Texas has abruptly rewritten the rules of its state contracting system, stripping women and minority-owned businesses of a long-standing support program and reshaping it entirely around disabled veterans.
The Texas Comptroller’s office announced Tuesday (Dec. 2) that the Historically Underutilized Business (HUB) program, created by lawmakers to give disadvantaged businesses a boost in securing state contracts, will no longer recognize race, ethnicity, or sex as qualifying factors. Instead, the program will be rebranded as Veteran Heroes United in Business (VetHUB) and restricted to veterans with at least a 20% service-connected disability.
The changes took effect immediately through emergency rules, dramatically narrowing a program that has existed for decades. Though the HUB initiative never set hiring quotas, it established participation goals many state agencies aimed to meet, helping certified businesses gain visibility and compete for major public contracts.
Under the new rules, thousands of businesses will lose that foothold.
According to the Comptroller’s office, any HUB certification tied to an owner’s gender, race, or ethnicity was revoked on Tuesday. Vendors received emails informing them that their certifications had been canceled and that their companies would be removed from the state’s HUB directory. Ongoing state contracts will not be disrupted; however, any new or renewed certifications related to those categories are now off the table.
Comptroller Kelly Hancock defended the decision in a written statement, framing the overhaul as both a constitutional correction and a tribute to veterans.
“Our nation’s veterans have always stepped up for us. 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,” Hancock said. “These emergency rules ensure Texas’ state contracting is free from gender or race discrimination.”
The shift follows a freeze the agency placed on new and renewed HUB certifications at the end of October. At the time, officials cited a need to review the program’s compliance with executive orders issued by both President Donald Trump and Governor Greg Abbott, which prohibited diversity, equity, and inclusion efforts in government. Hancock also posted on social media that the pause was meant to end “race or sex quotas” in state procurement.
The timing comes as a separate lawsuit filed by a company that does not have HUB certification and claims it lost contracts because of its move through federal court. No ruling has been issued in that case.
What remains unclear is the legal footing behind the Comptroller’s unilateral overhaul. The HUB program was created in state statute, meaning significant policy changes typically require action by either the Legislature or a court. The agency has not publicly explained what authority it is relying on to bypass that process.
For now, Texas’ small-business landscape has shifted overnight, and thousands of entrepreneurs are left navigating the fallout.
A program designed to widen the door for underserved businesses now opens it to only one group, and the legal questions may just be beginning.
