1 TAC §§111.11, 111.12, 111.17, 111.19, 111.20, 111.23, 111.25
The Texas Building and Procurement Commission proposes amendments
to Title 1, Part 5, Chapter 111, Subchapter B, §§111.11 (relating
to Policy and Purpose), 111.12 (relating to Definitions), 111.17 (relating
to the Certification Process), 111.19 (relating to Recertification), 111.20
(relating to Revocation), 111.23 (relating to Graduation Procedures), and
111.25 (relating to the Memorandum of Understanding between the Texas Department
of Economic Development and the General Services Commission).
Amendments are proposed to further ensure compliance in the certification
of historically underutilized businesses, as well as increase the certification
period for historically underutilized businesses. Amended language updates
the current definition of "Subcontractor" to comply with Texas Government
Code 2251.001 and updates obsolete language and references to the former General
Services Commission. In addition, amended language provides for the revocation
of a historically underutilized business' certification if that business is
barred from participating in state contracts.
Cindy Reed, Deputy Executive Director, determines that for the first five-year
period the rules are in effect, TBPC, will experience a moderate decrease
in administrative costs related to processing HUB recertification applications
by increasing the HUB certification period from two years to four years. In
addition, certified HUB vendors should also experience a moderate decrease
in the costs associated with providing the required documentation for recertification.
Furthermore, there will be no fiscal implication for the state or local governments
as a result of enforcing or administering these proposed rules.
Cindy Reed further determines that for each year of the first five-year
period the amendments are in effect, the public benefit anticipated as a result
of enforcing these rules will be compliance with Texas Government Code, Chapter
2161, relating to the Historically Underutilized Business Program. There will
be no effect on large, small, or micro- businesses. There is no significant
anticipated economic cost to persons who are required to comply with these
rules and there is no impact on local employment.
Comments on the proposals may be submitted to Robert F. Moreland, Legal
Counsel, Texas Building and Procurement 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 in the
Texas
Register
.
The amendments are proposed under the authority of the Texas
Government Code, Title 10, Subtitle D, §§2152.003, 2161.002, and
2161.253, which provide the Texas Building and Procurement 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.
§111.11.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 through race, ethnic, and gender-neutral
means. The purpose of this program is to promote full and equal business opportunities
for all businesses in state contracting in accordance with the goals specified
in the State of Texas Disparity Study. Sections 111.11 through
111.28
[
111.27
] of this title (relating to the Historically Underutilized
Business
Program) describe the minimum steps and requirements to be
undertaken by the commission and state agencies to fulfill the state's HUB
policy.
§111.12.Definitions.
The following words and terms, when used in this subchapter, shall
have the following meanings, unless the context clearly indicates otherwise.
(1)
Applicant--A corporation, sole-proprietorship, partnership,
joint venture, limited liability company, or supplier that applies to the
commission as
a
[
an
] historically underutilized business.
(2)
Application--A written request for certification as
a
[
an
] historically underutilized business in the required
format submitted to the commission.
(3)
Commodities--Materials, supplies, or equipment.
(4)
Comptroller--Comptroller of Public Accounts.
(5)
Contractor/Vendor --A supplier of commodities or services
to a state agency under a purchase order contract or other contract.
(6)
Directory--The Texas Certified Historically Underutilized
Business Directory.
(7)
Disparity Study--The State of Texas Disparity Study, performed
by the National Economic Research Associates, Inc. (NERA).
(8)
Economically Disadvantaged Person--An eligible HUB applicant
whose business has not exceeded the graduation size standards according to
the commission's graduation procedures in §111.23 of this title (relating
to Graduation Procedures).
(9)
Forum--A collaborative effort between agencies and potential
contractors/vendors to provide information and training regarding an agency's
procurement opportunities.
(10)
Graduation--When a business exceeds the commission's size
standard for certification.
(11)
Historically Underutilized Business--A business outlined
in subparagraphs (C)-(H) with its principal place of business in Texas (as
defined in paragraph (19) of this section) in which the owner(s):
(A)
have a proportionate interest and demonstrate active participation
in the control, operation, and management of the entities' affairs; and
(B)
are economically disadvantaged because of their identification
as members of the following groups:
(i)
Black Americans--which includes persons having origins
in any of the Black racial groups of Africa;
(ii)
Hispanic Americans--which includes persons of Mexican,
Puerto Rican, Cuban, Central or South American, or other Spanish or Portuguese
culture or origin, regardless of race;
(iii)
American Women--which includes all women of any ethnicity
except those specified in clauses (i), (ii), (iv), and (v) of this subparagraph;
(iv)
Asian Pacific Americans--which includes persons whose
origins are from Japan, China, Taiwan, Korea, Vietnam, Laos, Cambodia, the
Philippines, Samoa, Guam, the U.S. Trust Territories of the Pacific, the Northern
Marianas, and Subcontinent Asian Americans which includes persons whose origins
are from India, Pakistan, Bangladesh, Sri Lanka, Bhutan or Nepal; and
(v)
Native Americans--which includes persons who are American
Indians, Eskimos, Aleuts, or Native Hawaiians; and
(C)
a corporation formed for the purpose of making a profit
in which at least 51% of all classes of the shares of stock or other equitable
securities are owned by one or more persons described by subparagraphs (A)
and (B); or
(D)
a sole proprietorship created for the purpose of making
a profit that is 100% owned, operated, and controlled by a person described
by subparagraphs (A) and (B) of this section; or
(E)
a partnership formed for the purpose of making a profit
in which 51% of the assets and interest in the partnership is owned by one
or more persons who are described by subparagraphs (A) and (B) of this section;
or
(F)
a joint venture in which each entity in the joint venture
is
a
[
an
] historically underutilized business under
this subdivision; or
(G)
a supplier contract between a historically underutilized
business under this subdivision and a prime contractor/vendor under which
the historically underutilized business is directly involved in the manufacture
or distribution of the supplies or materials or otherwise warehouses and ships
the supplies;
(H)
a business other than described in subparagraphs (D), (F),
and (G) of this section, which is formed for the purpose of making a profit
and is otherwise a legally recognized business organization under the laws
of the State of Texas, provided that at least 51% of the assets and 51% of
any classes of stock and equitable securities are owned by one or more persons
described by subparagraphs (A) and (B) of this section.
(12)
Historically Underutilized Business (HUB) Coordinator--
An agency employee who holds a position equivalent to the procurement director
or is the procurement director. The employee reports to the agency's executive
director on HUB activities including, but [
are
] not limited to,
the agency's good faith effort criteria, HUB reporting, contract administration,
and marketing and outreach efforts for HUB participation.
(13)
HUB Report--A fiscal year semi-annual and annual report
of the state's total expenditures, contract awards and payments made to certified
HUBs.
(14)
Mentor Protege Program--A program designed by the commission
to assist agencies in identifying prime contractors/vendors and HUBs for potential
long-term contractual relationships.
(15)
NERA--National Economic Research Associates, Inc.
(16)
Non-Treasury Funds--Funds paid by a state agency that
are not treasury funds.
(17)
Other services--All services other than construction and
professional services, including consulting services subject to Texas Government
Code, Chapter 2254, Subchapter B.
(18)
Person--U.S. citizen, born or naturalized.
(19)
Principal place of business--A permanent business office
located in Texas where the majority HUB owner(s) makes the decisions, controls
the daily operations of the organization, and participates in the business.
The qualifying owners must be residents of the State of Texas.
(20)
Professional services--Services of accountants, architects,
engineers, land surveyors, and physicians that must be purchased by state
agencies under Texas Government Code, Chapter 2254, Subchapter A.
(21)
Subcontractor--
A person who contracts with a vendor
to work, to supply commodities, or contribute toward completing work for a
governmental entity as defined in Texas Government Code, § 2251.001.
[
A supplier of commodities or services to a contractor/vendor.
]
(22)
Subcontractor Funds--Payments made to certified historically
underutilized businesses by a contractor/vendor or supplier under contract
with the state.
(23)
Size Standards--Graduation thresholds established by the
HUB program consistent with the commission's rules which are extracted from
the U.S. Small Business Administration's size standards, and based on the
North American Industry Classification System codes
[
gross receipts
and gross number of employees according to the Standard Industrial Classification
codes
].
(24)
Term Contract--A contract establishing a source or sources
of supply for a specified period of time as defined in §113.2 of this
title (relating to Definitions).
(25)
Treasury Funds--Funds maintained in the state treasury
and paid through the comptroller's office for each state agency.
(26)
USAS--Uniform Statewide Accounting System for the State
of Texas.
(27)
Vendor Identification Number (VID)--A 13-digit identification
number used in state government to identify the bidder or business for payment
or award of contracts, certification as a HUB, and registration on the bidders
list.
(28)
HUB Subcontracting Plan-Written documentation regarding
the use of HUB subcontractors, which is required by a state agency in procurements
with an expected value of $100,000 or more which a potential contractor/vendor
must prepare and return with their bid, proposal, offer, or other applicable
expression of interest. The HUB subcontracting plan subsequently becomes a
provision of the contract awarded as a result of the procurement process.
§111.17.Certification Process.
(a)
A business seeking certification as
a
[
an
] historically underutilized business must submit an application to
the commission
in
[
on
] a form prescribed by the commission,
affirming under penalty of perjury that the business qualifies as
a
[
an
] historically underutilized business.
(b)
If requested by the commission, the applicant must provide
any and all materials and information necessary to demonstrate active participation
in the control, operation, and management of the historically underutilized
business.
(c)
Texas Government Code, §2161.231, provides that a
person commits a felony of the third degree if the person intentionally applies
as an historically underutilized business for an award of a purchasing contract
or public works contract and the person knowingly does not meet the definition
of
a
[
an
] historically underutilized business.
(d)
The commission shall certify the applicant as
a
[
an
] historically underutilized business or provide the applicant with
written justification of its denial of certification within
90
[
60
] days after the date the commission receives a satisfactorily completed
application from the applicant.
(e)
The commission reviews and evaluates applications, and
may reject an application based on one or more of the following:
(1)
the application is not satisfactorily completed;
(2)
the applicant does not meet the requirements of the definition
of historically underutilized business;
(3)
the application contains false information;
(4)
the applicant does not provide required information in
connection with the certification review conducted by the commission; or
(5)
the applicant's record of performance
on
[
of
] any prior contracts with the state.
(f)
The
commission
[
Commission
] may approve
the existing
certification program
[
Certification Program
] of one or more local governments or nonprofit organizations in this
state that certify historically underutilized businesses, minority business
enterprises, women's business enterprises, disadvantaged business enterprises
that substantially fall under the same definition, to the extent applicable
for
historically underutilized businesses
[
Historically Underutilized
Business
] found in §2161.001, Texas Government
Code
,
and maintain them on the
commission's
[
Commission's
]
Historically Underutilized Businesses
List
[
list
], if
(1)
the local government or nonprofit organization meets or
exceeds the standards established by the
commission
[
Commission
] as set out in Chapter 111, Subchapter B of this title (relating to
the Historically Underutilized Business Program); and
(2)
agrees to the terms and conditions as required by statute
relative to the agreement between the local government and/or nonprofits for
the purpose of certification of
historically underutilized businesses
[
Historically Underutilized Businesses
].
(g)
The agreement in subsection (f) of this section must take
effect immediately and contain conditions as follows:
(1)
allow for automatic certification of businesses certified
by the local government or nonprofit organization [
(Program)
] as
prescribed by the commission;
(2)
provide for the efficient updating of the commission database
containing information about historically underutilized businesses and potential
historically underutilized businesses as prescribed by the commission;
(3)
provide for a method by which the commission may efficiently
communicate with businesses certified by the local government or nonprofit
organization;
(4)
provide those businesses with information about the state's
Historically Underutilized Business Program; and
(5)
require that a local government or nonprofit organization
that enters into an agreement under subsection (f) of this section, complete
the certification of an applicant with written justification of its certification
denial within the period established by the commission in its rules for certification.
(h)
The commission will not accept the certification of a local
government or nonprofit organization that charges for the certification of
businesses to be listed on the Historically Underutilized Business
List
[
list
] maintained by the commission.
(i)
The commission may terminate an agreement made under this
section if a local government or nonprofit organization fails to meet the
standards established by the commission for certifying
historically underutilized
businesses
[
Historically Underutilized Businesses
]. In the
event of the termination of an agreement, those HUB's that were certified
as a result of the agreement will maintain their HUB status during the fiscal
year in which the agreement was in effect. Those HUB's who are removed from
the HUB list as a result of the termination of an agreement with a local government
or nonprofit organization may apply directly to the commission for certification
as a
historically underutilized business
[
Historically Underutilized
Business
].
(j)
The commission will send all certified HUBs an orientation
packet including a certificate, description of certification value/significance,
list of agency purchasers, and information regarding electronic commerce,
the Texas Marketplace, and the state procurement process.
§111.19.Recertification.
(a)
The certification is valid for a
four-year
[
two- year
] period beginning on the date the commission certified the
applicant as
a
[
an
] historically underutilized business.
(b)
Upon expiration of the
four-year
[
two-year
] period,
a
[
an
] historically underutilized business
that desires recertification must:
(1)
return a completed recertification form as provided by
the commission; and
(2)
comply with the requirements specified in §111.17
of this title (relating to the Certification Process) which apply to the recertification
process.
§111.20.Revocation.
(a)
The commission shall revoke the certification
of
a
[
an
] historically underutilized business if the
commission determines that a business does not meet the definition of historically
underutilized business or that the business fails to provide requested information
in connection with a certification review conducted by the commission. The
commission shall provide the business with written notice of the proposed
revocation. Applicants have 30 days from receipt of the written notice to
provide written documentation stating the basis for disputing the grounds
for revocation. The applicant shall also submit documentation to address the
deficiencies identified in the notice. The commission shall evaluate the documentation
to confirm the applicant's eligibility. The commission shall provide the applicant
with written notification of their certification status. If an applicant's
certification is revoked, the applicant may appeal to the commissioners within
14 days of receipt of written notice of the revocation. Upon receipt of the
applicant's request for appeal, the commissioners will vote on the proposed
revocation at the next available open meeting. The action of the commissioners
is final.
(b)
If a historically underutilized business
is barred from participating in state contracts in accordance with Texas Government
Code, section 2155.077, the commission shall revoke the certification of that
business for a period commensurate with the debarment period.
§111.23.Graduation Procedures.
(a)
A HUB shall be graduated from being used to fulfill HUB
procurement utilization goals when it has maintained gross receipts or total
employment levels for four consecutive years which exceed the U.S. Small Business
Administration's size standards identified by the North American Industry
Classification
System
Codes as stated in 13 Code of Federal Regulations
121.201 for the following categories:
(1)
heavy construction other than building construction;
(2)
building construction, including general contractors and
operative builders;
(3)
special trade construction;
(4)
medical, financial and accounting services;
(5)
architectural/engineering and surveying services;
(6)
other services including legal services;
(7)
commodities wholesalers;
(8)
commodities manufacturers.
(b)
Firms which have achieved the size standards identified
in subsection (a) of this section will be assumed to have reached a competitive
status in overcoming the effects of discrimination. The commission shall review
as part of the certification, compliance or recertification process the financial
revenue or relevant data of firms to determine whether the size standards
identified in subsection (a) of this section have been met.
(c)
The graduation of HUBs will be tracked and included in
the HUB Report by the applicant's Vendor Identification Number and by Social
Security Number to the extent allowed by federal law.
(d)
The commission will monitor the progress of graduated HUBs
and report their participation in the state's procurements to the Legislature
[
, General Services commission,
] and [
other
] state
agencies.
(e)
Businesses that have graduated from the HUB program in
accordance with this section or have been decertified in accordance with §§
111.17-111.22 of this title (relating to Executive Administration Division)
may not be included in meeting agency goals.
§111.25.Memorandum of Understanding between the Texas Department of Economic Development and the Texas Building and Procurement Commission [ General Services Commission ].
(a)
Pursuant to the Texas Government Code, §481.028 [
(Vernon 1998)
] the
Texas Building and Procurement Commission
[
General Services Commission
] adopts the following memorandum of understanding
(MOU) with the Texas Department of Economic Development, under which they
agree to cooperate in program planning and budgeting relating to procurement
information, and certification and technical assistance to small and historically
underutilized businesses.
(b)
The
Texas Building and Procurement Commission
[
General Services Commission
] and the Texas Department of Economic Development
mutually agree to the following in order to serve the citizens of Texas in
an efficient and fiscally responsible way:
(1)
to cooperate on regional economic planning with Texas;
(2)
to cooperate in providing procurement information, certification
and technical assistance to small and historically underutilized businesses;
(3)
to share information of mutual interest;
(4)
to develop the agreements necessary to accomplish the activities
set forth in the MOU; and
(5)
to cooperate to encourage economic development within Texas.
(c)
The MOU becomes effective upon execution by
authorized
representatives of each agency [
,
] and shall
remain
in effect until terminated by either party.
[
terminate on August
31, 2001, unless extended by the mutual agreement of the parties.
]
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 16, 2003.
TRD-200300245
Robert F. Moreland
Legal Counsel
Texas Building and Procurement Commission
Earliest possible date of adoption: March 2, 2003
For further information, please call: (512) 463-4257