H.B. No. 147 proposes amendments to the Government Code regarding contracting by governmental entities in Texas. The bill introduces a new section, 2252.911, which stipulates that governmental entities may only consider merit-based criteria when awarding contracts and prohibits the awarding of contracts based on factors such as race, color, ethnicity, sex, gender identity, sexual orientation, or any criteria associated with diversity, equity, and inclusion practices. This change aims to ensure that contracting decisions are made solely on the basis of qualifications and performance rather than demographic characteristics.

Additionally, the bill repeals Chapter 2161 of the Government Code, which previously governed the state's historically underutilized business program. The repeal does not affect any fund transfers directed by the Legislative Budget Board prior to the bill's effective date. The new provisions will apply only to contracts entered into after the bill's effective date, ensuring that existing contracts remain governed by the previous law. The act is set to take effect 91 days after the conclusion of the legislative session.

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