Texas Shifts State Contracting Focus to Veterans, Ending Support for Minority and Women-Owned Businesses
Texas is dramatically altering its state contracting program, effectively ending support for businesses owned by women and minorities and redirecting those resources to disabled veterans. The move, announced Tuesday by the state Comptroller’s office, has sparked questions about legal authority and the future of economic opportunity for historically disadvantaged groups.
The decades-old Historically Underutilized Business (HUB) program will be replaced by the Veteran Heroes United in Business program (VetHUB), which will exclusively serve veterans with a service-connected disability of 20% or higher. According to a news release, businesses currently certified as HUBs based on the race, ethnicity, or sex of their owners will have their certifications revoked under the new rules.
The restructuring was implemented through what the Comptroller’s office described as “emergency rules,” making the changes effective immediately. This swift action significantly narrows the scope of a program originally designed to level the playing field for minority- and women-owned businesses seeking state contracts. While the HUB program did not mandate quotas, it established goals for state agencies to prioritize HUB-certified vendors.
“Our nation’s veterans have always stepped up for us,” Comptroller Kelly Hancock stated. “VetHUB is Texas’ way of stepping up for them — cutting red tape, restoring constitutional integrity and opening doors for the men and women who wore our nation’s uniform. These emergency rules ensure Texas’ state contracting is free from gender or race discrimination and keep the program centered on those who earned this support through their service.”
The shift follows a freeze on new and renewed HUB certifications initiated at the end of October. The Comptroller’s office cited a need to review the program for compliance with executive orders from both President Donald Trump and Gov. Greg Abbott, which aim to restrict diversity, equity, and inclusion (DEI) initiatives in government. Following the freeze, Hancock asserted on social media that the goal was to eliminate “race or sex quotas” in government procurement.
The legality of Hancock’s actions is now under scrutiny. Legal experts note that the HUB program was established by the state Legislature through state law, and revoking such a law typically requires either a legislative repeal or a court ruling. The Comptroller’s office has not yet responded to inquiries regarding the legal basis for the changes.
Adding another layer of complexity, a lawsuit filed by a company not certified as a HUB alleges that its status negatively impacted its ability to secure state contracts. That case is currently ongoing in federal court, with no ruling yet issued.
State contracts already in place prior to Tuesday’s announcement will not be affected by the new rules, according to a frequently asked questions page on the Comptroller’s website. However, the agency has already begun notifying HUB vendors that no longer qualify, informing them of their certification revocation and removal from the state’s vendor directory.
The sudden overhaul of the HUB program raises concerns about its long-term impact on economic diversity in Texas and the potential for legal challenges. The future of state contracting and its commitment to supporting historically underutilized businesses remains uncertain.
