Relating to a prohibition on certain governmental contracts with foreign adversary companies and federally banned companies; authorizing a civil penalty.

89(R) HB 129 - Engrossed version - Bill Text

89R24407 CXP-F

By: McQueeney, Raymond, Harris, Metcalf,

H.B. No. 129

Barry, et al.

A BILL TO BE ENTITLED

AN ACT

relating to a prohibition on certain governmental contracts with

foreign adversary companies and federally banned companies;

authorizing a civil penalty.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:

SECTION 1. Subtitle F, Title 10, Government Code, is

amended by adding Chapter 2278 to read as follows:

CHAPTER 2278. PROHIBITION ON CONTRACTS WITH FOREIGN ADVERSARY

COMPANIES AND FEDERALLY BANNED COMPANIES

Sec. 2278.001. DEFINITIONS. In this chapter:

(1)

"Company" has the meaning assigned by Section

117.001, Business & Commerce Code.

(2) "Federally banned company" means a company:

(A)

that produces or provides communications

equipment or services listed on the covered list published by the

Public Safety and Homeland Security Bureau of the Federal

Communications Commission, as required by 47 C.F.R. Section

1.50002;

(B)

listed in Supplement No.

4 to 15 C.F.R. Part

744;

(C)

prohibited from participating in federal

contracts under Section 889, John S. McCain National Defense

Authorization Act for Fiscal Year 2019 (Pub. L. No.

115-232);

(D)

identified as a Chinese military company by

the United States Department of Defense in accordance with Section

1260H, William M. (Mac) Thornberry National Defense Authorization

Act for Fiscal Year 2021 (Pub. L. No.

116-283);

(E)

prohibited from participating in federal

contracts under Section 5949, James M. Inhofe National Defense

Authorization Act for Fiscal Year 2023 (Pub. L. No.

117-263);

(F)

subject to economic and trade sanctions

administered by the Office of Foreign Assets Control of the United

States Department of the Treasury;

(G)

subject to an order issued by the Federal

Acquisition Security Council under the Federal Acquisition Supply

Chain Security Act of 2018 (Title II, Pub. L. No.

115-390); or

(H)

restricted under any similar sanction

program under federal law.

(3) "Foreign adversary" means:

(A)

the People's Republic of China, including the

Hong Kong special administrative region;

(B) the Republic of Cuba;

(C) the Islamic Republic of Iran;

(D) the Democratic People's Republic of Korea;

(E) the Russian Federation;

(F) the Syrian Arab Republic;

(G)

the Venezuelan regime under Nicolás Maduro;

or

(H)

an agent or entity under significant control

of a country described by Paragraphs (A) through (G).

(4) "Foreign adversary company":

(A) means a company that:

(i)

is domiciled, incorporated,

headquartered, issued, or listed in a foreign adversary;

(ii)

has its principal place of business in

a foreign adversary;

(iii)

is controlled by the government,

military, or ruling political party of a foreign adversary; or

(iv)

is majority owned by an entity

described by Subparagraph (i), (ii), or (iii); and

(B) does not include:

(i) a United States citizen;

(ii)

a U.S. subsidiary, as defined by 15

C.F.R. Section 772.1; or

(iii)

a parent company not described by

Paragraph (A) that derives not more than 50 percent of the company's

total annual global revenue from subsidiaries from a foreign

adversary, regardless of whether the subsidiaries are companies

described by Paragraph (A).

(5)

"Governmental entity" has the meaning assigned by

Section 2251.001.

Sec.

2278.002.

PROHIBITED CONTRACTS; EXCEPTION. (a)

Except as provided by Subsection (b), a foreign adversary company

or a federally banned company may not submit a bid for a contract or

enter into a contract with a governmental entity relating to goods

or services. For purposes of this section, a company is considered

a foreign adversary company if the company enters into a contract

with a governmental entity to sell to the entity any final products

or services produced by a foreign adversary company or a federally

banned company.

(b)

A governmental entity may enter into a contract with a

company described by Subsection (a) if:

(1)

there is no other reasonable option for procuring

the good or service;

(2) the entity preapproves the contract; and

(3)

failure to procure the good or service would pose a

greater threat to this state than the threat associated with

procuring the good or service.

Sec.

2278.003.

CERTIFICATION REQUIRED. A governmental

entity shall require a vendor submitting a bid for a contract

relating to goods or services to include in the bid a written

certification that the vendor is not prohibited from submitting the

bid or entering into the contract under Section 2278.002(a).

Sec.

2278.004.

FALSE CERTIFICATION; VIOLATION. (a) A

governmental entity that determines that a vendor holding a

contract with the entity was ineligible to have the contract

awarded under Section 2278.002(a) because the vendor's

certification submitted under Section 2278.003 was false shall

notify the vendor that the vendor is in violation of this chapter.

The notice must include the basis for the entity's determination

that the vendor is in violation of this chapter.

(b)

A governmental entity, on making a final determination

that a vendor violated this chapter, shall refer the matter to the

attorney general for enforcement under Section 2278.006.

Sec.

2278.005.

CONTRACT TERMINATION FOR FALSE

CERTIFICATION; BARRING FROM STATE CONTRACTS. (a) A governmental

entity, on making a final determination that a vendor violated this

chapter, shall immediately terminate the contract without further

obligation to the vendor.

(b)

On receiving notice from a governmental entity of a

contract termination under Subsection (a) because a vendor violated

this chapter, the comptroller may bar the vendor from participating

in state contracts using procedures prescribed under Section

2155.077.

(c)

Debarment under this section expires on the fifth

anniversary of the date of the debarment under Subsection (b).

Sec.

2278.006.

CIVIL PENALTY. (a) A vendor that violates

this chapter is liable to the state for a civil penalty in an amount

equal to the greater of:

(1)

twice the amount of the contract terminated under

Section 2278.005; or

(2) $250,000.

(b)

The attorney general may bring an action to recover a

civil penalty imposed under this section.

SECTION 2. Chapter 2278, Government Code, as added by this

Act, applies only to a contract for which the request for bids or

proposals or other applicable expression of interest is made public

on or after the effective date of this Act. A contract for which the

request for bids or proposals or other applicable expression of

interest is made public before that date is governed by the law in

effect on the date the request or other expression of interest is

made public, and the former law is continued in effect for that

purpose.

SECTION 3. This Act takes effect September 1, 2025.