Multiple Agencies
An Audit Report on 19 Agencies' Compliance With Historically Underutilized Business Requirements
August 2001
Report Number 01-035
Overall Conclusion
None of the 19 agencies we reviewed for fiscal year 2000 fully complied with the revised historically underutilized business (HUB) requirements in Texas Administrative Code, Title 1, Part 5, Chapter 111, Section B, and Texas Government Code, Chapter 2161. In addition, the Health and Human Services Commission and the Texas Education Agency did not make a "good-faith effort" to comply with the HUB requirements, as evidenced by noncompliance in several categories within the code. Although the two agencies had significant noncompliance with the requirements, they did spend funds with HUB vendors. The revised HUB requirements became effective in fiscal year 2000. They require agencies to conduct additional procedures that encourage HUB participation. We assessed the agencies' compliance based on their implementation of HUB procedures, as required by statute, not on the agencies' ability to contract with a specific number, quota, or dollar amount of HUBs.
Notably, the Department of Insurance complied with nearly all of the requirements,
and the Department of Criminal Justice was the only agency that fully implemented
the mentor protégé program. HUB program statistics indicate that
the 19 agencies we reviewed (10 surveyed and 9 audited) spent $900 million in
general procurement categories, of which 15.4 percent ($139 million) was spent
with HUB vendors.
Key Facts and Findings
- Eighty-nine percent of audited agencies (8 of 9) reported inaccurate information
to the State General Services Commission (Commission) due to mathematical
errors and incomplete information. Additionally, some agencies over-reported
the number contracts awarded to HUBs because they misinterpreted the method
of calculating this number.
- Eighteen of the agencies did not fully comply with outreach requirements.
Ninety-five percent (18 of 19) had not developed mentor protégé
programs. Some agencies indicated that they could not plan and implement the
program by fiscal year end but were in the process of developing programs.
In addition, 42 percent (8 of 19) did not sponsor HUB forums.
- Sixty-three percent of the agencies (12 of 19) did not fully comply with
planning requirements. These agencies did not develop HUB rules and did not
include all information in their strategic plans.
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