The value of being a HUB vendor in Texas, Part 1

May 18, 2011

This is part one of a two part series on being a Texas HUB.

Simply put, businesses that qualify as historically underutilized businesses (HUBs) can have an advantage when selling to the State of Texas and a number of cities that have HUB programs.

The HUB program was created by the Texas legislature to allow small and historically underutilized businesses to have a fair chance at competing for business with the state. Many cities (like the City of Austin) have HUB programs that mirror the state’s, with some of them having small differences in rules.

This post is part one of a two part post describing the process of qualifying as a HUB vendor.

Principally there are three major components to being a HUB vendor:

  • is at least 51% owned by an Asian Pacific American, Black American, Hispanic American, Native American and/or American woman,
  • is an entity with its principal place of business in Texas, and
  • has an owner residing in Texas with a proportionate interest that actively participates in the control, operations and management of the entity's affairs.

Breaking down each of the elements, the first is the person who has at least 51% ownership. They must be members of one of the qualifying categories.

The second is the principal place of business must be domiciled in the State of Texas.

The last is as important as the other two and the one that received the most scrutiny by a certifying agency. The 51% owner must be materially involved in the company and participate in the control, operation, and management.

There is a significant amount of paperwork that one must complete to become a Texas HUB vendor.

There is no cost to apply and once certified your status is good for four years.

Benefits of being a Texas HUB include:

Inclusion in the State of Texas HUB Directory

Identification as a HUB vendor in the State of Texas Centralized Master Bidder’s List (additional $75 annual cost)

Ability to sell state agencies goods and services (up to a dollar threshold) without submitting a competitive bid.

Increased exposure to companies that do business with the state and are under pressure from the state to do a percentage of business with the state

There are two more critical points I want to make in this post. First, the main Texas HUB certifying agency in Texas is the Comptroller of Public Accounts. Many cities (like San Marcos for example) use the state’s HUB rules without modification, though cities may modify rules for their unique governmental agency. For example, the City of Austin has a few differences in how it works with and certifies HUB venders than does the state.

The state has entered into an agreement with ten other HUB certifying agencies. Those are:

• City of Austin
• City of Houston
• Dallas/Fort Worth Minority Supplier Development Council
• El Paso Hispanic Chamber of Commerce
• Houston Minority Supplier Development Council
• South Central Texas Regional Certification Agency
• Southwest Minority Supplier Development Council
• Texas Department of Transportation
• Women's Business Council - Southwest
• Women's Business Enterprise Alliance

It is important to understand that you may be certified by any one of these organizations or the state directly. If you are certified by one of the organizations listed above, the state recognizes the certification and will make you a HUB for the State of Texas. The reverse is not necessarily true. If you are certified by the Comptroller of Public Accounts that doesn’t mean your certification extends to the City of Austin, or other non-state governmental entity.

Part 2 of this series will discuss in detail how to sell to governmental entities once you have become a certified HUB.

Topics: Featured, Blog Posts, HUB

Ed Lette

Business Bank of Texas

Ed Lette is a Founder of Business Bank of Texas. Serving as a licensed CPA since 1983, Ed’s extensive experience in the banking industry has led him to become the founding president of four national bank charters including Business Bank of Texas, N.A., and the chief financial officer of five national banks during his 45 year career. Ed serves as director of the Texas Bankers Association District 4, chairman of the Executive Advisory Council to the School of Business at Texas Lutheran University, and is a life member of the Texas Association of Business.
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