From the Office of State Senator Royce West - District 23

For Immediate Release

CONTACT: Kelvin Bass
(512) 463-0123
December 12, 2003

Leveling the Playing Field of State Business


Anyone who has followed my track record over the decade I've served in the Texas Senate knows that the Historically Underutilized Business (HUB) program is an issue that's near and dear to my heart. Created in 1991, the HUB program's goal is to increase the number of opportunities available to companies owned by minorities and women who historically, have experienced low levels of participation in state procurement opportunities. The legislation aims to create a level playing field for all those who desire to do business with the state, regardless of ethnicity or gender.

While I believe that an unbiased system would judge each prospective business proposal purely on its merit, we live in a world where long-standing business practices are now tantamount to discrimination. When factors - such as the merit of the bid or product delivery - are evaluated on an equal basis, our HUB program is able to provide new opportunities to those businesses that have traditionally been shut out of a state procurement system; a system that for far too many years was characterized by croneyism and the "good ole boy" network.

Each year, my office receives reports on state agencies that rates their performances when it comes to contracting with historically underutilized businesses. I'm pleased to report that this year's HUB statistics show that in fiscal year 2002 - 2003, the percentage of HUB expenditures increased from 11 percent to 13 percent across the board. The number of certified HUB businesses increased by 32 percent, and the number of certified HUBs awarded contracts also increased by 11 percent. Overall, HUB subcontracting expenditures increased from $404 million to $534 million over the past year.

In addition, HUB expenditures increased in five of the six major procurement categories -- building construction, special trades, professional services, other services, and commodity purchases. For example, HUB expenditures in building construction increased from 10 percent to 16 percent and contracts in the special trades category increased from 15 percent to 22 percent. HUB spending by the state's public universities increased from 10 percent to 14 percent.

But there's still room for improvement. While term contract spending with HUBs increased by four percent, group purchasing expenditures decreased by five percent. And while dollars spent with HUB businesses increased in five of the six major procurement categories, the area of heavy construction showed a decrease.

It's alarming when some of the Texas' largest agencies are still falling far short of the mark. Although a 1.69 percent reduction in HUB expenditures might not seem like much, for an agency the size of the Texas Department of Criminal Justice, this means that $3.2 million less was spent by the agency with HUBs this year. Likewise for the Texas Department of Health. While a 0.18 percent decrease in their HUB expenditures might look like a drop in the bucket, it means that the agency spent a whopping $14 million less on HUBs in the past 12 months. Perhaps the biggest surprise was in seeing the Texas Buildings and Procurement Commission's numbers. Over the last year, the Commission's HUB expenditures decreased by 9.3 percent - which amounts to $4.9 million. That's most alarming when considering that this is the agency charged with oversight of other state agencies' implementation of the HUB statute.

That's a lot of lost opportunities for a lot of small businesses. While some of these reductions can be pinned to structural changes in state government, as well as recent and significant budget reductions, these cuts should be spread across the board. Historically Underutilized Businesses should not bear the brunt of this state's budgetary crisis.

The fact that some agencies have performed so poorly is cause for concern, and warrants immediate attention. Rest assured that nothing less than thorough explanations for these lackluster results will be required from the heads of the relevant agencies. I'll be looking for ways they can improve their HUB expenditures over the coming year so that these agencies are more in line with the promising improvements seen in most other state agencies.

We know that the HUB Program works when agencies put forth the effort. Now we must ensure that it works for all Texans, and in all sectors of state spending, so that the playing field is well kept and truly level when it comes to bidding on state contracts.

Royce West
Texas Senate