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Historically Underutilized Business (HUB) Program

The State of Texas Disparity Study – 2009

Frequently Asked Questions

Who are included in Women and Minority-Owned Business Enterprises?

Minority-owned business enterprises are those that are at least 51% owned and controlled by one or more citizens or lawful permanent residents of the United States who are either African American, Hispanic American, Asian American, or Native American. A woman-owned business is one that is at least 51% owned and controlled by one or more citizens or lawful permanent residents of the United States who are non-minority females.

The State of Texas seeks to maximize its utilization of Texas-based women and minority-owned businesses in state procurement and contracting through the HUB program.

What is the HUB program?

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.

Mission: To encourage and effectively promote the utilization of HUBs by all state agencies, and to promote full and equal business opportunities for all businesses in state contracting in accordance with the goals based on the State of Texas Disparity Study.

Administration: The State of Texas HUB Program is administered and maintained by the CPA. The CPA is responsible for the following:

  • Reporting state agencies’ HUB initiatives to the State legislature;
  • Certifying eligible businesses that apply for HUB certification;
  • Maintaining a current list of HUBs available for state contracts;
  • Provide consulting services to state agencies and HUB coordinators;
  • Assisting state agencies with good faith effort requirements and analysis.

The CPA is authorized by §2161.0012 of the Texas Government Code to promulgate rules governing the HUB program.

Does historical event of discrimination justify a set-aside program?

No. The U.S. Justice Department’s guidance to federal agencies states:

“[T]he mere fact that there has been generalized, historical discrimination in the country against minorities is an insufficient predicate for race-conscious remedial measures; the discrimination to be remedied must bee identified more concretely.” (61 Fed. Reg. at 26,050; Adarand Constructors, Inc. v. Pena, 515 U.S. 200, 237 (1995))

Are there other states which have conducted Disparity Studies?

Since the Croson case, in which the U.S. Supreme Court in 1989 struck down the set-aside program for Women and Minority Business Enterprises (W/MBE), most states have conducted disparity studies to assess the realistic goals and evaluate the proportional involvement of W/MBE in government procurement and contracting. In fact, several states have completed the 2nd and the 3rd round of studies to tune up the aspirational goals and revaluate their outreach and access programs. Please see several sources provided in the “Related Cases” page.

Who conducts a Disparity Study?

There are a few consulting businesses with expertise in conducting large scale disparity studies. The U.S. Commission on Civil Right, however, recommends utilizing independent researchers and universities in conducting the research.

Is a Disparity Study more than a simple research project?

Absolutely. A Disparity Study is not just data crunching and publishing the results. It must follow a set of guidelines set forth by the Federal Courts. Further, it must integrate sound empirical research with the legal requirements to identify the State benchmarks, recommends policy to elevate the W/MBE involvement in government procurement and contracting, and provide undisputed and defensible grounds for establishing realistic state goals.

How long will it take to conduct the Disparity Study for the State of Texas?

The time frame to complete a disparity study depends on the scope of the study, size of the jurisdiction, availability of valid data, and many other factors. Generally it takes nine to eighteen months to properly conduct a disparity study.

Which agencies are included in the study?

All State agencies and State higher education institutions will be included.

What types of businesses are included in the Disparity Study?

Only businesses that are ready, willing and able to do business with the State agencies and State higher education institutions are included in the analysis section of the Disparity Study.

Who are the socially disadvantaged individuals?

Socially disadvantaged individuals are those who have been subjected to racial or ethnic prejudice or cultural bias because of their identity as a member of a group without regard to their individual qualities - 15 U.S.C. §637(a)(5).

Limitations: The federal courts have identified two limitations: An individual whose personal net worth exceeds $770,000 is not economically disadvantaged – 49 C.F.R. § 26.67 (b); Small businesses do not qualify if their earnings exceeded $16.6 million per year in the previous three fiscal years – TEA-21 §1101(b)(2)(A), 112 Stat. at 113.


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