HB129 - Relating to a prohibition on certain governmental contracts with foreign adversary companies and federally banned companies; authorizing a civil penalty.

  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.