Proposed Texas law would give disabled veteran business owners an advantage for state contracts

From The Austin American-Statesman:

Texas veteran groups are pushing for a state law that would give businesses owned by disabled veterans an advantage when it comes to winning state contracts, a change they hope will spark employment for soldiers returning from Iraq and Afghanistan.

The Texas Legislature is considering several bills that would include service-disabled veteran-owned businesses under the state's designation for historically underutilized businesses, or HUBs.

Currently, HUBs are made up of minority- and women-owned businesses, and the Legislature requires state agencies to make "a good faith effort" to award a certain percentage of state contracts to them.

Veteran advocates say similar bills were stymied during the past two legislative sessions by pressure from existing HUBs, but this year at least two large HUB associations are supporting the change.

Jim Brennan, an Army veteran and president of the Austin business AAUSA Electric Supply Inc., has fought for the change in previous legislative sessions, and said this year could represent the bill's best chance at passage.

"We are woefully behind other states in recognizing and embracing service-disabled veteran-owned businesses," he said. "We have the second largest population (of veterans) in the country, and we have for all practical purposes done nothing in this regard."

State contracts represent the potential for big money for companies that qualify under the HUB designation: since 2008, the state comptroller has awarded more than $6 billion under the program.

According to the National Veteran-Owned Business Association, a dozen states have laws setting aside a certain percentage of state contracts to veterans or giving them preference in procuring contracts, and the federal government also gives preference to disabled veterans, along with minorities and women, when it comes to awarding contracts.

In North Carolina, a similar bill failed last year after lobbyists for minority businesses said including veterans could lead to court challenges that could topple the state's preferences law.

In 2007, the Texas Legislature passed a law giving veteran-owned businesses preference in the rare event that two bids were equal. Veteran advocates say the law has never been used.

Rep. Ryan Guillen, D-Rio Grande City, who sponsored one of the bills calling for the change, said the time is right for Texas to join the growing list of states with similar laws. "For those who have come back (from military service) disabled, it's hard for them to pick up where they left off, it's hard to compete," he said. "I thought this was a way we could honor them for their sacrifice."

Guillen also said that technical tweaks to the bill's language should make it more palatable to past opponents.

Rep. Eddie Lucio III, D-San Benito, who authored a similar bill in 2009, said that bill ran into opponents who argued that including veterans in the HUB designation would "dilute the pool" of candidates for state contracts. Opponents said they did not object to separate criteria for veterans, but they opposed including them as "underutilized" businesses, Lucio said.

So far, public opposition to the bill has not surfaced.

Roy Mata, the president of the Texas Association of Historically Underutilized Businesses, said his group supports the inclusion of service-disabled veterans in the program.

"I think there are enough pieces of the pie out there," he said. "As long as all the HUBs are equal and held to the same standards, I think our HUBs will be OK with that."

Frank Fuentes, chairman of the U.S. Hispanic Contractors Association who also represents the state association, said his group would also support the inclusion of veterans.

"The HUB designation doesn't guarantee you will get a contract. You still have to fight for it," he said. "There's a misperception that it's a set-aside (for state contracts). It's not. It's an opportunity. It's just a goal." Fuentes noted that most of the time, the state does not meet its stated goals for state awards to HUBs.

State law sets various percentages for contracts that state agencies and universities should work toward awarding to HUBs, ranging from 11.9 percent of heavy construction contracts to 57.2 percent of special trade construction contracts.

Last year, the state reached its goal in two of six contract categories.

In 2010, the state comptrollers office awarded nearly 16 percent of the state spending, or $2.1 billion, to HUBs, according to the agency's annual report. As of 2010, there were 16,495 certified HUBs in Texas.

It's unclear how many veteran groups would register with the state if the bill passed. About 1,300 Texas businesses owned by service-disabled veterans are registered with the federal government, but a percentage of those are also owned by minorities.

Service members returning from Iraq and Afghanistan can face grim economic futures: The unemployment for veterans under age 25 who served in those countries is 20.9 percent, higher than the 17.3 percent rate for non-veterans in the same age group.

Ed Touchet, 53, an Army veteran and owner of Austin Architecture and Planning Associates , said the bill would have a "huge" effect on stimulating opportunities for veterans with disabilities.

"Especially with the economy, it's important for soldiers returning to see opportunities," he said. "I think it will cut off a lot of this hopelessness."