Dilution of Historically Underutilized Business Program considered by Texas House

Recommended changes could have detrimental effect

(Austin, TX) – The State Affairs Committee of the Texas House of Representatives is currently considering two bills – HB1565 and HB3362 – that would detrimentally impact all gains that the Texas Historically Underutilized Business Program (HUB), created in 1991, is designed to achieve.

Concerned by what the recommended changes might mean for the future of HUB, representatives with the Texas Association of Mexican American Chambers of Commerce (TAMACC), the Texas Association of African American Chambers of Commerce (TAAACC) and U.S. Hispanic Contractors Association of Austin spoke in opposition of the bills before Committee members on Monday, April 8th.

Initially instigated by the United States Supreme Court, the HUB program sought to increase opportunities for minority- and women-owned businesses with the award of state contracts: “In accordance with Chapter 2161 of the Texas Government Code, State agencies, including institutions of higher education, shall make a good faith effort to utilize HUBs in state contracts, including contracts for construction, services, and commodities.” (Source: State Comptroller)

To qualify for HUB status currently, a business has to be at least 51% owned by Asian Pacific American, Black American, Hispanic American, Native American, American woman or a Service-Disabled Veteran.

Both HB1565, sponsored by Representative Thresa “Terry” Meza, D – Irving, and HB3362 sponsored by Representative Ana Hernandez, D – Houston, would add to the list of business owners who could seek HUB certification to anyone with a “qualified” disability.

“We are certainly not against helping people with disabilities,” shared Samuel Guzman, TAMACC Chairman of the Board. “What we are against is diluting the HUB program and in effect negating the very purpose for which it was created. We urge Representatives Meza and Hernandez, as well as other supporters in the House, to instead recommend changes to the existing Texas Human Resource Code §122 program, which currently provides many of the same protections it is specifically aimed at assisting people with disabilities.”

On that same day before the Committee, supportive testimony for the bills centered around the fact that the disabled community suffers from discrimination similar to those groups currently eligible to apply for HUB certification.

In responsive testimony, Frank Fuentes, Chairman of the U.S. Hispanic Contractors Association of Austin, explained: “We don’t question whether discrimination exists when it comes to employment and/or the awarding of State-backed contracts to the disabled community. However, there is already an existing statute that specifically addresses this protected group and serves to assist in employment and contracting efforts. A focus on strengthening that program, promoting it better and ensuring that the disabled community – specifically business owners – are familiar with it would, I believe, achieve what Representatives Meza and Hernandez are trying to accomplish with their current efforts.”

Another potentially detrimental aspect: Should the recommended changes to the HUB program be approved as proposed, a physician would be able to make the determination as to whether individuals “fit” the definition of disabled, and given medical privacy laws (Health Insurance Portability and Accountability Act – i.e. HIPAA), there would be limited ability to investigate potential abuses.

Charles O’Neal, President of TAAACC, further shared with Committee Members: “None of us here in opposition of the recommended bill revisions want to deny opportunities to anyone among the disabled community. On the contrary, we want to see them treated fairly and respectively, similar to what we’ve been pushing for through the HUB program. What we don’t want to see is a dilution of the HUB program – a program that for all practical purposes is doing well, but still has a way to go in truly being considered a successful program.”

Currently, both bills are pending in the Committee. However, representatives with TAMACC, TAACC and the U.S. Hispanic Contractors Association are anticipating more attacks on the HUB program this session.

“We all are committed to continue to advocate on behalf of women – and minority-owned businesses to the keep the integrity of the HUB program and not let it be reduced to an ineffective program that ultimately will help no one,” says Pauline Anton, TAMACC President and CEO.

Additional Background:

In 2008, the State’s Comptroller’s office contracted with an independent vendor to determine if there was compelling enough information to continue the HUD program. The resulting Disparity Study released in 2009 confirmed the need for the continuation of the Statewide HUB Program, based primarily on:

  1. statistical disparities by race, ethnicity and gender classification in current HUB utilization, particularly in prime contracting
  2. statistical disparities by race, ethnicity and gender classification in the private marketplace, particularly in the area of utilization of women- and minority- owned firms in commercial construction
  3. statistical disparities in firm earnings by race, ethnicity and gender classification, even after controlling for capacity-related factors; and
  4. anecdotal testimony of disparate treatment as presented by business owners in interviews, surveys, public hearings and focus groups.
  5. The findings are the basis for any rule revisions required of this agency by Chapter 2161, Government Code.


Sec. 122.001. PURPOSE. The purpose of this chapter is to further the state’s policy of encouraging and assisting persons with disabilities to achieve maximum personal independence by engaging in useful and productive employment activities and, in addition, to provide state agencies, departments, and institutions and political subdivisions of the state with a method for achieving conformity with requirements of nondiscrimination and affirmative action in employment matters related to persons with disabilities.