85R7994 YDB-D     By: Reynolds H.B. No. 1281       A BILL TO BE ENTITLED   AN ACT   relating to historically underutilized businesses and to goods and   services purchased by governmental entities; providing penalties.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Section 2155.074(b), Government Code, is amended   to read as follows:          (b)  In determining the best value for the state, the   purchase price and whether the goods or services meet   specifications are the most important considerations. However, the   commission or other state agency may, subject to Subsection (c) and   Section 2155.075, consider other relevant factors, including:                (1)  installation costs;                (2)  life cycle costs;                (3)  the quality and reliability of the goods and   services;                (4)  the delivery terms;                (5)  indicators of probable vendor performance under   the contract such as past vendor performance, the vendor's   financial resources and ability to perform, the vendor's experience   or demonstrated capability and responsibility, and the vendor's   ability to provide reliable maintenance agreements and support;                (6)  the cost of any employee training associated with   a purchase;                (7)  the effect of a purchase on agency productivity;                (8)  the vendor's anticipated economic impact to the   state or a subdivision of the state, including potential tax   revenue and employment; [and]                (9)  whether the vendor is a historically underutilized   business as defined by Section 2161.001; and                (10)   other factors relevant to determining the best   value for the state in the context of a particular purchase.          SECTION 2.  Sections 2155.444(a), (b), (c), and (e),   Government Code, are amended to read as follows:          (a)  The comptroller [commission] and all state agencies   making purchases of goods, including agricultural products, shall   give preference to those produced or grown in this state or offered   by Texas bidders as follows:                (1)  goods produced or offered by a Texas bidder that is   a historically underutilized business [owned by a service-disabled   veteran who is a Texas resident] shall be given a first preference   and goods produced in this state or offered by other Texas bidders   shall be given second preference, if the cost to the state and   quality are equal; and                (2)  agricultural products grown in this state shall be   given first preference and agricultural products offered by Texas   bidders shall be given second preference, if the cost to the state   and quality are equal.          (b)  If goods, including agricultural products, produced or   grown in this state or offered by Texas bidders exceed 105 percent   of the cost of other goods or are not equal in [cost and] quality to   other products, then goods, including agricultural products,   produced or grown in other states of the United States shall be   given preference over foreign products if the cost to the state and   quality are equal.          (c)  In this section:                (1)  "Agricultural products" includes textiles and   other similar products.                (2)  "Historically underutilized business" has the   meaning assigned by Section 2161.001.                [(1-a)     "Service-disabled veteran" means a person who   is a veteran as defined by 38 U.S.C. Section 101(2) and who has a   service-connected disability as defined by 38 U.S.C. Section   101(16).]                (3) [(2)]  "Texas bidder" means a business:                      (A)  incorporated in this state;                      (B)  that has its principal place of business in   this state; or                      (C)  that has an established physical presence in   this state.          (e)  The comptroller [commission] and all state agencies   procuring services shall give first preference to services offered   by a Texas bidder that is a historically underutilized business   [owned by a service-disabled veteran who is a Texas resident] and   shall give second preference to services offered by other Texas   bidders if:                (1)  the services meet state requirements regarding the   service to be performed and expected quality; and                (2)  the cost of the service does not exceed the cost of   other similar services of similar expected quality that are offered   by a bidder that is not entitled to a preference under this   subsection.          SECTION 3.  Section 2161.001, Government Code, is amended by   amending Subdivision (3) and adding Subdivision (5) to read as   follows:                (3)  "Economically disadvantaged person" means a   person who:                      (A)  is economically disadvantaged because of the   person's identification as a member of a certain group, including:                            (i)  Black Americans;                            (ii) Hispanic Americans;                            (iii) women;                            (iv) Asian Pacific Americans;                            (v) Native Americans; and                            (vi)  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); and                      (B)  has suffered the effects of discriminatory   practices or other similar insidious circumstances over which the   person has no control.                (5)  "Professional services" has the meaning assigned   by Section 2254.002.          SECTION 4.  Section 2161.064, Government Code, is amended by   adding Subsection (f) to read as follows:          (f)  A state agency may use the directory compiled under this   section to create a mailing list for soliciting bids from   historically underutilized businesses.  A state agency that   determines the size of the acquisition justifies rotation may   rotate the businesses included on the mailing list by using   different portions of the directory for separate acquisitions of   goods or services. If the state agency rotates the businesses   included on a solicitation mailing list, bids must be solicited   from:                (1)  a bidder who was previously awarded the bid for the   goods or services;                (2)  businesses that have been added to the directory   since the last solicitation; and                (3)  businesses included in the portion of the   directory selected for the solicitation mailing list.          SECTION 5.  Subchapter B, Chapter 2161, Government Code, is   amended by adding Section 2161.067 to read as follows:          Sec. 2161.067.  JOINT VENTURES. (a)  In this section:                (1)  "Eligible purchase" means a purchase of goods or   services that:                      (A)  a state agency determines is eligible for a   joint venture based on work and market availability; and                      (B)  exceeds the minimum dollar value provided by   comptroller rule.                (2)  "Joint venture" means an association of two or   more individuals or businesses, at least one of which is a   historically underutilized business, that is:                      (A)  established to carry on a single business   activity;                      (B)  certified as a joint venture by the   comptroller; and                      (C)  limited in scope and duration.          (b)  Each state agency shall determine whether a purchase of   goods or services is an eligible purchase for which the agency is   required to make a good faith effort to award the contract to a   joint venture. The agency may not accept a contract bid submitted   by any bidder other than a joint venture unless the agency   determines, based on the relevant facts, documents, and   circumstances, that the agency made a good faith effort to award the   contract to a joint venture.          (c)  A contract for a joint venture must be in writing and:                (1)  be based on the sharing of real economic interest   in the venture that includes proportionate control over management,   interest in capital acquired by the joint venture, and interest in   earnings;                (2)  be completed by all parties to the joint venture;                (3)  be executed before a notary public;                (4)  clearly delineate the rights and responsibilities   of each member;                (5)  comply with any requirements of the comptroller as   provided in bid documents or otherwise; and                (6)  provide that the joint venture continue for at   least the duration of the eligible purchase.          (d)  The comptroller using available resources shall select   for review a random sampling of state agency joint venture   determinations made under Subsection (b).          (e)  A state agency selected by the comptroller under   Subsection (d), the joint venture, and each member of the joint   venture shall provide the comptroller access to review all records   pertaining to joint venture agreements before and after the award   of a contract to the joint venture by the agency in order to   reasonably assess compliance with this section.          (f)  A member of a joint venture who fails to comply with this   section, and whose failure to comply continues for at least 30 days   after receiving written notice of the noncompliance from the   comptroller, is subject to any or all of the following penalties:                (1)  withholding of 10 percent of all future payments   for the eligible purchase until the comptroller determines the   member of the joint venture is in compliance with this section;                (2)  withholding of all future payments under the   eligible purchase until the comptroller determines the member of   the joint venture is in compliance with this section;                (3)  cancellation of the eligible purchase; and                (4)  ineligibility for future contracts or   subcontracts with this state for one to five years from the date on   which the penalty is imposed.          SECTION 6.  Section 2161.252, Government Code, is amended by   adding Subsection (c) to read as follows:          (c)  A subcontracting plan must require the contractor to   accept bids, proposals, offers, or other applicable expressions   from historically underutilized businesses for not less than 10   working days after the date the contractor notifies the business of   the subcontracting opportunity. This subsection does not apply to   a professional services contract.          SECTION 7.  Section 2254.002(2), Government Code, is amended   to read as follows:                (2)  "Professional services" means services:                      (A)  within the scope of the practice, as defined   by state law, of:                            (i)  accounting;                            (ii)  architecture;                            (iii)  landscape architecture;                            (iv)  land surveying;                            (v)  medicine;                            (vi)  optometry;                            (vii)  professional engineering;                            (viii)  real estate appraising; or                            (ix)  professional nursing; or                      (B)  provided in connection with the professional   employment or practice of a person who is licensed or registered as:                            (i)  a certified public accountant;                            (ii)  an architect;                            (iii)  a landscape architect;                            (iv)  a land surveyor;                            (v)  a physician, including a surgeon;                            (vi)  an optometrist;                            (vii)  a professional engineer;                            (viii)  a state certified or state licensed   real estate appraiser; [or]                            (ix)  a registered nurse; or                            (x)  an attorney.          SECTION 8.  (a) Not later than December 1, 2017, the   comptroller of public accounts shall adopt the rules required to   implement the changes in law made by this Act.          (b)  Chapters 2155 and 2161, Government Code, as amended by   this Act, apply only to a purchase of goods or services or a   contract entered into on or after January 1, 2018.          SECTION 9.  This Act takes effect September 1, 2017.