and historically underutilized
9-18 businesses;
9-19 (11) enlist the assistance of public and private
9-20 agencies, businesses, and other organizations in disseminating
9-21 information about state programs and services that benefit small
9-22 businesses and historically underutilized businesses and
9-23 information regarding means by which small businesses and
9-24 historically underutilized businesses can use those programs and
9-25 services;
9-26 (12) provide information and assistance relating to
9-27 establishing, operating, or expanding small businesses and
10-1 historically underutilized businesses;
10-2 (13) establish and operate a statewide toll-free
10-3 telephone service providing small businesses and historically
10-4 underutilized businesses with ready access to the services offered
10-5 by the department and other state agencies;
10-6 (14) identify sources of financial assistance for
10-7 small businesses and historically underutilized businesses, match
10-8 small businesses and historically underutilized businesses with
10-9 sources of financial assistance, and assist small businesses and
10-10 historically underutilized businesses with the preparation of
10-11 applications for loans from governmental or private sources;
10-12 (15) sponsor meetings, to the extent practicable in
10-13 cooperation with public and private educational institutions, to
10-14 provide training and disseminate information beneficial to small
10-15 businesses and historically underutilized businesses;
10-16 (16) assist small businesses and historically
10-17 underutilized businesses in their dealings with federal, state, and
10-18 local governmental agencies and provide information regarding
10-19 governmental requirements affecting small businesses and
10-20 historically underutilized businesses;
10-21 (17) perform research, studies, and analyses of
10-22 matters affecting the interests of small businesses and
10-23 historically underutilized businesses;
10-24 (18) develop and implement programs to encourage
10-25 governmental agencies, public sector business associations, and
10-26 other organizations to provide useful services to small businesses
10-27 and historically underutilized businesses;
11-1 (19) use available resources within the state, such as
11-2 small business development centers, educational institutions, and
11-3 nonprofit associations, to coordinate the provision of management
11-4 and technical assistance to small businesses and historically
11-5 underutilized businesses in a systematic manner;
11-6 (20) publish newsletters, brochures, and other
11-7 documents containing information useful to small businesses and
11-8 historically underutilized businesses;
11-9 (21) identify successful small business and
11-10 historically underutilized business assistance programs provided by
11-11 other states and determine the feasibility of adapting those
11-12 programs for implementation in this state;
11-13 (22) establish an outreach program to make the
11-14 existence of the department's assistance known to small businesses
11-15 and historically underutilized businesses and potential clients
11-16 throughout the state;
11-17 (23) adopt rules necessary to carry out this section;
11-18 (24) identify potential business opportunities for
11-19 small businesses and historically underutilized businesses in the
11-20 border region and develop programs to maximize those opportunities;
11-21 (25) identify potential business opportunities for
11-22 small businesses and historically underutilized businesses in rural
11-23 areas of this state and develop programs to maximize those
11-24 opportunities; and
11-25 (26) perform any other functions necessary to carry
11-26 out the purposes of this section.
11-27 (b) The department may provide community-based services to
12-1 carry out its duties under this section, including the creation of
12-2 a pilot program to evaluate the merits of locating full-time
12-3 personnel outside the Austin headquarters. This pilot program will
12-4 give first preference to serving economically distressed areas,
12-5 rural areas, or historically underutilized businesses or assisting
12-6 development of specific industries. The department may require
12-7 areas served by these personnel to provide in-kind or cash
12-8 contributions as necessary to support these personnel. A report
12-9 will be submitted to the legislature describing the effectiveness
12-10 of this method for delivering services from the department to
12-11 address specific economic needs.
12-12 SECTION 8. DUTIES OF THE STATE BOARD OF INSURANCE. (a) The
12-13 State Board of Insurance shall maintain records and submit a report
12-14 to the governor and the legislature not later than February 1 of
12-15 each odd-numbered year relating to bonds governed by Chapter 7,
12-16 Insurance Code, and its subsequent amendments. The report must
12-17 include:
12-18 (1) the number of bond applications made to surety
12-19 companies;
12-20 (2) the number of bond applicants that were small
12-21 businesses or historically underutilized businesses;
12-22 (3) the number and amount of bonds authorized by
12-23 surety companies;
12-24 (4) the number and amount of bonds that were issued to
12-25 small businesses or historically underutilized businesses; and
12-26 (5) a breakdown of the bonds issued to small
12-27 businesses or historically underutilized businesses by ethnicity
13-1 and sex.
13-2 (b) Copies of the report must also be filed with the
13-3 commission and department.
13-4 SECTION 9. DUTIES OF LEGISLATIVE BUDGET BOARD. The
13-5 Legislative Budget Board shall submit an annual report to the
13-6 department and the commission stating for each state agency the
13-7 capital budget items and term contract purchases of the state
13-8 agency during the previous state fiscal year.
13-9 SECTION 10. DUTIES OF FINANCIAL INSTITUTIONS. (a) Each
13-10 year on a date determined by the state treasurer, a financial
13-11 institution must file with the state treasurer, the commission, and
13-12 the department a report for the preceding year that includes:
13-13 (1) the number of small businesses and historically
13-14 underutilized businesses that applied for a loan with the financial
13-15 institution;
13-16 (2) the number of loans that were made to small
13-17 businesses and historically underutilized businesses; and
13-18 (3) the number of small businesses and historically
13-19 underutilized businesses that were denied a request for a loan and
13-20 the reason for the denial.
13-21 (b) The timely annual filing by a financial institution of a
13-22 report of condition required by 12 U.S.C. Section 1817(a)(3), and
13-23 its subsequent amendments, that contains the information required
13-24 by Section 122, Federal Deposit Insurance Corporation Improvement
13-25 Act of 1991 (Pub. L. 102-242), and its subsequent amendments, with
13-26 the appropriate federal agency on the form prescribed by that
13-27 agency constitutes compliance with the reporting requirements of
14-1 this section, unless the federal reserve board fails or refuses to
14-2 publish that information as required by Section 477, Federal
14-3 Deposit Insurance Corporation Improvement Act of 1991 (12 U.S.C.
14-4 Section 251), and its subsequent amendments, and the state
14-5 treasurer notifies the financial institution that the federal
14-6 reserve board has failed to publish that information and requests
14-7 the financial institution to forward to the state treasurer the
14-8 portion of the report of condition that contains the information
14-9 required by Section 122, Federal Deposit Insurance Corporation
14-10 Improvement Act of 1991. Forwarding the requested portion of the
14-11 report of condition to the state treasurer constitutes compliance
14-12 with the reporting requirements of this section.
14-13 (c) This section does not require a financial institution to
14-14 collect or report information relating to the race, sex, religion,
14-15 or ethnicity of a borrower or a loan applicant to the extent the
14-16 collection or reporting of that information is prohibited or
14-17 restricted by any other law of this state or the United States.
14-18 (d) If the state treasurer determines that a financial
14-19 institution is improperly denying loans to small businesses or
14-20 historically underutilized businesses, the treasurer may prohibit
14-21 funds of the state or another governmental entity over which the
14-22 treasurer has control from being deposited with the financial
14-23 institution.
14-24 (e) On the request of a small business or a historically
14-25 underutilized business that is the recipient of a contract from the
14-26 state or a local unit of government, a financial institution shall
14-27 assist the business in the establishment of a collateralized
15-1 operating line of credit that is consistent with the dollar value
15-2 of the business contract. If a financial institution is able to
15-3 provide this line of credit, the line of credit must:
15-4 (1) provide for draws on at least a weekly basis to
15-5 meet operating expenses; and
15-6 (2) be secured by the business's accounts receivable
15-7 or alternative security or collateral.
15-8 SECTION 11. CRIMINAL PENALTY. (a) A person commits an
15-9 offense if the person intentionally applies as a historically
15-10 underutilized business for an award of a contract governed by this
15-11 Act and the person knowingly does not meet the definition of a
15-12 historically underutilized business under this Act.
15-13 (b) A person commits an offense if the person intentionally
15-14 applies as a small business for an award of a contract governed by
15-15 this Act and the person knowingly does not meet the definition of
15-16 small business under this Act.
15-17 (c) An offense under this section is a felony of the third
15-18 degree.
15-19 SECTION 12. CONFORMING AMENDMENTS. Sections 3.07 and 3.10,
15-20 State Purchasing and General Services Act (Article 601b, Vernon's
15-21 Texas Civil Statutes), are amended to read as follows:
15-22 Sec. 3.07. Emergency Purchases. <(a)> The commission shall
15-23 provide for emergency purchases by a state agency and may set a
15-24 monetary limit on the amount of each emergency purchase.
15-25 <(b) Each emergency purchase made under this section is
15-26 subject to the disadvantaged business provisions of Section 3.10 of
15-27 this article.>
16-1 Sec. 3.10. Purchase Methods. <(a)> In purchasing supplies,
16-2 materials, services, and equipment the commission may use, but is
16-3 not limited to, the contract purchase procedure, the multiple award
16-4 contract procedure, and the open market purchase procedure. The
16-5 commission shall have the authority to combine orders in a system
16-6 of schedule purchasing, and it shall at all times try to benefit
16-7 from purchasing in bulk. All purchases of and contracts for
16-8 supplies, materials, services, and equipment shall, except as
16-9 provided herein, be based whenever possible on competitive bids.
16-10 <(b) The commission shall make a good faith effort to assist
16-11 disadvantaged businesses to receive at least 10 percent of the
16-12 total value of all contract awards for the purchase of supplies,
16-13 materials, services, and equipment that the commission expects to
16-14 make for a state agency in its fiscal year. The commission shall
16-15 estimate the expected total value of an agency's contract awards
16-16 not later than the 60th day of the agency's fiscal year and may
16-17 revise the estimate as new information requires.>
16-18 SECTION 13. REPEALER. The following are repealed:
16-19 (1) Subchapter G, Chapter 481, Government Code;
16-20 (2) Sections 465.0081, 481.078(f), and 493.012,
16-21 Government Code;
16-22 (3) Section 12.029, Agriculture Code;
16-23 (4) Sections 11.912 and 61.0571, Education Code;
16-24 (5) Sections 1.02(3), 1.03, 1.04, and 5.36, State
16-25 Purchasing and General Services Act (Article 601b, Vernon's Texas
16-26 Civil Statutes);
16-27 (6) Section 2.06, State Lottery Act (Article 179g,
17-1 Vernon's Texas Civil Statutes);
17-2 (7) Article 6669c, Revised Statutes; and
17-3 (8) Section 24, Chapter 410, Acts of the 53rd
17-4 Legislature, Regular Session, 1953 (Article 6674v, Vernon's Texas
17-5 Civil Statutes).
17-6 SECTION 14. STUDY BY COMPTROLLER. (a) Before January 1,
17-7 1994, the comptroller shall prepare a disparity and capacity study
17-8 regarding state contracting. Each state governmental entity shall
17-9 report as necessary to and cooperate with the comptroller in the
17-10 preparation of the study.
17-11 (b) The study must identify the available capacity,
17-12 potential availability, and goals for small businesses and
17-13 historically underutilized businesses for geographical and
17-14 industrial segments of the state.
17-15 (c) Before February 1, 1994, the comptroller shall
17-16 distribute the report to each state governmental entity and the
17-17 legislature.
17-18 (d) This section expires February 1, 1994.
17-19 SECTION 15. APPLICATION. This Act applies only to a
17-20 contract awarded on or after the effective date of this Act. A
17-21 contract awarded before the effective date of this Act is governed
17-22 by the law in effect when the contract was awarded, and that law is
17-23 continued in effect for that purpose.
17-24 SECTION 16. EFFECTIVE DATE. This Act takes effect September
17-25 1, 1993.
17-26 SECTION 17. EMERGENCY. The importance of this legislation
17-27 and the crowded condition of the calendars in both houses create an
18-1 emergency and an imperative public necessity that the
18-2 constitutional rule requiring bills to be read on three several
18-3 days in each house be suspended, and this rule is hereby suspended.