1 TAC §§111.11, 111.13, 111.14, 111.26, 111.27
The General Services Commission proposes amendments to Title
1, T.A.C. §§111.11, 111.13, and new §§ 111.14, 111.26
and 111.27 concerning the Historically Underutilized Business Certification
Program in order to comply with the legislative requirements of Senate Bill
(SB) 178, 76th Legislative Session codified under the Texas Government Code,
Chapter 2161. The amendments and new rules are being proposed to implement
the new requirements of the Texas Government Code, Chapter 2161 regarding:
the HUB policy statement, procurement utilization goals, agency determination
of subcontracting opportunities, HUB subcontracting plans, HUB coordinator
responsibilities, and the agency forum program. The commission, according
to the revised rules and in accordance with the HUB Program's policies and
procedures, will maintain the requirements.
Sal Valdez, Director of Business Services, has determined that for the
first five year period the proposed amendments are in effect, there will be
no effect to state or local government as a result of implementing these amendments.
Sal Valdez, Director of Business Services, has also determined that for
each year of the first five year period that the amended sections are in effect
the public benefit anticipated as a result of implementing these rules is
a streamlined method for securing more goods and services from HUB vendors.
There will be no effect on small businesses. There is no anticipated economic
cost to persons who are required to comply with the rules as proposed.
Comments on the proposals may be submitted to Ann Dillion, General Counsel,
General Services Commission, P. O. Box 13047, Austin, TX 78711-3047. Comments
must be received no later than thirty days from the date of publication of
the proposal to the Texas Register.
The amendments are proposed under the Texas Government Code,
Title 10, Subtitle D, Chapter 2161, §2161.002, which provides the General
Services Commission with the authority to promulgate rules under this Chapter.
The following statute is affected by these rules: Government Code, Title
10, Subtitle D, Chapter 2161.
§111.11.Policy and Purpose.
It is the policy of the commission to encourage the use of historically
underutilized businesses
(HUBs)
by state agencies and to assist
agencies
in the implementation of this policy
[
to achieve
these goals
] through race, ethnic, and
gender-neutral
[
gender neutral
] means. The
purpose
[
goal
] of this
program is to promote full and equal business opportunity for all businesses
in state contracting
in accordance with the goals specified in the State
of Texas Disparity Study. Sections 111.11 through 111.27 of this title (relating
to the Historically Underutilized Certification Program) describe the minimum
steps and requirements to be undertaken by the commission and state agencies
to fulfill the state's HUB policy.
§111.13.Annual Procurement Utilization Goals.
(a)
In accordance with
§111.11 of this title (relating
to Policy and Purpose) and the Texas Government Code, Sections 2161.181 and
2161.182,
[
the commission's policy of encouraging the use of HUBs
in state procurement, and based upon the findings of the Disparity Study,
] each state agency shall make a good faith effort to utilize HUBs in
contracts for construction, services
(
[
,
]including
professional and consulting services
)
[
,
] and commodities
purchases. Each agency may achieve the annual program goals by contracting
directly with HUBs or indirectly through subcontracting opportunities.
(b)
Each state agency shall make a good faith effort to assist
HUBs in receiving a portion of the total contract value of all contracts that
the agency expects to award in a fiscal year in accordance with the following
percentages:
(1)
11.9% for heavy construction other than building contracts;
(2)
26.1% for all [
other
] building construction,
including general contractors and operative builders contracts;
(3)
57.2% for all special trade construction contracts;
(4)
20% for professional services contracts;
(5)
33% for all other services contracts; and
(6)
12.6% for commodities contracts.
(c)
Each agency shall make a good faith effort to meet or exceed
the goals outlined in subsection (b) of this section. The percentage goals
established in subsection (b) are overall annual program goals for each state
agency applicable to the total annual dollar amount of an agency's contracts
for each of the specific types of contracts. It may not be practicable to
apply these goals to each contract. For each contract, state agencies may
set higher or lower program goals than those outlined in [
this
]
subsection
(b) of this section
. Agencies may consider HUB availability,
HUB utilization, geographical location of the project, the contractual scope
of work
,
or other relevant factors. By implementing the following
procedures, an agency shall be presumed to have made a good faith effort:
(1)
prepare and distribute information on procurement procedures
in a manner that encourages participation in state contracts by all businesses;
(2)
divide proposed requisitions into reasonable lots
in keeping with industry standards and competitive bid requirements;
(3)
where feasible,
assess bond and insurance
requirements and design [
such
] requirements
that
[
to
] reasonably permit more than one business to perform the work;
(4)
specify reasonable, realistic delivery schedules consistent
with an agency's actual requirements;
(5)
ensure that specifications, terms, and conditions
reflect an agency's actual requirements, are clearly stated
,
and
do not impose unreasonable or unnecessary contract requirements;
(6)
provide potential bidders with referenced list of
certified HUBs for subcontracting;
(7)
determine whether specific
agencywide
[
agency wide
] goals are appropriate under the Disparity Study
, as
[
because
] some HUB groups have not been underutilized within
applicable contracting categories and should not be included in the HUB goals
for that category
;
[
.
]
(8)
identify potential subcontracting
opportunities in all contracts and require a HUB subcontracting plan for contracts
of $100,000 or more, where such opportunities exist, in accordance with the
Texas Government Code, Chapter 2161, Subchapter F, § 2161.251; and
(9)
seek HUB subcontracting in contracts
that are less than $100,000 whenever possible.
(d)
A state agency may also demonstrate good faith under this
section by
submitting
[
including
] a supplemental letter
with documentation
including, but not limited to the following,
as prescribed by the commission:
(1)
identifying the percentage of contracts awarded to women
and/or minority-owned businesses that are not certified as HUBs;
(2)
demonstrating that a different goal from that identified
in subsection (b) of this section was appropriate given the agency's mix of
purchases;
(3)
demonstrating that a different goal was appropriate
given the particular qualifications required by an agency for its contracts;
[
or
]
(4)
demonstrating that a different goal was appropriate
given that graduated HUBs cannot be counted toward the goal
; or
[
.
]
(5)
demonstrating assistance to noncertified
HUBs in obtaining certification with the commission.
§111.14.Subcontracts.
(a)
Requirement for HUB subcontracting plans. In accordance
with the Texas Government Code, Chapter 2161, Subchapter F, each state agency
that considers entering into a contract with an expected value of $100,000
or more shall, before the agency solicits bids, proposals, offers, or other
applicable expressions of interest, determine whether subcontracting opportunities
are probable under the contract.
(1)
State agencies shall use the following steps in making
the determination of whether subcontracting opportunities are probable under
the contract:
(A)
Agencies shall use the HUB participation goals in §111.13
of this title (relating to Annual Procurement Utilization Goals);
(B)
Research the Centralized Master Bidders List, the HUB Directory,
the Internet and other directories, as identified by the commission, for HUBs
that may be available to perform the contract work;
(C)
Additionally, determination of subcontracting opportunities
may include, but is not limited to, the following:
(i)
contacting other state and local agencies and institutions
of higher education to obtain information regarding similar contracting and
subcontracting opportunities; and
(ii)
reviewing the history of similar agency purchasing transactions.
(2)
If subcontracting opportunities are probable,
each agency's invitation for bids or other purchase solicitation documents
for construction, professional services, other services, and commodities for
$100,000 or more shall state that probability and require a HUB subcontracting
plan. Accordingly, potential contractor/vendor responses that do not include
a completed HUB subcontracting plan shall be rejected as a material failure
to comply with advertised specifications in accordance with §113.6 (a)
of this title (relating to Bid Evaluation and Award). The plan shall include
goals established pursuant to §111.13 of this title (relating to Annual
Procurement Utilization Goals).
(b)
Development and evaluation of HUB subcontracting plans.
A state agency shall require a potential contractor vendor to state whether
it is a Texas certified HUB. Potential contractors/vendors shall follow, but
are not limited to, procedures in subsection (b)(1) of this section when developing
the HUB subcontracting plan. The HUB subcontracting plan shall include the
form provided by the agency identifying the subcontractors that will be used
during the course of the contract, the expected percentage of work to be subcontracted,
and the approximate dollar value of that percentage of work. The contractor/vendor
shall provide all additional information required by the agency.
(1)
Evidence of good faith effort in developing a HUB subcontracting
plan includes, but is not limited to, the following procedures:
(A)
Divide the contract work into reasonable lots to the extent
consistent with prudent industry practice.
(B)
Notify HUBs of the work that the contractor/vendor intends
to subcontract. The preferable method of notification shall be in writing.
The notice shall, in all instances, include the scope of the work, information
regarding the location to review plans and specifications, information about
bonding and insurance requirements, and identify a contact person. The notice
shall be provided to potential HUB subcontractors prior to submission of the
contractor's/vendor's bid. The potential contractor/vendor shall provide potential
HUB subcontractors reasonable time to respond to the potential contractor's/vendor's
notice. "Reasonable time to respond" in this context is no less than five
working days from receipt of notice, unless circumstances require a different
time period, which is determined by the agency and documented in the contract
file. The potential contractor/vendor shall effectively use the commission's
Centralized Master Bidders List, the HUB Directory, Internet resources, and
other directories as identified by the commission or agency when searching
for HUB subcontractors. Contractors/Vendors may rely upon the services of
minority, women, and community organizations contractor groups, local, state,
and federal business assistance offices, and other organizations that provide
assistance in identifying qualified applicants for the HUB program who are
able to perform all or select elements of the HUB subcontracting plan. The
potential contractor/vendor shall provide the notice described in this subsection
to three or more HUBs that perform the type of work required. Upon request,
the potential contractor/vendor shall provide official written documentation
(i.e. phone logs, fax transmittals, etc.) to demonstrate compliance with the
notice required in this subsection.
(C)
Provide written justification of the selection process,
if a non HUB subcontractor is selected through means other than competitive
bidding, or a HUB bid is the best value responsive bidder to a competitive
bid invitation, but is not selected.
(D)
Advertise HUB subcontracting opportunities in general circulation,
trade association, and/or minority/woman focus media concerning subcontracting
opportunities.
(E)
Encourage a selected noncertified minority or woman owned
business subcontractor to apply for certification by the commission in accordance
with the procedures set forth in §111.17 of this title (relating to Certification
Process).
(2)
If the contract is a lease contract, the lessor
shall comply with the requirements of this section from and after the occupancy
date provided in the lease, or such other time as may be specified in the
invitation for bid for the lease contract.
(3)
In making a determination whether a good faith effort
has been made in the development of the required HUB subcontracting plan,
a state agency shall require the potential contractor/vendor to submit supporting
documentation explaining in what ways the potential contractor/vendor has
made a good faith effort according to each criterion listed in subsection
(b)(1) of this section. The documentation shall include at least the following:
(A)
Whether the potential contractor/vendor divided the contract
work into reasonable portions in accordance with prudent industry practices.
(B)
Whether the potential contractor/vendor notices contain
adequate information about bonding, insurance, the plans, the specifications,
scope of work, and other requirements of the contract to three or more qualified
HUBs allowing reasonable time for HUBs to participate effectively.
(C)
Whether the potential contractor/vendor negotiated in good
faith with qualified HUBs, not rejecting qualified HUBs who were also the
best value responsive bidder.
(D)
Whether the potential contractor/vendor documented reasons
for rejection or met with the rejected HUB to discuss the rejection.
(E)
Whether the potential contractor/vendor advertised in general
circulation, trade association, and/or minority/women focus media concerning
subcontracting opportunities.
(F)
Whether the potential contractor/vendor assisted non-certified
HUBs to become certified.
(4)
The HUB subcontracting plan shall be reviewed
and evaluated prior to contract award and, if accepted, shall become a provision
of the agency's contract. No changes shall be made to an accepted subcontracting
plan prior to its incorporation into the contract. State agencies shall review
the supporting documentation submitted by the potential contractor/vendor
to determine if a good faith effort has been made in accordance with this
section and the bid specifications. If the agency determines that a submitted
HUB subcontracting plan was not developed in good faith, the agency shall
treat the lack of good faith as a material failure to comply with advertised
specifications, and the subject bid or other response shall be rejected. The
reasons for rejection shall be recorded in the procurement file.
(5)
If the potential contractor/vendor can perform all
the subcontracting opportunities identified by the agency, a statement of
the potential contractor's/vendor's intent to complete the work with its employees
and resources without any subcontractors will be submitted with the potential
contractor's/vendor's bid, proposal, offer, or other expression of interest.
If the potential contractor/vendor is selected and decides to subcontract
any part of the contract after the award, as a provision of the contract,
the contractor/vendor must comply with provisions of this section relating
to developing and submitting a subcontracting plan prior to any modifications
or performance in the awarded contract involving subcontracting being authorized
by the state agency. If the selected contractor/vendor subcontracts any of
the work without prior authorization and without complying with this section,
the contractor/vendor would be deemed to have breached the contract and be
subject to any remedial actions provided by Texas Government Code, Chapter
2161, state law and this section. Agencies may report non-performance relative
to its contracts to the commission in accordance with Chapter 113, Subchapter
F of this title (relating to the Vendor Performance and Debarment Program).
(c)
Submission, review and determination of changes to an approved
subcontracting plan during contract performance. If at any time during the
term of the contract, a contractor/vendor desires to make changes to the approved
subcontracting plan, such proposed changes must be received for prior review
and approval by the state agency before changes will be effective under the
contract. The potential contractor/vendor must comply with provisions of subsection
(b) of this section (relating to developing and submitting a subcontracting
plan for substitution of work or of a subcontractor) prior to any alternatives
being approved under the subcontracting plan. The state agency should approve
changes by amending the contract. The reasons for amendments shall be recorded
in the procurement file.
(d)
Determining contractor/vendor contract compliance. The
contractor/vendor shall maintain business records documenting its compliance
with the HUB subcontracting plan and shall submit a compliance report to the
contracting agency periodically and in the format required by the contract
documents. During the term of the contract, the state agency shall determine
whether the value of the subcontracts to HUBs meets or exceeds the HUB subcontracting
provisions specified in the contract. If the contractor/vendor fails to meet
the HUB subcontracting provisions specified in the contract, the state agency
shall notify the contractor of any deficiencies. The state agency shall give
the contractor/vendor an opportunity to submit documentation and explain to
the state agency why the failure to fulfill the HUB subcontracting plan should
not be attributed to a lack of good faith effort by the contractor/vendor.
If the contractor/vendor is meeting or exceeding the provisions, the state
agency shall maintain documentation of the contractor's/vendor's efforts in
the contract file. Accordingly, state agencies shall require a contractor/vendor
to whom a contract has been awarded to report to the agency the identity and
the amount paid to its subcontractors in accordance with §111.16(c) of
this title (relating to State Agency Reporting Requirements).
(1)
The state agency shall audit the contractor's/vendor's
compliance with the HUB subcontracting plan. The state agency shall give the
contractor/vendor an opportunity to submit documentation and explain to the
state agency why the failure to fulfill the HUB subcontracting plan should
not be attributed to a lack of good faith effort by the contractor/vendor.
In determining whether the contractor/vendor made the required good faith
effort, the agency may not consider the success or failure of the contractor/vendor
to subcontract with HUBs in any specific quantity. The agency's determination
is restricted to considering factors indicating good faith including, but
not limited to, the following:
(A)
Whether the contractor gave timely notice to the subcontractor
regarding the time and place of the subcontracted work.
(B)
Whether the contractor facilitated access to the work site,
electrical power, and other necessary utilities.
(C)
Whether documentation or information was provided that
included potential changes in the scope of contract work.
(2)
If a determination is made that the contractor/vendor
failed to implement the HUB subcontracting plan in good faith, the agency,
in addition to any other remedies, may report nonperformance to the commission
in accordance with Chapter 113, Subchapter F of this title (relating to Vendor
Performance and Debarment Program).
(3)
State agencies shall review their procurement procedures
to ensure compliance with this section. In accordance with §111.26 of
this title (relating to HUB Coordinator Responsibilities) the agency's HUB
coordinator and contract administrators should facilitate institutional compliance
with this section.
§111.26.HUB Coordinator Responsibilities.
(a)
In accordance with Texas Government Code, §2161.062(e),
state agencies with biennial budgets that exceed $10 million shall designate
a staff member to serve as the Historically Underutilized Business (HUB) Coordinator
for the agency during the fiscal year. The HUB coordinator will advise and
assist agency executive directors and staff in complying with the requirements
of Chapter 111, Subchapter B of this title (relating to the Historically Underutilized
Business Certification Program), the Texas Government Code, §§321.013,
2101.011, and Texas Government Code, Chapter 2161.
(b)
To demonstrate an agency's good faith effort, it shall
provide the HUB coordinator with necessary and sufficient resources from its
current operations and budget to efficiently promote the achievement of all
the responsibilities of the HUB coordinator. The HUB coordinator will assist
its agency in the development of the agency's procurement specifications,
HUB subcontracting plans, and evaluation of contracts for compliance. The
HUB coordinator should be identified in a responsive role that reports, communicates,
and provides information to the agency's executive director. To assist state
agencies and the commission with HUB compliance, the duties and responsibilities
of HUB coordinators include, but are not limited to, the agency's good faith
effort criteria, HUB reporting, contract administration, and marketing and
outreach efforts for HUB participation. The commission may assist agencies,
upon request, to identify other responsibilities of a HUB coordinator for
compliance.
§111.27.HUB Forum Programs for State Agencies.
(a)
In accordance with Texas Government Code, §2161.066,
the commission shall design a program of forums in which historically underutilized
businesses are invited by state agencies to deliver technical and business
presentations that demonstrate their capability to do business with the agency:
(1)
to senior managers and procurement personnel at state agencies
that acquire goods and services of a type supplied by the historically underutilized
businesses; and
(2)
to contractors/vendors with the state who may be subcontracting
for goods and services of a type supplied by the historically underutilized
businesses.
(b)
The forums shall be held at state agency offices. Each
agency with a biennial appropriation exceeding $10 million shall participate
in the forums by sending senior managers and procurement personnel to attend
relevant presentations. The agency will inform their contractors/vendors about
presentations relevant to subcontracting opportunities for HUBs and small
businesses. The commission and each agency that has a HUB coordinator shall:
(1)
design its own forum program and model the program forum
following the format established by the commission;
(2)
sponsor presentations by HUBs at the agency;
(3)
advertise in appropriate trade publications to target
HUBs; and
(4)
identify and invite HUBs to make marketing presentations
on the types of goods and services they provide .
(c)
The agency's forum programs may include, but are not limited
to, the following initiatives:
(1)
providing marketing information that will direct HUBs to
key staff within the agency;
(2)
notifying other state agencies to assist in the preparation
and planning of the forum when necessary;
(3)
informing HUBs about potential contract opportunities
and future awards; and
(4)
preparing an annual report of each sponsored forum.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on January 25, 2000.
TRD-200000470
Ann Dillon
General Counsel
General Services Commission
Earliest possible date of adoption: March 5, 2000
For further information, please call: (512) 463-3960
1 TAC §111.14
(Editor's note: The text of the following section proposed for
repeal will not be published. The section may be examined in the offices of
the General Services Commission or in the Texas Register office, Room 245,
James Earl Rudder Building, 1019 Brazos Street, Austin.)
The General Services Commission proposes the repeal
of Title 1, T.A.C., §111.14 concerning Subcontracts in order to propose
new Title 1, T.A.C. §111.14 which contains language that is compliant
with amendments to the Texas Government Code, Chapter 2161, Subchapter F (Subcontracting)
enacted by S.B. 178, 76th Leg. (1999).
Sal Valdez, Director of Business Services, has determined for the first
five year period the repeal is in effect, there will be no adverse effect
to state or local government as a result of enforcing these rules.
Sal Valdez, Director of Business Services, further determines that for
each year of the first five-year period the repeal is in effect, the public
benefit anticipated as a result of enforcing the repeal will be the deletion
of obsolete language and the creation of new and more efficient rules relating
to the Texas Government Code, Chapter 2161, Subchapter F. There will be no
effect on small or large businesses and/or persons.
Comments on the proposals may be submitted to Ann Dillon, General Counsel,
General Services Commission, P.O. Box 13047, Austin, TX 78711-3047. Comments
must be received no later than thirty days from the date of publication of
the proposal to the Texas Register.
The repeal of §111.14 is proposed under the authority of
the Texas Government Code, Title 10, Subtitle D, Chapter 2161, §2161.002,
which provides the General Services Commission with the authority to promulgate
rules necessary to implement the sections.
The following code is affected by these rules: Government Code, Title 10,
Subtitle D, Chapter 2161.
§111.14.Subcontracts.
This agency hereby certifies that the proposal has been
reviewed by legal counsel and found to be within the agency's legal authority
to adopt.
Filed with the Office of
the Secretary of State on January 25, 2000.
TRD-200000471
Ann Dillon
General Counsel
General Services Commission
Earliest possible date of adoption: March 5, 2000
For further information, please call: (512) 463-3960