SB 2912

relating to the state historically underutilized business program;
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1.  Section 2161.001, Government Code, is amended by
adding Subdivision (5) and (6) 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
(A)  negotiation of the terms of a contract or
(B)  assumption of financial risk commensurate
with a contract or subcontract;
(C)  acquisition of appropriate lines of credit or
(D)  fulfillment of the responsibilities of a
joint venture partner under a joint venture agreement.
(6)  "Disadvantaged business enterprise" means a
historically underutilized business as defined in Section 2161,
SECTION 2.  Section 2161.0015, Government Code, is amended
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
(1)  the business owner may not have an individual
personal net worth of more than $1.32 million; and
(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.;
(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
SECTION 3.  Section 2161.002(c), Government Code, is amended
(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
(c)  Section 2161.003 and Subsections (a) and (b) of this
section [do not] apply to a project or contract subject to Section
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
(a-2)  The comptroller may not initially certify a business
as a disadvantaged business enterprise 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
(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
disadvantaged business enterprise 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
(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
(6)  the date of completion of training required under
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
(2)  a description of the significance and value of
(3)  a list of state purchasing personnel;
(4)  information regarding electronic commerce
(5)  information regarding the Texas Marketplace
(6)  additional information about the state
(7)  the business's current training and continuing
(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
(1)  coordinate training programs for the recruitment,
training, and retention of historically underutilized businesses;
(2)  report required information to the comptroller
(3)  match historically underutilized businesses with
SECTION 7.  Section 2161.063(a), Government Code, is amended
(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
(2)  assisting state agencies in seeking historically
underutilized businesses capable of supplying required goods or
(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
disadvantaged business enterprise that can perform commercially
SECTION 8.  Section 2161.064, Government Code, is amended by
adding Subsection (f) to read as follows:
(f)  The comptroller shall verify that each disadvantaged
business enterprise 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
(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
(c)  The  mentor-protege program under this section must be
consistent with the program established under 49 C.F.R. Section
SECTION 10.  Section 2161.066(d), Government Code, is
(d)  Each state agency that has a historically underutilized
(1)  design its own program and model the program to the
extent appropriate on the program developed by the comptroller
(2)  sponsor presentations by disadvantaged business
(3)  provide a method for a disadvantaged business
enterprise 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
disadvantaged business enterprise, according to the North American
Industry Classification System.
SECTION 11.  Section 2161.121(a), Government Code, is
(a)  The comptroller shall prepare a consolidated report
(1)  includes the number and dollar amount of contracts
awarded and paid to historically underutilized businesses
(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;
(4)  includes assurances by state agencies that the
number and the dollar amounts of contracts awarded to disadvantaged
business enterprise es are properly calculated according to the
level of participation each disadvantaged business enterprise
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 disadvantaged business enterprise can perform a commercially
(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
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
disadvantaged business enterprise 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
(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
(3)  made good faith, timely efforts to contact
identified historically underutilized businesses regarding
(4)  conducted its procurement program in accordance
with the good faith effort methodology set out in comptroller
(5)  established goals for contracting with
historically underutilized businesses in each procurement category
(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
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 disadvantaged business enterprise 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
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
(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
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
disadvantaged business enterprise.
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 disadvantaged business
enterprise 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 disadvantaged
(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
(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
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, 2025.