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.