Relating to prohibiting certain activities by contractors and vendors of state agencies; providing administrative penalties.

Contracts

• Mandatory Flow-Down: Immediately amend all Master Services Agreements (MSAs) to explicitly prohibit conduct defined in Sec. 2261.302.
• Indemnification: Update indemnity clauses to cover administrative penalties ($500k–$2M) and lost revenue from debarment caused by subcontractor actions.
• Termination Rights: Insert clauses allowing immediate contract termination if a subcontractor is investigated by the SAO or Texas Rangers.

Hiring/Training

• Termination Hold: Implement a protocol requiring General Counsel review before disciplining any employee involved in state contracts. The law creates a rebuttable presumption of retaliation if an employee is terminated within 120 days of reporting a violation.
• Sales & Lobbying Training: Train Government Affairs teams on the new definition of "undue influence." Strict firewalls must be established between sensitive data repositories and sales teams.

Reporting & Record-Keeping

• Data Source Audits: You must document the source of all business intelligence data regarding state officials to prove it was "publicly available" and not illicitly mined.
• Internal Whistleblowing: Establish an internal reporting channel distinct from the state's hotline to capture complaints before they escalate to the SAO.

Fees & Costs

• Uninsurable Risk: There are no new state fees, but the financial risk is severe. Review General Liability policies; most exclude administrative penalties. Review Employment Practices Liability Insurance (EPLI) for coverage of "exemplary damages" in retaliation suits.