Texas Government Contracts — Procurement Guide
Researched by the BidStride Research Team
Texas state agencies award approximately $12B+ in contracts annually across construction, technology, professional services, and operations. Contracts are posted through the Electronic State Business Daily (ESBD) and require vendor registration before you can submit responses or receive bid notifications.
Texas has specific programs for small and disadvantaged businesses including Texas HUB (Historically Underutilized Business) Program. Understanding the state's set-aside programs and registration requirements before you bid is essential to competing effectively.
Procurement Portal
- Portal Name
- Electronic State Business Daily (ESBD)
- Annual Volume
- $12B+
Small Business Programs
Texas HUB (Historically Underutilized Business) Program
- HUB (Historically Underutilized Business)
- MBE (Minority Business Enterprise)
- WBE (Women Business Enterprise)
- SDVOSB
Top Texas Procurement Agencies
These agencies represent the highest volume buyers in Texas state government. Targeting your business development efforts toward the agencies most relevant to your capabilities will yield the strongest results.
- Texas Department of Transportation
- Texas Health and Human Services Commission
- Texas Department of Information Resources
- Texas General Land Office
- Texas Education Agency
Top NAICS Codes in Texas State Contracting
These NAICS codes appear most frequently in Texas state solicitations. Ensure your SAM.gov registration and state vendor profile include the codes relevant to your services.
How to Register and Bid on Texas Contracts
- 1Register on Electronic State Business Daily (ESBD). Vendor registration is required to receive bid notifications and submit responses. Registration is typically free. Start registration →
- 2Select your commodity codes. During registration, select the NIGP or product/service codes that match your offerings. This determines which solicitations you receive notifications for. The more accurately you code your capabilities, the more relevant your alerts will be.
- 3Pursue Texas HUB (Historically Underutilized Business) Program certification if eligible. Certified small and disadvantaged businesses receive preference in evaluation and access to set-aside opportunities. Review eligibility criteria for HUB (Historically Underutilized Business) and apply before you bid.
- 4Monitor solicitations and respond promptly. State procurement deadlines are firm. Late bids are typically rejected regardless of reason. Use BidStride to get daily alerts when newTexas opportunities matching your NAICS codes are posted.
Frequently Asked Questions — Texas Government Contracting
Texas posts solicitations on the Electronic State Business Daily (ESBD) at txsmartbuy.gov. Opportunities over $25,000 must be posted publicly for at least 14 days. Vendors must register on the Texas SmartBuy system to respond to solicitations and submit bids electronically.
The Historically Underutilized Business (HUB) program promotes contracting with businesses owned by minorities, women, and service-disabled veterans. State agencies must make good faith efforts to include HUBs in their procurement process. HUB certification is administered by the Texas Comptroller of Public Accounts.
Register through the Texas Comptroller's Vendor Performance Tracking System (VPTS) and create a profile on Texas SmartBuy. You will need your federal EIN, business entity information, and a list of applicable commodity codes. Registration is free and keeps your business visible in the state vendor database.
Texas uses invitation for bids (IFB) for commodity and construction contracts, requests for proposals (RFP) for complex services, and requests for qualifications (RFQ) for professional services. The state also has master contracts through DIR (technology) and TXMAS (multiple award schedule) that allow agencies to buy without running a new procurement.
Licensing Requirements in Texas
Business License
RequiredTexas does not have a general state business license, but businesses must register with the Texas Secretary of State and obtain a sales tax permit from the Comptroller of Public Accounts if selling taxable goods or services. Many cities and counties require local permits. All state vendors must register with the Centralized Master Bidders List (CMBL).
- LLC
- Corporation
- Sole Proprietorship (DBA filed with county clerk)
- Partnership
Contractor License
Not RequiredTexas does not have a statewide general contractor license. However, specialty trades require state licenses — including electricians (TDLR), plumbers (TSBPE), and HVAC technicians (TDLR). Some municipalities (Houston, San Antonio, Austin) require local contractor registration.
Licensing Board: Texas Department of Licensing and Regulation (TDLR) for specialty trades
Threshold: N/A — no statewide general contractor license
Licensing board infoTexas Procurement Thresholds
Texas Government Code Chapter 2155 and Local Government Code chapters 252 and 271 govern procurement thresholds. State purchases over $25,000 must be competitively bid through the Comptroller's office or delegated to agencies. Public works follow separate thresholds.
| Category | Threshold |
|---|---|
| Micro Purchase | Up to $10,000 (delegated purchase authority) |
| Informal Bidding | $10,001 - $25,000 (informal solicitation, minimum 3 bids for goods) |
| Formal Bidding | Above $25,000 (formal competitive bidding or RFP required) |
| Public Works | Above $50,000 requires competitive bidding for state agencies; local government thresholds vary ($50,000 for counties, cities may vary) |
Texas Contractor Certifications
These certifications can give your business a competitive advantage when bidding on Texas state contracts, including access to set-aside programs and evaluation preferences.
Historically Underutilized Business
Texas's primary diversity certification. For businesses at least 51% owned by minorities, women, or service-disabled veterans who are economically disadvantaged. Must be domiciled in Texas or demonstrate a significant business presence.
Agency: Texas Comptroller of Public Accounts, Statewide HUB Program
- Access to state HUB subcontracting goals (varies by category: 11.2-32.9%)
- Inclusion in HUB directory used by prime contractors
- HUB subcontracting plan credit for prime contractors
Disadvantaged Business Enterprise
Federally-mandated program for USDOT-assisted contracts administered by TxDOT.
Agency: Texas Department of Transportation (TxDOT)
- Access to DBE subcontracting goals on federal-aid transportation projects
- TxDOT DBE goal typically 10-12%
Small and Veteran-Owned Business
Texas gives bid preferences to small businesses and veteran-owned businesses through the HUB program and Texas Government Code Chapter 2155.
Agency: Texas Comptroller of Public Accounts
- Goods produced in Texas or by Texas bidders receive preference under Texas Government Code 2155.444
- Veteran-owned businesses may qualify for HUB certification
Texas Set-Aside Programs
HUB Participation Goals
Goal: 11.2% - 32.9% (varies by category)Texas sets HUB participation goals by procurement category: Heavy Construction 11.2%, Building Construction 21.1%, Special Trade Construction 32.9%, Professional Services 23.7%, Other Services 26.0%, Commodities 21.1%. Texas Government Code 2161.
Texas Bidder Preference
Goal: N/ATexas resident bidders receive preference over out-of-state bidders by the same margin the other state gives its residents. Texas Government Code 2155.444.
How to Protest a Texas Contract Award
- Filing Deadline
- Within 10 working days of the protester knowing or should have known of the action being protested
- Filing Body
- Contracting agency (first level); Comptroller of Public Accounts (for statewide contracts); State Office of Administrative Hearings (SOAH) for formal disputes
- Process
- Protests are filed in writing with the contracting agency, identifying the solicitation number, grounds for protest, and requested relief. The agency issues a written determination. Appeals may go to the Comptroller or SOAH. For local government, protest procedures vary by jurisdiction.
Texas Payment Terms for Contractors
30
Days (Standard)
Yes
Prompt Payment Act
Automatic interest at rate established by Comptroller (typically 6% per annum) on payments over 30 days late
Late Interest Rate
Texas Prompt Payment Act (Government Code 2251) requires state agencies to pay within 30 days of receiving goods/services or a correct invoice, whichever is later. For construction contracts, progress payments within 30 days; retainage release within 30 days of final acceptance.
Texas Bonding Requirements
Texas Government Code Chapter 2253 governs bonding on public works. Payment bonds protect subcontractors and suppliers. Sureties must be authorized by the Texas Department of Insurance.
| Bond Type | Requirement |
|---|---|
| Bid Bond | 5% of bid amount is typical for public works |
| Performance Bond | 100% of contract value for public works over $100,000 |
| Payment Bond | 100% of contract value for public works over $25,000 |
Threshold: Texas Government Code 2253 requires performance bonds for contracts over $100,000 and payment bonds for contracts over $25,000
Texas Insurance Requirements
- General Liability
- $1 million per occurrence / $2 million aggregate is standard for state contracts
- Workers' Compensation
- Texas is unique — workers' compensation is NOT mandatory for private employers. However, most state contracts require proof of workers' comp or equivalent coverage. Non-subscribers face significant liability exposure.
- Additional Requirements
- Auto liability ($1 million). Professional liability as required by contract. Builder's risk insurance for construction projects. State of Texas must be named as additional insured.
Unique Contracting Rules in Texas
- Workers' Comp Optional: Texas is the only state where workers' compensation insurance is not mandatory for most private employers, though state contracts typically require it.
- Prevailing Wage: Texas has repealed its state prevailing wage law. Only federal Davis-Bacon rates apply to federally-funded projects. State-funded projects have no prevailing wage requirement.
- Buy Texas: Texas Government Code 2155.444 provides preferences for goods and services produced in Texas or offered by Texas bidders, applied reciprocally against out-of-state bidders.
- HUB Subcontracting Plan (HSP): Prime contractors on state contracts must submit a HUB Subcontracting Plan demonstrating good faith efforts to use HUB subcontractors. Failure to comply can result in contract termination.
- No State Income Tax: Texas does not have a state income tax, which affects cost structures for contractors.
- Reverse Auction: Texas allows and encourages the use of reverse auction procedures for commodity purchases (Government Code 2155.062).
- Payment Bond Trap: Texas does not have a mechanics' lien right on public projects — the payment bond is the exclusive remedy for unpaid subcontractors (Government Code 2253).
Texas Government Contracting — Key Facts
- Texas state government spends approximately $60 billion in total annual expenditures, with over $15 billion in direct procurement.
- TxDOT awards over $7 billion in construction contracts annually, making it one of the largest state DOTs by spending.
- Over 16,000 businesses are certified as HUBs in Texas.
- Texas has over 80 state agencies that conduct independent procurement.
- The Comptroller manages over 200 statewide term contracts.
Cities & Counties in Texas
Explore local procurement guides for cities and counties in Texas. Each guide covers registration, certifications, key departments, and bidding thresholds specific to that jurisdiction.
Pop: 1.0 million | $1.5 billion [VERIFY] procurement
Pop: 2 million | $1 billion (estimated) procurement
Pop: 1.3 million | $2 billion [VERIFY] procurement
Pop: 2.6 million | $1.5 billion (estimated) procurement
Pop: 4.7 million | $3 billion (estimated) procurement
Pop: 2.3 million | $3 billion [VERIFY] procurement
Pop: 1.5 million | $1.5 billion [VERIFY] procurement
Pop: 2.1 million | $1.2 billion (estimated) procurement
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