Texas – Like every other state, Texas has a HUB program. For those who may be unfamiliar, HUB stands for Historically Underutilized Business. In Texas, it is a purchasing and procurement platform run by the state Comptroller’s Office. It was created to keep minority-owned businesses from being discriminated against, based solely on their ownership. And now, one public school system, funded by state and federal funding, is using the very system created to avoid discrimination, to…wait for it… discriminate.
First, a little about HUB.
The state HUB program exists to provide opportunities for small businesses that are 51% or greater owned and operated by minorities and women. Traditionally, these small businesses lose out on contract opportunities to larger companies. HUB was created to provide them with at least a percentage of the work available for government procurement projects.
It was also created to keep minority-owned businesses from being discriminated against, based solely on their ownership.
Texas’ statewide goals for HUB participation look like this:
- 11.2% for heavy construction other than building contracts;
- 21.1% for all building construction, including general contractors and operative builders’ contracts;
- 32.9% for all special trade construction contracts;
- 23.7% for professional services contracts;
- 26.0% for all other services contracts; and
- 21.1% for commodities contracts.
There are only six categories of ownership that qualify a firm for HUB participation. Texas Code Title 10, Subtitle D, Chapter 2161 defines these six groups as “economically disadvantaged.” The Ownership for HUB certification is considered to be 51% or greater controlling interest and management of day-to-day operations and are:
- African American owned;
- Hispanic American owned;
- Asian American owned;
- Native American owned;
- Woman owned; or,
- Service disabled Veteran owned.
That is it. Those are the six “protected” groups in Texas.
Here are the specialized categories that fall into HUB capabilities.
More specifically, Texas state legislators added verbiage to increase opportunities for disabled veteran owned companies.
The comptroller shall adopt rules to provide goals for increasing the contract awards for the purchase of goods or services by the comptroller and other state agencies to businesses that qualify as historically underutilized businesses because the businesses are owned or owned, operated, and controlled, as applicable, wholly or partly by one or more veterans as defined by 38 U.S.C. Section 101(2) who have a service-connected disability as defined by 38 U.S.C. Section 101(16). The goals established under this subsection are in addition to the goals established under Subsection (c) and the goals established under Subsection (c) may not be reduced as a result of the establishment of goals under this subsection.
So obviously, the Austin Independent School District wants to be inclusive of all the protected groups with HUB certifications through the state.
Or, do they?
A quick look at their website shows that they do not.
From their own description, the want to provide “opportunities for HUB’s [sic] to broaden and enhance their capabilities to do business with the District.” Yet, they aren’t actually including all HUB companies in the mix and giving them all a fair shake. Please take notice of the note at the bottom of the HUB Goals shown above. MBE is cumulative of all ethnicities, but women owned entities are labeled as such. They provide the HUB codes for five out of the six. Noticeably absent?
You will not see “SV.”
The district also posted charts of their HUB participation by in relationship to their last two bond cycles for Professional Services and Construction.
Conspicuously absent, yet again, are disabled veteran owned companies.
So, why are they leaving out 1/6th of the eligible talent pool?
They apparently hired a consultant to provide them with information as part of a “disparity” study.
While we are not showing the report, it is available in its 365-page entirety for you to read at your leisure. In essence, the report shows that the greater Austin area needs to check its “white, male” privilege at the door.
The study indicated that in the Austin ISD area, minority and women business owners earned between 15.3% and 41.3% less than white male business owners, depending on which category they fell into to.
Interestingly enough, the report also breaks down the percentage of company ownership in the state, showing the percentages of each HUB category as part of the total marketplace.
A HUB Vendor search in Texas shows that (isolating to a single category of professional services for a sample) there are 1170 companies that are in that service market place in Texas and certified HUB. Of those, 24 are disabled veteran owned companies, or 2%. When you remove the owners that would be qualified for HUB without disabled veteran status, the number drops to 8, or .6% of the marketplace for architects, engineers and consultants.
The District,to its credit, posts all available bid package documents online for potential bidders to download. On all projects that have a HUB requirement, they provide a spreadsheet that lists all HUB vendors by trade and HUB category.
Absent again…service connected disabled veterans.
The program was designed to encourage prime-contractors to sub-contract portions of the work to HUB entities. There is nothing from the district that says disabled veteran owned firms cannot bid on opportunities. They can, so long as they bid it as a prime contractor. A prime that then must go out and find other HUB entities to sub-contract parts of the work out to if he wants to be successful.
We use the word “he” on purpose. Female disabled veterans still qualify for these bids as they are classified as woman-owned business entity, or WBE.
While prime contractors could use the numbers provided by the veteran group in their proposal, it would not help achieve the HUB participation goals, and thus…no incentive for them to run with the veteran owned firm.
So, what are veteran owned small business (in the professional services and/or construction services arena) left with? They can always go after the veteran set-aside opportunities that the VA and DoD sometimes offer. Those opportunities, however, often carry requirements that small start-ups cannot accommodate.
This leaves a protected class of businesses in the state of Texas on the outside looking in when it comes to bidding work with Austin ISD.
Very #AISDproud to be trailblazers in advancing equity for ALL businesses. Visit our website to learn more https://t.co/LaTWC0M69x #AISDFuture @facilitiesAISD @AustinISD_CMD @AustinISD pic.twitter.com/ynFdmrBi0u
— Austin ISD HUB Program (@HUBProudAISD) April 30, 2018
Well, ALL businesses except those owned by Texas disabled veterans.
So, why would the Austin Independent School District exclude one of those groups from its bid opportunities? Good question. We reached out to the Superintendent, the Director of Construction Services and the Director of Contracting and Procurement.
They forwarded our questions to the media relations department. Their media group sent an email asking what our credible evidence and documentation was. We were kind enough to send it over, in detail, laid out much like this article. We even held the piece for an extra day in hopes of receiving their response.
As of the publishing of this piece, we had not received a follow-up response from AISD.
Should they provide a response, we will provide an update.
Now, before it seems that we are simply picking on Austin ISD, they are not the only ones who do it.
In fact, Houston ISD, Dallas ISD and the City of Dallas all follow suit with Austin ISD.
Dallas ISD, like AISD, does recognize the state of Texas HUB certification, but again specifically excludes disabled veterans.
The City of Dallas does not recognize the state certification for HUB. Instead they use a couple of certifying agencies in the Dallas area and have reciprocity agreements with similar groups in other parts of the state.
The problem with those agencies, most do not offer certifications for disabled veterans. The program run by the City of Houston Mayors office does recognize Persons with Disabilities Business (PDBE) entities. The problem is that the purchasing groups do not.
The North Central Texas Regional Certification Authority NCTRCA states that they do not recognize the state of Texas certificate, because it may not meet the same stringent adherence to Federal Regulations pertaining to Disadvantaged Business Enterprises.
You read that right. A local agency will not recognize the state agency certification because they may not be strict enough.
According to a conversation with someone in the Comptroller’s office in Austin, each of these other regional/local certifying bodies exist and operate only through a memorandum of understanding with the State of Texas Comptroller’s Office, the same office that manages the HUB certification process.
Oh by the way…most of these entities that put out bid opportunities,such as cities and school districts, receive federal and state funding, yet they somehow manage to tell the state that they don’t get to have any oversight into how that money is spent when it comes to HUB participation.
NOTE: Nothing in this article is intended to compare the struggles of a disabled veteran to the historical battles fought by people of color and women. The information detailed here is in the context of Texas identifying disabled veteran owned businesses as part of a protected class of business, and state-funded entities and agencies finding a way to use a law meant to lessen the possibility of discrimination, real or perceived, to single out and discriminate against one of the six protected groups.