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An Audit Report on Selected State Entities' Compliance with Requirements Related to the Historically Underutilized Business Program and the State Use Program

October 2014

Report Number 15-006

Overall Conclusion

Compliance with HUB Program Requirements

For fiscal year 2013, five of the seven entities audited substantially complied, overall, with the State's Historically Underutilized Business (HUB) Program requirements in the areas of planning, outreach, subcontracting, and reporting. Those five entities were:

- The Department of Insurance.

- The Health and Human Services Commission.

- The Texas A&M University System.

- Texas Tech University.

- The University of Texas M.D. Anderson Cancer Center.

The Department of State Health Services and the General Land Office minimally complied, overall, with HUB program requirements.

The HUB requirements with the highest level of compliance were the requirements to adopt HUB rules and to involve a HUB coordinator in developing procurement specifications, HUB subcontracting plans, and evaluating HUB contracts. All seven entities audited fully complied with those requirements.

The HUB requirements with the lowest level of compliance were the requirements to:

- Estimate expected HUB contract awards. All seven entities were noncompliant with that requirement.

- Review and evaluate HUB subcontracting plans prior to awarding contracts. Six of the seven entities audited were minimally compliant or noncompliant with that requirement.

All seven entities audited fully or substantially achieved at least one of their HUB goals.

Compliance with Purchasing from People with Disabilities (State Use) Program Requirements

Six of the entities audited are also subject to the requirements of the State Use Program. However, none of those six entities fully complied with those requirements in fiscal year 2013. Specifically:

- The Department of Insurance, the Department of State Health Services, the Health and Human Services Commission, and Texas Tech University minimally complied, overall, with State Use Program requirements.

- The General Land Office and the Texas A&M University System did not comply, overall, with State Use Program requirements.

Auditors also followed up on six previous recommendations related to the HUB and State Use programs issued in An Audit Report on Selected State Entities’ Compliance with Requirements Related to the Historically Underutilized Business Program and the State Use Program (State Auditor's Office Report No. 13-026, March 2013). The Office of the Comptroller of Public Accounts fully implemented three of those six recommendations. It partially implemented one recommendation, its implementation of one recommendation was ongoing, and its implementation of one recommendation was incomplete/ongoing. In addition, auditors reviewed selected general and application controls over the Office of the Comptroller of Public Accounts' Web portal for the State Use Program and identified two control weaknesses that the Office of the Comptroller of Public Accounts resolved during this audit.

Auditors communicated other, less significant issues to the entities' management separately in writing.

Contact the SAO about this report.

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