Texas House Bill HB2409

Texas 2025 - 89th Regular

• Filed: 2/4/25

Caption

Relating to a prohibition on governmental contracts with Chinese companies for certain information and communications technology; authorizing a civil penalty; creating a criminal offense.

Impact

If enacted, HB2409 would significantly amend Chapter 2275 of the Texas Government Code, thus establishing a new framework governing contracts with foreign companies in relation to critical infrastructure. The bill includes provisions for civil penalties against vendors who violate the new contractual prohibitions. Additionally, it outlines procedures for termination of contracts with vendors found to be in violation and bars these vendors from future contracts for five years. This could lead to increased scrutiny of vendor relationships and necessitate a more rigorous vetting process for companies wanting to work with the state.

Summary

House Bill 2409 seeks to implement a prohibition on governmental entities in Texas from entering into contracts with certain companies based in China that provide information and communications technology services. The proposed legislation defines specific criteria for what constitutes a scrutinized company, which includes those organized under Chinese laws, or those where the Chinese government retains a controlling interest. By restricting contracts with such entities, the bill aims to mitigate potential risks associated with foreign control over critical infrastructure and data security.

Contention

Discussions surrounding HB2409 have highlighted concerns regarding the implications of such restrictions. Opponents may argue that the bill could limit competition and increase costs by eliminating a significant number of technology providers from the bidding process. Moreover, concerns about the broad definitions used in the bill may lead to unintended consequences for innocent companies that are merely associated or have minor investments from scrutinized entities. The debate will focus on balancing national security interests with maintaining an open and competitive market for government contracts.

Texas Constitutional Statutes Affected

Government Code

• Chapter 2275. Prohibition On Contracts With Certain Foreign-owned Companies In Connection With Critical Infrastructure
  • Section: New Section