88R9563 RDS-F
 
  By: Miles S.B. No. 1490
 
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the state historically underutilized business program;
  creating a criminal offense.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 2161.001, Government Code, is amended by
  adding Subdivision (5) to read as follows:
               (5)  "Commercially useful function" means
  responsibility for the execution of a distinct element of the work
  of a contract and performance, management, and supervision of the
  work involved, including:
                     (A)  negotiation of the terms of a contract or
  subcontract;
                     (B)  assumption of financial risk commensurate
  with a contract or subcontract;
                     (C)  acquisition of appropriate lines of credit or
  loans; or
                     (D)  fulfillment of the responsibilities of a
  joint venture partner under a joint venture agreement.
         SECTION 2.  Section 2161.0015, Government Code, is amended
  to read as follows:
         Sec. 2161.0015.  DETERMINING SIZE STANDARDS FOR
  HISTORICALLY UNDERUTILIZED BUSINESSES. To [The comptroller may
  establish size standards that a business may not exceed if it is to]
  be considered a historically underutilized business under this
  chapter:
               (1)  the business owner may not have an individual
  personal net worth of more than $1.32 million; and
               (2)  the business must:
                     (A)  meet the Small Business Administration's
  size standards for a small business for purposes of federal
  government procurement under 13 C.F.R. Section 121.401, et seq.;
  and
                     (B)  have an annual gross income of not more than
  $23.98 million. [In determining the size standards, the comptroller
  shall determine the size at which a business should be considered
  sufficiently large that the business probably does not
  significantly suffer from the effects of past discriminatory
  practices.]
         SECTION 3.  Section 2161.002(c), Government Code, is amended
  to read as follows:
         (c)  In adopting rules to administer this chapter, the
  comptroller shall adopt rules that are based on the results of the
  "Texas Department of Transportation Disparity Study 2019" prepared
  by Colette Holt & Associates ["State of Texas Disparity Study, A
  Report to the Texas Legislature as Mandated by H.B. 2626, 73rd
  Legislature, December 1994" (prepared by National Economic
  Research Associates, Inc.)]. The comptroller shall revise the
  rules in response to the findings of any updates of the study that
  are prepared on behalf of the state.
         SECTION 4.  Section 2161.004(c), Government Code, is amended
  to read as follows:
         (c)  Section 2161.003 and Subsections (a) and (b) of this
  section [do not] apply to a project or contract subject to Section
  201.702, Transportation Code.
         SECTION 5.  Section 2161.061, Government Code, is amended by
  amending Subsections (a) and (e) and adding Subsections (a-1),
  (a-2), and (a-3) to read as follows:
         (a)  The comptroller shall certify and recertify
  historically underutilized businesses.
         (a-1)  A certification or recertification under this section
  expires on the first anniversary of the date the certification or
  recertification was issued.
         (a-2)  The comptroller may not initially certify a business
  as a historically underutilized business unless each owner of the
  business completes at least 32 hours of training provided by the
  comptroller or a local government or nonprofit organization
  approved by the comptroller to provide the training. The training
  must include information regarding:
               (1)  the requirements of this chapter and rules adopted
  under this chapter; and
               (2)  the programs available under 49 C.F.R. Part 26 and
  the requirements for participation in those programs.
         (a-3)  The comptroller may not recertify a business as a
  historically underutilized business unless each owner of the
  business completes at least eight hours of continuing training
  provided by the comptroller or a local government or nonprofit
  organization approved by the comptroller to provide the continuing
  training.
         (e)  A local government or a nonprofit organization that
  certifies historically underutilized businesses under Subsection
  (c) or that conducts a certification program described by and
  approved under Subsection (b) shall make available to the public an
  online searchable database containing information about
  historically underutilized businesses, minority business
  enterprises, women's business enterprises, and disadvantaged
  business enterprises certified by the local government or nonprofit
  organization, including:
               (1)  the name of the business;
               (2)  the contact person or owner of the business;
               (3)  the address and telephone number of the business;
               (4)  the type or category of business, including
  relevant capabilities of the business and the North American
  Industry Classification System codes for the business; [and]
               (5)  the expiration date of the business's
  certification; and
               (6)  the date of completion of training required under
  this section.
         SECTION 6.  Sections 2161.062(b), (d), and (e), Government
  Code, are amended to read as follows:
         (b)  The comptroller shall offer historically underutilized
  businesses assistance, [and] training, and continuing training
  regarding state procurement procedures.
         (d)  The comptroller shall send each historically
  underutilized business [businesses] an orientation package on
  certification or recertification. The package shall include:
               (1)  a certificate issued in the historically
  underutilized business's name;
               (2)  a description of the significance and value of
  certification;
               (3)  a list of state purchasing personnel;
               (4)  information regarding electronic commerce
  opportunities;
               (5)  information regarding the Texas Marketplace
  website; [and]
               (6)  additional information about the state
  procurement process; and
               (7)  the business's current training and continuing
  training status.
         (e)  A state agency with a biennial budget that exceeds $10
  million shall designate a staff member to serve as the historically
  underutilized businesses coordinator for the agency during the
  fiscal year. The procurement director may serve as the coordinator.
  In agencies that employ a historically underutilized businesses
  coordinator, the position of coordinator, within the agency's
  structure, must be at least equal to the position of procurement
  director. In addition to any other responsibilities, the
  coordinator shall:
               (1)  coordinate training programs for the recruitment,
  training, and retention of historically underutilized businesses;
               (2)  report required information to the comptroller
  annually; and
               (3)  match historically underutilized businesses with
  key staff within the agency.
         SECTION 7.  Section 2161.063(a), Government Code, is amended
  to read as follows:
         (a)  The comptroller shall encourage state agencies to use
  historically underutilized businesses by:
               (1)  working with state agencies to establish a
  statewide policy for increasing the use of historically
  underutilized businesses;
               (2)  assisting state agencies in seeking historically
  underutilized businesses capable of supplying required goods or
  services;
               (3)  assisting state agencies in identifying and
  advising historically underutilized businesses on the types of
  goods and services the agencies need; [and]
               (4)  assisting state agencies in increasing the amount
  of business placed with historically underutilized businesses; and
               (5)  assisting state agencies in identifying
  historically underutilized businesses that can perform
  commercially useful functions for agencies.
         SECTION 8.  Section 2161.064, Government Code, is amended by
  adding Subsection (f) to read as follows:
         (f)  The comptroller shall verify that each historically
  underutilized business listed in the directory is in full
  compliance with the training requirements under Section 2161.061.
         SECTION 9.  Section 2161.065, Government Code, is amended by
  amending Subsection (a) and adding Subsection (c) to read as
  follows:
         (a)  The comptroller shall design and oversee the
  implementation by state agencies of a mentor-protege program to
  foster long-term relationships between prime contractors and
  historically underutilized businesses and to increase the ability
  of historically underutilized businesses to contract with the state
  or to receive subcontracts under a state contract. Each state
  agency with a biennial appropriation that exceeds $10 million shall
  implement and require participation in the program designed by the
  comptroller.
         (c)  The mentor-protege program under this section must be
  consistent with the program established under 49 C.F.R. Section
  26.35.
         SECTION 10.  Section 2161.066(d), Government Code, is
  amended to read as follows:
         (d)  Each state agency that has a historically underutilized
  businesses coordinator shall:
               (1)  design its own program and model the program to the
  extent appropriate on the program developed by the comptroller
  under this section; [and]
               (2)  sponsor presentations by historically
  underutilized businesses at the agency; and
               (3)  provide a method for a historically underutilized
  business to provide documentation through a state-approved source
  that the business is able to perform a commercially useful function
  in the industry for which the business is certified as a
  historically underutilized business, according to the North
  American Industry Classification System.
         SECTION 11.  Section 2161.121(a), Government Code, is
  amended to read as follows:
         (a)  The comptroller shall prepare a consolidated report
  that:
               (1)  includes the number and dollar amount of contracts
  awarded and paid to historically underutilized businesses
  certified by the comptroller;
               (2)  analyzes the relative level of opportunity for
  historically underutilized businesses for various categories of
  acquired goods and services; [and]
               (3)  tracks, by vendor identification number and, to
  the extent allowed by federal law, by social security number, the
  graduation rates for historically underutilized businesses that
  grew to exceed the size standards determined by the comptroller;
  and
               (4)  includes assurances by state agencies that the
  number and the dollar amounts of contracts awarded to historically
  underutilized businesses are properly calculated according to the
  level of participation each historically underutilized business
  performs for purposes of determining the amount that could be
  counted toward a disadvantaged business enterprise participation
  goal under 49 C.F.R. Section 26.55.
         SECTION 12.  Sections 2161.122(b), (c), and (d), Government
  Code, are amended to read as follows:
         (b)  A contractor or supplier awarded a contract by a state
  agency shall report to the agency the identity of each historically
  underutilized business to whom the contractor or supplier awarded a
  subcontract for the purchase of goods or services and certify that
  the historically underutilized business can perform a commercially
  useful function.
         (c)  Each state agency shall report to the comptroller in
  accordance with Section 2161.125 the following information with
  regard to the expenditure of both treasury and nontreasury funds:
               (1)  the total dollar amount of purchases and payments
  made under contracts awarded to historically underutilized
  businesses that could be counted toward a disadvantaged business
  enterprise participation goal under 49 C.F.R. Section 26.55;
               (2)  the number of businesses participating in any
  issuance of state bonds by the agency;
               (3)  the number of contracts awarded to businesses with
  regard to the agency's acquisition, construction, or equipping of a
  facility or implementation of a program; and
               (4)  the number of bids, proposals, or other applicable
  expressions of interest made by historically underutilized
  businesses with regard to the agency's acquisition, construction,
  or equipping of a facility or implementation of a program.
         (d)  A state agency participating in a group purchasing
  program shall send to the comptroller in the agency's report under
  Section 2161.121 a separate list of purchases from historically
  underutilized businesses that are made through the group purchasing
  program, including the dollar amount of each purchase allocated to
  the reporting agency that could be counted toward a disadvantaged
  business enterprise participation goal under 49 C.F.R. Section
  26.55.
         SECTION 13.  Sections 2161.123(a) and (d), Government Code,
  are amended to read as follows:
         (a)  Each state agency, including the comptroller, that is
  required to have a strategic plan under Chapter 2056 shall include
  in its strategic plan a written plan for increasing the agency's use
  of historically underutilized businesses in purchasing and public
  works contracting and for monitoring the agency's use of
  historically underutilized businesses based on amounts that could
  be counted toward a disadvantaged business enterprise
  participation goal under 49 C.F.R. Section 26.55. The governing
  board of each university system or institution of higher education
  not included in a university system, other than a public junior
  college, shall prepare a written plan for increasing the use of
  historically underutilized businesses in purchasing and public
  works contracting by the system or institution.
         (d)  The comptroller and the state auditor shall cooperate to
  develop procedures providing for random periodic monitoring of
  state agency compliance with this section. The state auditor shall
  report to the comptroller a state agency that is not complying with
  this section. In determining whether a state agency is making a
  good faith effort to comply, the state auditor shall consider
  whether the agency:
               (1)  has adopted rules under Section 2161.003;
               (2)  has used the comptroller's directory under Section
  2161.064 and other resources to identify certified and qualified
  historically underutilized businesses that are able and available
  to contract with the agency;
               (3)  made good faith, timely efforts to contact
  identified historically underutilized businesses regarding
  contracting opportunities;
               (4)  conducted its procurement program in accordance
  with the good faith effort methodology set out in comptroller
  rules; and
               (5)  established goals for contracting with
  historically underutilized businesses in each procurement category
  based on:
                     (A)  scheduled fiscal year expenditures; and
                     (B)  the availability of historically
  underutilized businesses in each category as determined by rules
  adopted under Section 2161.002.
         SECTION 14.  Section 2161.125, Government Code, is amended
  to read as follows:
         Sec. 2161.125.  CATEGORIZATION OF HISTORICALLY
  UNDERUTILIZED BUSINESSES; TRAINING INFORMATION. (a) The
  comptroller, in cooperation with each state agency reporting under
  this subchapter, shall categorize each historically underutilized
  business included in a report under this subchapter by sex, race,
  and ethnicity and by whether the business qualifies as a
  historically underutilized business because it is owned or owned,
  operated, and controlled, as applicable, wholly or partly by one or
  more veterans as defined by 38 U.S.C. Section 101(2) who have
  suffered at least a 20 percent service-connected disability as
  defined by 38 U.S.C. Section 101(16).
         (b)  The report under Subsection (a) must also state whether
  the historically underutilized business owners have completed
  training and continuing training required by Section 2161.061 and
  whether the business can perform a commercially useful function.
         SECTION 15.  Section 2161.181, Government Code, is amended
  to read as follows:
         Sec. 2161.181.  GOALS FOR PURCHASES OF GOODS AND SERVICES. A
  state agency, including the comptroller, shall make a good faith
  effort to increase the contract awards for the purchase of goods or
  services that the agency expects to make during a fiscal year to
  historically underutilized businesses based on rules adopted by the
  comptroller to implement the disparity study described by Section
  2161.002(c). The agency's efforts and achievement of its goals
  under this section must be measured based on amounts that could be
  counted toward a disadvantaged business enterprise participation
  goal under 49 C.F.R. Section 26.55.
         SECTION 16.  Section 2161.182(a), Government Code, is
  amended to read as follows:
         (a)  A state agency that contracts for a construction
  project, including a project under Section 2166.003, shall make a
  good faith effort to increase the construction contract awards that
  the agency expects to make during a fiscal year to historically
  underutilized businesses based on rules adopted by the comptroller
  to implement the disparity study described by Section 2161.002(c).
  The agency's efforts and achievement of its goals under this
  subsection must be measured based on amounts that could be counted
  toward a disadvantaged business enterprise participation goal
  under 49 C.F.R. Section 26.55.
         SECTION 17.  Section 2161.231, Government Code, is amended
  by adding Subsection (a-1) to read as follows:
         (a-1)  A person commits an offense if the person
  intentionally makes a false report under this subtitle regarding an
  award of a purchasing contract or public works contract to a
  historically underutilized business.
         SECTION 18.  Section 2161.252, Government Code, is amended
  by adding Subsection (c) to read as follows:
         (c)  A state agency may not approve a historically
  underutilized business subcontracting plan or award a contract to
  which the plan relates unless the plan has been approved by the
  agency's good faith effort review committee established under
  Section 2161.2521.
         SECTION 19.  Subchapter F, Chapter 2161, Government Code, is
  amended by adding Section 2161.2521 to read as follows:
         Sec. 2161.2521.  GOOD FAITH EFFORT REVIEW COMMITTEE. (a) A
  state agency that determines that there is a probability for
  subcontracting opportunities under Section 2161.252 shall
  establish a good faith effort review committee for the purpose of
  reviewing any subcontracting plans.
         (b)  The committee shall consist of five members, including:
               (1)  three members from the state historically
  underutilized business community;
               (2)  one member from the state agency; and
               (3)  one member from the prime contracting community.
         SECTION 20.  Sections 2161.253(b) and (c), Government Code,
  are amended to read as follows:
         (b)  To the extent that subcontracts are not contracted for
  as originally submitted in the historically underutilized business
  subcontracting plan, the contractor shall report to the state
  agency and the agency's good faith effort review committee all the
  circumstances that explain that fact and describe the good faith
  efforts made to find and subcontract with another historically
  underutilized business.
         (c)  The state agency and the agency's good faith effort
  review committee shall audit the contractor's compliance with the
  historically underutilized business subcontracting plan. In
  determining whether the contractor made the required good faith
  effort, the agency may not consider the success or failure of the
  contractor to subcontract with historically underutilized
  businesses in any specific quantity. The agency's determination is
  restricted to considering factors indicating good faith.
         SECTION 21.  Section 2161.065(b), Government Code, is
  repealed.
         SECTION 22.  The changes in law made by this Act apply only
  to a contract for which the request for bids or proposals or other
  applicable expressions of interest, if applicable, is made public
  on or after the effective date of this Act.
         SECTION 23.  This Act takes effect September 1, 2023.