By Oliveira H.B. No. 3032
76R6712 WP-D
A BILL TO BE ENTITLED
1-1 AN ACT
1-2 relating to historically underutilized businesses; providing a
1-3 penalty.
1-4 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-5 SECTION 1. Sections 2161.001(2) and (3), Government Code,
1-6 are amended to read as follows:
1-7 (2) "Historically underutilized business" means a
1-8 business formed for the purpose of making a profit in which one or
1-9 more socially disadvantaged persons holds a controlling interest.
1-10 The eligible applicant must:
1-11 (A) control the board of directors, in the case
1-12 of a corporation [formed for the purpose of making a profit in
1-13 which 51 percent or more of all classes of the shares of stock or
1-14 other equitable securities are owned by one or more socially
1-15 disadvantaged persons who have a proportionate interest and
1-16 actively participate in the corporation's control, operation, and
1-17 management];
1-18 (B) own a business that meets the size standards
1-19 as determined by the commission [a sole proprietorship created for
1-20 the purpose of making a profit that is completely owned, operated,
1-21 and controlled by a socially disadvantaged person]; and
1-22 (C) demonstrate daily participation in business
1-23 activity, including managerial and operational control [a
1-24 partnership formed for the purpose of making a profit in which 51
2-1 percent or more of the assets and interest in the partnership are
2-2 owned by one or more socially disadvantaged persons who have a
2-3 proportionate interest and actively participate in the
2-4 partnership's control, operation, and management;]
2-5 [(D) a joint venture in which each entity in the
2-6 venture is a historically underutilized business, as determined
2-7 under another paragraph of this subdivision; or]
2-8 [(E) a supplier contract between a historically
2-9 underutilized business as determined under another paragraph of
2-10 this subdivision and a prime contractor under which the
2-11 historically underutilized business is directly involved in the
2-12 manufacture or distribution of the goods or otherwise warehouses
2-13 and ships the goods].
2-14 (3) "Socially disadvantaged person" means a person who
2-15 is socially disadvantaged because of the person's identification as
2-16 a member of a certain group, including women, Black Americans of
2-17 African descent, and persons of [Hispanic Americans, women,] Asian
2-18 Pacific, Hispanic [Americans], and Native American descent
2-19 [Americans], and who has suffered the effects of discriminatory
2-20 practices or other similar insidious circumstances over which the
2-21 person has no control.
2-22 SECTION 2. Subchapter A, Chapter 2161, Government Code, is
2-23 amended by adding Section 2161.003 to read as follows:
2-24 Sec. 2161.003. REVOCATION OR TRANSFER OF PURCHASING
2-25 AUTHORITY. (a) In this section, "health and human services
2-26 agency" has the meaning assigned by Section 531.001.
2-27 (b) In preparing the consolidated yearly report under
3-1 Section 2161.121 regarding the historically underutilized business
3-2 program during the preceding state fiscal year, the commission
3-3 shall determine for each state agency whether the agency
3-4 substantially failed to meet during the preceding fiscal year the
3-5 applicable historically underutilized business contracting goals
3-6 established by this chapter and by rules of the commission. The
3-7 commission shall revoke, for the remainder of the current state
3-8 fiscal year, any purchasing authority that the commission has
3-9 delegated to a state agency if the commission determines that the
3-10 agency failed to meet the applicable goals.
3-11 (c) The commission shall report to the Health and Human
3-12 Services Commission each health and human services agency that
3-13 substantially failed to meet the goals during the preceding state
3-14 fiscal year. The Health and Human Services Commission shall
3-15 transfer, for the remainder of the current state fiscal year, one
3-16 or more appropriate procurement functions of each of those agencies
3-17 to another appropriate state agency.
3-18 (d) If the commission revokes a state agency's delegated
3-19 purchasing authority under this section or the Health and Human
3-20 Services Commission transfers a health and human services agency's
3-21 purchasing functions under this section, the comptroller may
3-22 consider that fact in the event a transfer of an agency's
3-23 appropriated funds is needed to cover the costs of assuming the
3-24 agency's purchasing functions. The amount transferred from the
3-25 agency's funds shall be an amount determined by the Legislative
3-26 Budget Board.
3-27 SECTION 3. Sections 2161.061(b) and (c), Government Code,
4-1 are amended to read as follows:
4-2 (b) As one [part] of its certification procedures, the
4-3 commission may:
4-4 (1) approve a municipal [another certification]
4-5 program that certifies historically underutilized businesses under
4-6 substantially the same definition used by Section 2161.001; and
4-7 (2) certify a business certified under the municipal
4-8 program as a historically underutilized business under this
4-9 chapter.
4-10 (c) In order to maximize the number of certified
4-11 historically underutilized businesses, the commission shall enter
4-12 into agreements with other certification programs in the state.
4-13 The agreements must take effect immediately and address:
4-14 (1) automatic certification and regular electronic
4-15 updates of the state database for members of minority business
4-16 enterprise or women business enterprise programs; and
4-17 (2) training and education by the commission of those
4-18 minority business enterprise or women business enterprise members.
4-19 [A municipality, in certifying historically underutilized
4-20 businesses, may adopt the certification program of the commission,
4-21 of the federal Small Business Administration, or of another
4-22 political subdivision or other governmental entity.]
4-23 SECTION 4. Section 2161.062, Government Code, is amended by
4-24 adding Subsections (d) and (e) to read as follows:
4-25 (d) The commission shall send historically underutilized
4-26 businesses an orientation package on certification or
4-27 recertification. The package shall include:
5-1 (1) a certificate issued in the vendor's name;
5-2 (2) a description of the significance and value of
5-3 certification;
5-4 (3) a list of state purchasing personnel;
5-5 (4) information regarding electronic commerce
5-6 opportunities;
5-7 (5) information regarding the Texas Marketplace
5-8 website; and
5-9 (6) additional information about the state procurement
5-10 process.
5-11 (e) A State agency with a budget greater than $5 million a
5-12 fiscal year shall designate a staff member to serve as the
5-13 historically underutilized business coordinator for the agency.
5-14 The procurement director may serve as the coordinator. In agencies
5-15 that currently employ a historically underutilized business
5-16 coordinator, the position of coordinator, within the agency's
5-17 structure, must be at least equal to the position of procurement
5-18 director. The coordinator shall:
5-19 (1) coordinate training programs for the recruitment
5-20 and retention of historically underutilized businesses;
5-21 (2) report required data to the commission; and
5-22 (3) match historically underutilized businesses with
5-23 key staff within the agency.
5-24 SECTION 5. Section 2161.063(b), Government Code, is amended
5-25 to read as follows:
5-26 (b) The commission shall assist the Texas Department of
5-27 Economic Development [Commerce] in performing the department's
6-1 duties under Section 481.0068 [481.103].
6-2 SECTION 6. Section 2161.064(b), Government Code, is amended
6-3 to read as follows:
6-4 (b) The commission at least semiannually shall update the
6-5 directory and provide access to the directory electronically or in
6-6 another form [a copy of the directory] to each state agency.
6-7 SECTION 7. Sections 2161.121(a) and (e), Government Code,
6-8 are amended to read as follows:
6-9 (a) The commission shall prepare a consolidated report that:
6-10 (1) includes the number and dollar amount of contracts
6-11 awarded and paid to historically underutilized businesses certified
6-12 by the commission; [and]
6-13 (2) analyzes the relative level of opportunity for
6-14 historically underutilized businesses for various categories of
6-15 acquired goods and services; and
6-16 (3) tracks graduation rates for historically
6-17 underutilized businesses as determined by the General Services
6-18 Commission by vendor identification number and social security
6-19 number.
6-20 (e) The commission shall send on October 15 of each year a
6-21 report on the preceding fiscal year to the presiding officer of
6-22 each house of the legislature[, the members of the legislature,]
6-23 and the joint committee.
6-24 SECTION 8. Section 2161.122(c), Government Code, is amended
6-25 to read as follows:
6-26 (c) A state agency participating in a group purchasing
6-27 program [described under Section 2155.139(b)] shall send to the
7-1 commission in the agency's report under Section 2161.121 a separate
7-2 list of purchases from historically underutilized businesses that
7-3 are made through the group purchasing program, including the dollar
7-4 amount of each purchase allocated to the reporting agency.
7-5 SECTION 9. Subchapter C, Chapter 2161, Government Code, is
7-6 amended by adding Sections 2161.126 and 2161.127 to read as
7-7 follows:
7-8 Sec. 2161.126. EDUCATION AND OUTREACH BY COMMISSION. Before
7-9 September 1 of each year, the commission shall report to the
7-10 governor, the lieutenant governor, and the speaker of the house of
7-11 representatives on the education and training efforts being made
7-12 toward historically underutilized businesses. The report must
7-13 include the following as related to historically underutilized
7-14 businesses:
7-15 (1) agency vision, mission, and philosophy;
7-16 (2) marketing materials and other educational
7-17 materials;
7-18 (3) policy regarding education, outreach, and
7-19 dissemination of information;
7-20 (4) prior year goal attainment;
7-21 (5) goals, objectives, and expected outcome measures
7-22 for each outreach and education event; and
7-23 (6) future initiatives on education and outreach.
7-24 Sec. 2161.127. LEGISLATIVE APPROPRIATIONS REQUESTS. Each
7-25 state agency must include as part of its legislative appropriations
7-26 request a detailed report for consideration by the budget
7-27 committees of the legislature that shows the extent to which the
8-1 agency met the applicable historically underutilized business
8-2 contracting goals established by this chapter and by rules of the
8-3 commission during the two calendar years preceding the calendar
8-4 year in which the request is submitted. If a state agency did not
8-5 meet an applicable goal, the report must demonstrate the reasons
8-6 for that fact. The extent to which a state agency meets applicable
8-7 goals is considered a performance measure for purposes of the
8-8 appropriations process.
8-9 SECTION 10. Section 2161.182(a), Government Code, is amended
8-10 to read as follows:
8-11 (a) A state agency that contracts for a construction project
8-12 [, including a project] under Section 2166.003[,] shall make a good
8-13 faith effort to assist historically underutilized businesses to
8-14 receive not less than 30 percent of the total value of each
8-15 construction contract award that the agency expects to make during
8-16 a fiscal year.
8-17 SECTION 11. Chapter 2161, Government Code, is amended by
8-18 adding Subchapter F to read as follows:
8-19 SUBCHAPTER F. SUBCONTRACTING
8-20 Sec. 2161.251. APPLICABILITY. (a) This subchapter applies
8-21 to all contracts entered into by a state agency with an expected
8-22 value of $100,000 or more, including:
8-23 (1) contracts for the acquisition of a good or
8-24 service; and
8-25 (2) contracts for or related to the construction of a
8-26 public building, road, or other public work.
8-27 (b) This subchapter applies to the contract without regard
9-1 to:
9-2 (1) whether the contract is otherwise subject to this
9-3 subtitle; or
9-4 (2) the source of funds for the contract, except that
9-5 to the extent federal funds are used to pay for the contract, this
9-6 subchapter does not apply if federal law prohibits the application
9-7 of this subchapter in relation to the expenditure of federal funds.
9-8 Sec. 2161.252. AGENCY DETERMINATION REGARDING SUBCONTRACTING
9-9 OPPORTUNITIES; BUSINESS SUBCONTRACTING PLAN. (a) Each state
9-10 agency that considers entering into a contract with an expected
9-11 value of $100,000 or more shall, before the agency solicits bids,
9-12 proposals, offers, or other applicable expressions of interest from
9-13 prospective contractors, determine whether it is probable that
9-14 there will be subcontracting opportunities under the contract. If
9-15 the state agency determines that there is that probability, the
9-16 agency in its request for bids, proposals, offers, or other
9-17 applicable expressions of interest regarding the contract shall
9-18 require that each bid, proposal, offer, or other applicable
9-19 expression of interest include a historically underutilized
9-20 business subcontracting plan.
9-21 (b) If the state agency determines that there is the
9-22 probability for subcontracting opportunities under the contract,
9-23 the agency also shall determine the extent to which historically
9-24 underutilized businesses will be available to enter into the
9-25 subcontracts. The state agency shall make this determination based
9-26 on the types of subcontracting opportunities available under the
9-27 contract together with the agency's knowledge of the relevant
10-1 market, any relevant disparity study conducted by or for a
10-2 governmental entity that contains information on the availability
10-3 of historically underutilized businesses to perform the types of
10-4 subcontracted work in the relevant locality, and other relevant
10-5 information the agency considers to be reliable. Given the
10-6 expected value of the subcontracting opportunities and its
10-7 determination regarding the availability of historically
10-8 underutilized businesses to perform the subcontracted work, the
10-9 state agency shall state the minimum historically underutilized
10-10 business subcontracting goals for the contract expressed as a
10-11 percentage of the expected dollar value of the contract. The state
10-12 agency shall include the minimum percentage goal in its request for
10-13 bids, proposals, offers, or other applicable expressions of
10-14 interest.
10-15 (c) When a state agency requires a historically
10-16 underutilized business subcontracting plan under Subsection (a), a
10-17 bid, proposal, offer, or other applicable expression of interest
10-18 from a prospective contractor must contain a plan that meets the
10-19 requirements of this section to be considered responsive.
10-20 (d) The historically underutilized business subcontracting
10-21 plan is considered to be part of the bid, proposal, offer, or other
10-22 applicable expression of interest. The plan must include:
10-23 (1) the historically underutilized business
10-24 subcontracting goal that the prospective contractor expects to
10-25 meet, expressed as a percentage of the expected dollar amount of
10-26 the contract;
10-27 (2) the name of each historically underutilized
11-1 business with which the prospective contractor expects to
11-2 subcontract;
11-3 (3) the part of the work that each of those expected
11-4 subcontractors would perform;
11-5 (4) the expected dollar value of each of those
11-6 subcontracts; and
11-7 (5) information about the methods used in the past and
11-8 currently used by the prospective contractor to identify, contact,
11-9 and evaluate available historically underutilized businesses with
11-10 which to subcontract.
11-11 (e) If the historically underutilized business
11-12 subcontracting goal stated in the prospective contractor's plan is
11-13 less than the state agency's stated minimum goal for the contract,
11-14 the plan must account for that fact. The plan must demonstrate the
11-15 reason, in the prospective contractor's opinion, that there is an
11-16 insufficient number of historically underutilized businesses
11-17 available in the locality at that time to allow the state agency's
11-18 stated minimum goal to be met.
11-19 Sec. 2161.253. AGENCY EVALUATION OF BUSINESS SUBCONTRACTING
11-20 PLAN. (a) A state agency that has required each bid, proposal,
11-21 offer, or other applicable expression of interest for the contract
11-22 to include a historically underutilized business subcontracting
11-23 plan may not award the contract to a prospective contractor who did
11-24 not include a plan that complies with Section 2161.252.
11-25 (b) In determining which bid, proposal, offer, or other
11-26 applicable expression of interest offers the best value to the
11-27 state or is the lowest and best responsible bid or proposal, the
12-1 state agency shall evaluate and consider the merits of each
12-2 prospective contractor's historically underutilized business
12-3 subcontracting plan.
12-4 Sec. 2161.254. REQUIRED CONTRACT CLAUSES. (a) A contract
12-5 awarded by a state agency that has required each bid, proposal,
12-6 offer, or other applicable expression of interest for the contract
12-7 to include a historically underutilized business subcontracting
12-8 plan must include the contract clauses in this section.
12-9 (b) The historically underutilized business subcontracting
12-10 plan submitted by the prospective contractor receiving the contract
12-11 is considered to be part of the contract. The historically
12-12 underutilized business subcontracting goal expressed in the plan as
12-13 a percentage of the expected dollar amount of the contract is
12-14 considered to be part of the contract, except that if negotiations
12-15 were allowed under other law and the prospective contractor and the
12-16 state agency agreed on a different percentage subcontracting goal
12-17 during negotiations before the contract was awarded, the negotiated
12-18 goal is considered to be part of the contract.
12-19 (c) The contract must require quarterly reports on the
12-20 progress the contractor is making in meeting the overall goals of
12-21 the historically underutilized business subcontracting plan. The
12-22 quarterly reports must generally describe, in the manner prescribed
12-23 by the state agency, the progress being made in meeting the goals.
12-24 The quarterly reports must also specifically report:
12-25 (1) whether the historically underutilized businesses
12-26 named in the subcontracting plan as businesses with which the
12-27 contractor expected to subcontract actually received the expected
13-1 subcontracts, and if not:
13-2 (A) the reasons for that fact; and
13-3 (B) the efforts that the contractor made to find
13-4 another historically underutilized business that was available and
13-5 would be interested in the subcontract;
13-6 (2) the cumulative dollar value of subcontracts
13-7 awarded to historically underutilized businesses under the contract
13-8 as of the end of the quarterly reporting period; and
13-9 (3) the percentage of the cumulative amount the
13-10 contractor has spent under the contract, as of the end of the
13-11 quarterly reporting period, as payments to historically
13-12 underutilized businesses who have received subcontracts under the
13-13 contract.
13-14 (d) The contract must include a clause that outlines and
13-15 describes the requirements of the state's historically
13-16 underutilized business subcontracting program.
13-17 (e) The contract must include a liquidated damages clause
13-18 that requires the contractor to pay liquidated damages to the state
13-19 after the contract is completed if:
13-20 (1) the value of subcontracts awarded under the
13-21 contract to historically underutilized businesses did not meet or
13-22 exceed the historically underutilized business subcontracting goal
13-23 that is part of the contract; and
13-24 (2) the goal was not met at least in part because the
13-25 contractor did not make a good faith effort to meet the goal.
13-26 (f) The amount of the liquidated damages is computed by
13-27 subtracting the value of subcontracts awarded under the contract to
14-1 historically underutilized businesses from the historically
14-2 underutilized business subcontracting goal that is part of the
14-3 contract.
14-4 Sec. 2161.255. DETERMINING WHETHER TO ASSESS LIQUIDATED
14-5 DAMAGES. (a) After the contract is completed, the purchasing
14-6 personnel of the state agency shall determine whether the value of
14-7 subcontracts awarded under the contract to historically
14-8 underutilized businesses met or exceeded the historically
14-9 underutilized business subcontracting goal that was part of the
14-10 contract. If it is determined that the contractor failed to meet or
14-11 exceed the goal, the state agency shall notify the contractor of
14-12 that determination.
14-13 (b) The state agency shall give the contractor ample
14-14 opportunity to submit documentation and to explain in discussions
14-15 with state agency purchasing personnel that the failure to meet or
14-16 exceed the goal is not attributable to a lack of good faith effort
14-17 on the part of the contractor to meet the goal.
14-18 (c) In determining the extent to which the contractor made a
14-19 good faith effort to meet the goal, the state agency's purchasing
14-20 personnel shall consider factors indicating good faith such as
14-21 whether the contractor:
14-22 (1) provided timely notice of a subcontracting
14-23 opportunity to historically underutilized businesses that have the
14-24 ability to perform the subcontract and that may be interested in
14-25 receiving the subcontract;
14-26 (2) advertised the subcontracting opportunity in
14-27 general circulation media, trade association media, and media that
15-1 focus on serving one or more kinds of historically underutilized
15-2 businesses;
15-3 (3) effectively used the services of minority, women,
15-4 and community organization contractor groups, local, state, and
15-5 federal business assistance offices, and other organizations that
15-6 provide assistance in identifying historically underutilized
15-7 businesses that have the ability to perform the subcontract;
15-8 (4) divided subcontract work or purchases into the
15-9 smallest reasonable units to enhance the possibility of
15-10 historically underutilized business participation in the
15-11 subcontracting opportunity; and
15-12 (5) awarded a subcontract to the historically
15-13 underutilized business that qualified as the lowest responsible
15-14 bidder or offeror, or for negotiated subcontracts, negotiated in
15-15 good faith with interested historically underutilized businesses.
15-16 (d) If, after considering the documentation and explanations
15-17 submitted by the contractor, the state agency's officer or employee
15-18 in charge of procurement determines that the failure to meet or
15-19 exceed the goal is to any significant degree attributable to a lack
15-20 of good faith effort on the part of the contractor to meet the
15-21 goal, that officer or employee shall assess the liquidated damages
15-22 on behalf of the agency. The contractor shall pay the amount of
15-23 the liquidated damages to the state agency, which shall send the
15-24 money to the comptroller for deposit in the unobligated and
15-25 undedicated portion of the general revenue fund.
15-26 SECTION 12. Section 2161.231, Government Code, is amended to
15-27 read as follows:
16-1 Sec. 2161.231. PENALTY. (a) A person commits an offense if
16-2 the person:
16-3 (1) intentionally applies as a historically
16-4 underutilized business for an award of a purchasing contract or
16-5 public works contract under this subtitle; and
16-6 (2) knows the person is not a historically
16-7 underutilized business.
16-8 (b) A person commits an offense if the person:
16-9 (1) intentionally applies as a historically
16-10 underutilized business for an award of a subcontract under a
16-11 purchasing contract or public works contract with a state agency
16-12 under this subtitle or other law; and
16-13 (2) knows the person is not a historically
16-14 underutilized business.
16-15 (c) An offense under this section is a third degree felony.
16-16 SECTION 13. (a) This Act takes effect September 1, 1999,
16-17 except that Section 2161.003, Government Code, as added by this
16-18 Act, takes effect September 1, 2000.
16-19 (b) Subchapter F, Chapter 2161, Government Code, as added by
16-20 this Act, applies only to subcontracting under a contract entered
16-21 into by a state agency for which the request for bids, proposals,
16-22 offers, or other applicable expressions of interest is published or
16-23 otherwise disseminated on or after that date.
16-24 SECTION 14. The importance of this legislation and the
16-25 crowded condition of the calendars in both houses create an
16-26 emergency and an imperative public necessity that the
16-27 constitutional rule requiring bills to be read on three several
17-1 days in each house be suspended, and this rule is hereby suspended.