This bill creates a Tennessee small business reserve pilot program as an initiative aimed at ensuring that eligible businesses are afforded the maximum equitable opportunity to participate in this state's procurement process. The pilot program expires June 30, 2026, and must be initiated and supervised by the department of general services in coordination with the department of finance and administration, the comptroller of the treasury, and the governor's office of diversity business enterprises. During the pilot program, all state governmental entities must select certain contracts to award to an eligible business as follows: (1) In determining whether a particular contract is eligible for the pilot program, state governmental entities must consider whether there is an eligible business that is capable and available to bid on the contract; (2) If an eligible business is identified under item (1), then the state governmental entity must offer the contract for bid only to an eligible business; (3) If a responsive and responsible bid or proposal is not received for a contract that has been designated for the pilot program, or the low bid is determined to be too high, the contract may be removed from the pilot program; and (4) Each state governmental entity must, to the extent practicable, achieve a minimum of 15 percent of the entity's total dollar value of contracts from businesses in the following industries: (A) Agriculture, forestry, and fishing; (B) Architecture, design, and engineering; (C) Automotive maintenance; (D) Construction; (E) Education; (F) Finance, insurance, and real estate; (G) Information systems and technology; (H) Manufacturing; (I) Marketing, communications, and public relations; (J) Medical and health care; (K) Retail; (L) Transportation, commerce, and utilities; and (M) Wholesale. Businesses eligible to participate in the pilot program are those that: (A) Are minority-owned businesses, woman-owned businesses, service-disabled veteran-owned businesses, businesses owned by persons with disabilities, and small businesses that are listed in the directory published by the governor's office of diversity business enterprises pursuant to present law; and (B) Have an average of less than $1 million in gross receipts each year over the previous three years. The governor's office of diversity business enterprises will determine the businesses eligible to participate and produce a list of such businesses for dissemination to all state governmental entities. During the pilot program, state governmental entities must consider whether a particular project or service subject to a contract bid could be separated into smaller contracts that would allow the contract to be bid under the pilot program. The chief procurement officer will include a progress report on the pilot program in the annual report required under present law. Also, this bill requires the department to produce a report on the pilot program after the pilot program concludes and submit the report to the state and local government committee of the senate and the state government committee of the house of representatives no later than February 28, 2027.