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State Government Bets on HUBs

Historically underutilized businesses are offered a chance to bid alongside other companies for lucrative cooperative contracts.

The Texas Department of Information Resources (DIR), which manages all IT procurement for the state, is forecasting that its customers will purchase more than $725 million through cooperative contracts in fiscal year 2006. These cooperative contracts, which enable state agencies to create considerable economies of scale by pooling their resources during the procurement process, result in huge government contracts for private sector businesses.

However, government is not solely about fiscal responsibility. It is also about being a good citizen, recognizing social obligations and spreading the wealth. So, the state’s duty to be financially prudent must be weighed against its duty to better the lives of the people it represents.

One way to achieve this is by reaching out to business communities that have traditionally been outside the bidding process for lucrative government contracts. In Texas, these businesses are known as HUBs, or historically underutilized businesses.

HUBs are defined as businesses that are more than 51 percent owned by women or minorities. Under a statewide procurement program managed by the Texas Building and Procurement Commission (TBPC), Texas businesses can apply for HUB certification, which enables businesses to bid alongside other companies for lucrative cooperative contracts with state agencies, local governments, universities and school districts.

HUBs are now a key part of the state procurement process. In fact, the Texas legislature requires government agencies to make a good-faith effort to assure that HUBs receive a portion of all contract dollars.

The Texas DIR recently showed how purchasing within the government IT sector can be opened up to HUBs. In January, the department signed an important agreement with the Texas Association of HUBs (TAH) to expand their shared commitment to partnership and mutual opportunities.

The agreement increases communication and cooperation between HUB companies and the state, establishes a HUB advisory board, and expands communication channels between HUBs and the public sector. Already, 156 of 303 DIR cooperative contracts are either directly working with HUBs or have a HUB reseller option.

CATALYST FOR CHANGE

The catalyst for this enhanced collaboration was the 2003 formation of TAH, a not-for-profit association founded by Texas HUB owners and employees to promote HUB utilization by Texas government offices, institutions and agencies.

The TAH represents HUBs within the Texas Legislature and the TBPC. It also conducts regular networking events to initiate key contacts between HUBs and prime stakeholders.

“Our mission is to foster the program by working with state and local government to ensure that IT contracts provide a fair mechanism for HUBs to become prime contractors — or at least subcontracted with prime contractors — to be part of state government IT contracts,” explains Roy Mata, president of TAH.

Mata wants to level the playing field when it comes to state procurement opportunities and break down historical barriers to doing business with state government. “It means everything to a HUB to win a large state contract, whether as a prime [contractor] or as a subcontractor,” he says. “Working as a subcontractor allows HUB businesses to demonstrate their ability to provide the types of services the primes are looking for.”

Local HUBs benefit from the business, Mata explains, but government benefits too. “HUBs bring the talent of their firms when it comes to IT services,” he says. But they also bring a local, personal touch to state and local government contracts.

Mata describes the DIR-TAH collaboration agreement as “the first step in the right direction,” while stressing that the DIR “has shown great outreach to the HUB community by making us part of the IT contracting process.” In turn, the TAH organizes popular networking sessions to provide a mechanism for HUBs to meet prime contractors.

No wonder Mata is forecasting a bright future for the relationship between state government and the Texas HUB community. Hopefully, other states will establish similar initiatives.

Oct 31 2006

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