Texas HUB subcontracting plans: when state agencies require them and what subs should know

Specialty contractors trying to break into Texas state work often hear primes ask, "Are you HUB certified?" The question comes from a short provision of Texas law. When a state agency determines a contract will have subcontracting opportunities, that provision makes a Historically Underutilized Business subcontracting plan part of every bid.

What the law says

Government Code § 2161.252 requires each state agency considering a contract with an expected value of $100,000 or more to decide, before it solicits bids or proposals, whether there will be subcontracting opportunities. If the agency finds that there probably will be, it must require every bid, proposal or offer to include a HUB subcontracting plan. A bid without the required plan is not considered responsive.

The statute defines a historically underutilized business as an entity with its principal place of business in Texas that is at least 51 percent owned and actively run by one or more economically disadvantaged persons, as chapter 2161 defines them. The Texas Comptroller runs the statewide HUB certification program.

What it means on a job

• For primes: the plan is prepared before bid day. It documents how you will use HUB subcontractors or the good-faith effort you made to find them. Primes routinely start outreach weeks ahead, so subs who are already certified and visible get the calls.
• For subs: certification puts you in the Comptroller's HUB directory, which primes search when building plans. It doesn't guarantee work, but on agency contracts where the rule applies it makes you useful to every bidder at once.
• For suppliers: chapter 2161 also counts certain supplier arrangements in which a HUB is directly involved in manufacturing or distributing the goods.

Not the same as DBE

HUB is a state program for state agency contracts. TxDOT's federally funded highway contracts use the federal Disadvantaged Business Enterprise program, certified through the Texas Unified Certification Program. Many Texas firms hold both. Check which one a solicitation asks for.

Where to find the work

State agencies post solicitations over $25,000 on the Electronic State Business Daily. Our ESBD and CMBL guide covers registration, and the Sub Finder lets HUB-certified firms list that certification on their profile.

This article summarizes the statute and is not legal advice.

After award: the plan becomes a contract term

Section 2161.253 makes the HUB subcontracting plan a provision of the awarded contract. The contractor must make good-faith efforts to carry it out. If subcontracts aren't awarded as the plan described, the contractor has to report the circumstances to the agency and describe its good-faith efforts to find another HUB. The agency audits compliance, but it may not judge the contractor on whether it hit a particular quantity; it looks only at factors that show good faith. A contractor found to have failed in good faith can be barred from further contracting with that agency.

The same section gives primes a route to credit: using a protégé from the Comptroller's mentor-protégé program (§ 2161.065) as a subcontractor counts as a good-faith effort for that part of the plan.

Where the rule doesn't reach

Section 2161.251 applies the subchapter to state agency contracts of $100,000 or more, including construction of public buildings, roads and other public works, whatever the funding source. There is one exception: to the extent federal funds pay for a contract, the subchapter doesn't apply if federal law prohibits it. Separately, § 2161.004(c) says the chapter's agency-rule and applicability provisions don't apply to a project or contract subject to Transportation Code § 201.702, which covers TxDOT's highway program.

Don't overstate certification

Section 2161.231 makes it a third-degree felony to intentionally apply as a HUB for a state purchasing or public works contract while knowing the business isn't one. Certification is the Comptroller's to grant, either directly or by recognizing approved local and nonprofit certification programs under § 2161.061.