Texas 2025 - 89th Regular

Texas Senate Bill SB1585 Compare Versions

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1		-	By: Hughes, Parker S.B. No. 1585
2		-	(In the Senate - Filed February 24, 2025; March 10, 2025,
3		-	read first time and referred to Committee on State Affairs;
4		-	March 26, 2025, reported adversely, with favorable Committee
5		-	Substitute by the following vote: Yeas 10, Nays 0; March 26, 2025,
6		-	sent to printer.)
7		-	Click here to see the committee vote
8		-	COMMITTEE SUBSTITUTE FOR S.B. No. 1585 By: Paxton
	1	+	89R8077 JCG-D
	2	+	By: Hughes S.B. No. 1585
9	3
10	4
11	5
12	6
13	7		A BILL TO BE ENTITLED
14	8		AN ACT
15	9		relating to a prohibition on governmental contracts with companies
16	10		of foreign adversaries for certain information and communications
17	11		technology; authorizing a civil penalty; creating a criminal
18	12		offense.
19	13		BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
20	14		SECTION 1. The heading to Chapter 2275, Government Code, is
21	15		amended to read as follows:
22	16		CHAPTER 2275. PROHIBITION ON CONTRACTS WITH CERTAIN FOREIGN-OWNED
23	17		COMPANIES IN CONNECTION WITH CRITICAL INFRASTRUCTURE AND
24	18		INFORMATION AND COMMUNICATIONS TECHNOLOGY
25	19		SECTION 2. Chapter 2275, Government Code, is amended by
26	20		designating Sections 2275.0101 through 2275.0103 as Subchapter A
27	21		and adding a subchapter heading to read as follows:
28	22		SUBCHAPTER A. PROHIBITION ON CERTAIN CONTRACTS IN CONNECTION WITH
29	23		CRITICAL INFRASTRUCTURE
30	24		SECTION 3. Section 2275.0101, Government Code, is amended
31	25		to read as follows:
32	26		Sec. 2275.0101. DEFINITIONS. In this subchapter [chapter]:
33	27		(1) "Company" means a sole proprietorship,
34	28		organization, association, corporation, partnership, joint
35	29		venture, limited partnership, limited liability partnership, or
36	30		limited liability company, including a wholly owned subsidiary,
37	31		majority-owned subsidiary, parent company, or affiliate of those
38	32		entities or business associations, that exists to make a profit.
39	33		(2) "Critical infrastructure" means a communication
40	34		infrastructure system, cybersecurity system, electric grid,
41	35		hazardous waste treatment system, or water treatment facility.
42	36		(3) "Cybersecurity" means the measures taken to
43	37		protect a computer, computer network, computer system, or other
44	38		technology infrastructure against unauthorized use or access.
45	39		(4) "Designated country" means a country designated by
46	40		the governor as a threat to critical infrastructure under Section
47	41		2275.0103.
48	42		(5) "Governmental entity" means a state agency, a
49	43		political subdivision, or an independent organization certified
50	44		under Section 39.151, Utilities Code, to perform a function
51	45		described by Section 39.151(a), Utilities Code.
52	46		(6) "Affiliate," with respect to a company entering
53	47		into an agreement in which the critical infrastructure is electric
54	48		grid equipment, has the meaning assigned by the protocols of the
55	49		independent organization certified under Section 39.151, Utilities
56	50		Code, for the ERCOT power region.
57	51		SECTION 4. Section 2275.0103(a), Government Code, is
58	52		amended to read as follows:
59	53		(a) The governor, after consultation with the public safety
60	54		director of the Department of Public Safety, may designate a
61	55		country as a threat to critical infrastructure for purposes of this
62	56		subchapter [chapter].
63	57		SECTION 5. Chapter 2275, Government Code, is amended by
64	58		adding Subchapter B to read as follows:
65	59		SUBCHAPTER B. PROHIBITION ON CERTAIN CONTRACTS IN CONNECTION WITH
66	60		INFORMATION AND COMMUNICATIONS TECHNOLOGY
67	61		Sec. 2275.0201. DEFINITIONS. In this subchapter:
68		-	(1) "Company" has the meaning assigned by Section
69		-	2275.0101.
70		-	(2) "Control" means the direct or indirect power,
	62	+	(1) "Control" means the direct or indirect power,
71	63		whether or not exercised, to determine, direct, or decide important
72	64		matters affecting a company through the ownership of a majority or a
73	65		dominant minority of the total outstanding voting interest in the
74	66		company, board representation, proxy voting, special share,
75	67		contractual arrangement, formal or informal arrangement to act in
76	68		concert, or other means of exercising power.
77		-	(3) "Foreign adversary" means:
	69	+	(2) "Foreign adversary" means:
78	70		(A) the People's Republic of China; or
79		-	(B) any country listed on the entity list under
80		-	Supplement No. 4 to 15 C.F.R. Part 744 because there is reasonable
81		-	cause to believe the country is involved, has been involved, or
82		-	poses a significant risk of being or becoming involved in
83		-	activities contrary to the national security or foreign policy
84		-	interests of the United States of America.
85		-	(4) "Governmental entity" has the meaning assigned by
	71	+	(B) any country designated as a foreign adversary
	72	+	by the governor under Section 2275.0206.
	73	+	(3) "Governmental entity" has the meaning assigned by
86	74		Section 2251.001.
87		-	(5) "Information or communications technology or
	75	+	(4) "Information or communications technology or
88	76		service" means a hardware, software, or other product or service
89		-	and its components that is:
90		-	(A) designed to facilitate by electronic means
91		-	the processing, storage, retrieval, communication, transmission,
92		-	or display of information or data; and
93		-	(B) capable of storing data, communicating
94		-	independently, controlling systems, or engaging in two-way
95		-	communication with a foreign adversary.
96		-	(6) "Scrutinized company" means a company or a wholly
	77	+	and its components that is designed to facilitate by electronic
	78	+	means the processing, storage, retrieval, communication,
	79	+	transmission, or display of information or data.
	80	+	(5) "Scrutinized company" means a company or a wholly
97	81		owned subsidiary or majority-owned subsidiary of a company that is:
98	82		(A) organized in or under the laws of a foreign
99	83		adversary or has its principal place of business in a foreign
100	84		adversary;
101		-	(B) identified on the covered list under 47
102		-	C.F.R. Section 1.50002 as producing or providing communications
103		-	equipment or a service that poses an unacceptable risk to the
104		-	national security of the United States or the security and safety of
105		-	United States persons; or
106		-	(C) as provided by 15 C.F.R. Part 791, not a
107		-	United States person and has been subject to a determination by the
108		-	United States secretary of commerce, or the secretary's designee,
109		-	as involved in a transaction related to an information or
110		-	communications technology or service that posed an undue or
111		-	unacceptable risk.
112		-	(7) "Two-way communication" means, with respect to an
113		-	information or communications technology or service, systems or
114		-	components that facilitate the bidirectional exchange of
115		-	information which may include remote or unauthorized access.
	85	+	(B) a publicly traded company for which the
	86	+	government of a foreign adversary has the ability to:
	87	+	(i) exercise control over the company;
	88	+	(ii) appoint or discharge a board member,
	89	+	officer, or director; or
	90	+	(iii) exercise any other right not
	91	+	available to a retail investor holding an equivalent share of
	92	+	ownership; or
	93	+	(C) a privately held company in which the
	94	+	government of a foreign adversary holds any share of ownership.
116	95		Sec. 2275.0202. CONTRACTS WITH SCRUTINIZED COMPANIES
117	96		PROHIBITED; EXCEPTION. (a) Except as provided by Subsection (b), a
118	97		scrutinized company may not submit a bid for a contract or enter
119	98		into a contract with a governmental entity relating to an
120	99		information or communications technology or service.
121	100		(b) A governmental entity may enter into a contract relating
122	101		to an information or communications technology or service with a
123	102		scrutinized company if the governmental entity, with the approval
124	103		of the governor, determines:
125	104		(1) the only vendors available to provide the
126	105		information or communications technology or service are
127	106		scrutinized companies;
128	107		(2) the cost to this state of finding and contracting
129	108		with a vendor that is not a scrutinized company would be so
130	109		disproportionately high that the use of a vendor that is a
131	110		scrutinized company would be overwhelmingly in the best interest of
132	111		this state; or
133	112		(3) any goods or services that originate with a
134	113		scrutinized company and may be used in the performance of the
135	114		contract constitute a de minimis amount of the total value of the
136	115		goods and services provided under the contract and pose no risk to
137	116		the security of this state.
138	117		Sec. 2275.0203. VERIFICATION REQUIRED. (a) A vendor
139	118		submitting a bid for a contract relating to an information or
140	119		communications technology or service shall include in the bid a
141	120		written verification that the vendor:
142	121		(1) is not a scrutinized company;
143	122		(2) will not contract with a scrutinized company for
144	123		any aspect of its performance under the contract; and
145	124		(3) will not procure products or services from or that
146	125		originate with a scrutinized company for use in the performance of
147	126		the contract.
148	127		(b) A governmental entity may not enter into a contract
149	128		relating to an information or communications technology or service
150	129		with a vendor that fails to provide the verification required by
151	130		Subsection (a).
152	131		Sec. 2275.0204. FALSE VERIFICATION; VIOLATION. (a) A
153	132		governmental entity that determines that a vendor holding a
154	133		contract with the entity was ineligible to have the contract
155	134		awarded under Section 2275.0202 because the vendor's written
156	135		verification was false shall notify the vendor that the vendor is in
157	136		violation of this subchapter. The notice must include the basis for
158	137		the entity's determination that the vendor is in violation of this
159	138		subchapter.
160	139		(b) Not later than the 60th day after the date a vendor
161	140		receives a notice under Subsection (a), the vendor may provide a
162	141		written response to the governmental entity with evidence that the
163	142		vendor's verification was not false and that the vendor is not in
164	143		violation of this subchapter. If a vendor does not provide a
165	144		response in the manner provided by this subsection, the entity's
166	145		determination under Subsection (a) becomes a final determination.
167	146		(c) Not later than the 60th day after the date the
168	147		governmental entity receives a vendor's response as provided under
169	148		Subsection (b), the governmental entity shall review the response
170	149		and notify the vendor of the entity's final determination based on
171	150		the evidence provided by the vendor.
172	151		(d) A governmental entity, on making a final determination
173		-	that a vendor violated this subchapter, shall:
174		-	(1) refer the matter to the attorney general, a
175		-	district attorney, or a county attorney, as applicable, for
176		-	enforcement under Sections 2275.0207 and 2275.0208; and
177		-	(2) notify the comptroller of the final determination
178		-	for purposes of Section 2275.0206.
	152	+	that a vendor violated this subchapter, shall refer the matter to
	153	+	the attorney general, a district attorney, or a county attorney, as
	154	+	applicable, for enforcement under Sections 2275.0207 and
	155	+	2275.0208.
179	156		Sec. 2275.0205. CONTRACT TERMINATION FOR FALSE
180	157		VERIFICATION; BARRING FROM STATE CONTRACTS. (a) A governmental
181	158		entity, on making a final determination that a vendor violated this
182	159		subchapter, shall immediately terminate the contract without
183	160		further obligation to the vendor.
184		-	(b) A vendor that violates this subchapter may not respond
185		-	to a solicitation for or be awarded a contract for goods or services
186		-	by any governmental entity until the fifth anniversary of the date
187		-	the vendor receives a final determination under Section 2275.0204.
188		-	Sec. 2275.0206. DEBARMENT BY COMPTROLLER. On receiving
189		-	notice of a final determination under Section 2275.0204 that a
190		-	vendor violated this subchapter, the comptroller shall bar the
191		-	vendor from participating in state contracts until the fifth
192		-	anniversary of the date the vendor receives the final determination
	161	+	(b) A vendor that violates this subchapter is barred from
	162	+	responding to a solicitation for or being awarded a contract for
	163	+	goods or services by any governmental entity until the fifth
	164	+	anniversary of the date the vendor receives a final determination
193	165		under Section 2275.0204.
	166	+	Sec. 2275.0206. DESIGNATION OF COUNTRY AS FOREIGN
	167	+	ADVERSARY. (a) The governor may designate a country as a foreign
	168	+	adversary for purposes of this subchapter.
	169	+	(b) The governor shall consider designating a country as a
	170	+	foreign adversary under Subsection (a) if the United States
	171	+	secretary of commerce, or the secretary's designee, has determined
	172	+	the country to be a foreign adversary under 15 C.F.R. Section 791.4.
194	173		Sec. 2275.0207. CIVIL PENALTY. (a) A vendor that violates
195	174		this subchapter is liable to the state for a civil penalty in an
196	175		amount equal to the greater of:
197	176		(1) twice the amount of the contract terminated under
198	177		Section 2275.0205; or
199	178		(2) the amount of loss suffered by the state from
200	179		terminating the contract.
201	180		(b) The attorney general may bring an action to recover a
202	181		civil penalty imposed under this section.
203	182		(c) The attorney general may recover reasonable attorney's
204	183		fees and court costs in bringing an action under this section.
205	184		Sec. 2275.0208. CRIMINAL PENALTY. (a) A vendor that
206	185		violates this subchapter commits an offense.
207	186		(b) An offense under this section is a state jail felony.
208	187		SECTION 6. Subchapter B, Chapter 2275, Government Code, as
209	188		added by this Act, applies only to a contract for which the request
210	189		for bids or proposals or other applicable expression of interest is
211	190		made public on or after the effective date of this Act. A contract
212	191		for which the request for bids or proposals or other applicable
213	192		expression of interest is made public before that date is governed
214	193		by the law in effect on the date the request or other expression of
215	194		interest is made public, and the former law is continued in effect
216	195		for that purpose.
217	196		SECTION 7. This Act takes effect September 1, 2025.
218		-	* * * * *