SUBJECT: Qualifying disabled veterans as HUB contractors
COMMITTEE: Defense and Veterans’ Affairs — favorable, without amendment
VOTE: 9 ayes — Menéndez, Sheffield, Collier, Farias, Frank, Miller, Moody,
WITNESSES: For — James Brennan, Texas Coalition of Veterans Organizations; Philip
Lindner, National Guard Association of Texas; (Registered, but did not
testify: James Cunningham, Texas Coalition of Veterans Organizations
and Military Officers Association of America; Brian East, Disability
Rights Texas; Deborah Giles and Patrick Hogan, Texas Technology
Consortium; Carlos Higgins, Austin Military Officers Association;
Morgan Little and John Miterko, Texas Coalition of Veterans
Against — Peter Aguirre; Karen Box, Southwest Minority Supplier
Development Council; Carmen Garcia, MBE Institute for Public Policy;
Margo Posey, Dallas Fort Worth Minority Supplier Development Council,
Houston Minority Supplier Development, Austin and San Antonio
Southwest Minority Council; Jim Wyatt, Texas Association of African
On — Thomas Palladino, Texas Veterans Commission
BACKGROUND: To participate in the state’s historically underutilized business (HUB)
contracting program as defined by Government Code 2161.001 (3), at
least 51 percent of a business must be owned by one or more economically
disadvantaged persons. An economically disadvantaged person is defined
as someone who is economically disadvantaged as a result of
discrimination caused by that person’s identification as a member of a
certain group, including African Americans, Hispanic Americans, women,
Asian Pacific Americans, and Native Americans.
DIGEST: HB 194 would allow service-disabled veterans to participate in the state’s
HUB contracting program. The bill also would require the state
comptroller, for reporting purposes, to add service-disabled veterans as
defined by federal statute to the categories of groups included in the
The bill would take effect September 1, 2013.
Adding service-disabled veterans to the historically underutilized business
contracting program would provide economic opportunities to a highly
skilled group of individuals who have honored their country through
military service. Their inclusion would strengthen the visibility and
sustainability of the HUB program in ways that benefit the state as well as
By expanding the definition of a HUB owner, the bill would allow
service-disabled veterans greater access to contracts with the state and
other public entities. States such as California and Florida have allowed
service-disabled veterans this kind of access to state procurement
Enlarging the pool of available vendors could help drive down state
contracting costs. At the same time, the state would benefit from the
excellent training and skills these veterans would bring to their duties.
The program would incentivize entrepreneurism for veterans, who, as a
group, have a higher-than-average unemployment rate. HB 194 would
allow disabled veterans to join other groups of individuals who have
sometimes suffered the effects of discriminatory practices. In addition,
service-disabled veterans would spur attention in the media and boost
support for a program some participants say does not receive a sustainable
level of contracts.
Nearly 17,000 businesses were classified as Texas-certified HUBs in fiscal
2012, according to a report by the Texas Comptroller of Public Accounts.
The U.S. Small Business Administration estimates that about 1,000
businesses are owned by service-disabled veterans in Texas, so adding this
group would not greatly impact the HUB program.
Widening the definition of what qualifies as a historically underutilized
business, as proposed by HB 194, would dilute an important program that
ensures that businesses owned by minorities and women have a fair
chance of procuring contracts with government agencies and public
entities. Instead, lawmakers should seek to establish a similar but separate
job procurement program tailored to serving businesses owned by servicedisabled veterans.
The HUB program in Texas is struggling to meet its goals of increasing
the number of contracts available to underutilized businesses and growing
the number of jobs provided by those operations. The state’s spending
with HUBs dropped by $88.3 million in fiscal 2012, when HUB-related
state expenditures comprised 13.8 percent of total expenditures, according
to a study by the Texas Comptroller of Public Accounts. Enlarging the
pool of businesses that could procure contracts through the HUB program
when expenditures are shrinking would not make sense and would harm
businesses for which the program was created.
Much like Veterans Administration hospitals are tailored to provide health
care to the military and former service members, a separate program
should promote contract procurement in a way that suits service-disabled
veterans and honors the commitment they made to their country.