A significant shift in Texas’s Texas HUB Program is causing confusion. Acting Texas Comptroller Kelly Hancock announced a freeze on new and renewed HUB certifications in late October. This action led to rescinded approvals for many businesses, impacting thousands of small businesses often owned by women, minorities, and disabled veterans. The program historically aimed to provide them better access to state contracts through the Texas HUB Program.
The Texas Comptroller’s office is restructuring the Texas HUB Program. It is now focusing exclusively on businesses owned by service-disabled veterans. This new iteration is called Veteran Heroes United in Business (VetHUB). This change took effect immediately through emergency rules. Any prior HUB certification tied to an owner’s gender, race, or ethnicity has been revoked, creating significant Texas HUB Program changes.
Understanding the Texas HUB Program and Its Sudden Change
The Texas HUB Program was established by the Texas Legislature in 1995. Its goal was to give disadvantaged businesses a boost and help them secure state contracts. The program provided a crucial small business certification. This helped firms stand out when bidding on state work. State agencies typically had participation goals for HUB-certified businesses, which helped certified businesses gain visibility within the framework of the Texas HUB Program.
However, the program faced scrutiny amid a broader state crackdown on diversity, equity, and inclusion (DEI) initiatives. Acting Comptroller Kelly Hancock cited constitutional concerns and compliance with U.S. and Texas Constitutions. Governor Greg Abbott’s Executive Order GA-55 also plays a role, prohibiting race- and sex-based preferences in state benefits. Hancock stated that contracts should be earned by performance and best value, aiming to end “race or sex quotas” in state procurement, a departure from the original intent of the Texas HUB Program.
Immediate Impact and Confusion Regarding Texas HUB Program Changes
The sudden nature of the Texas HUB Program changes has left many business owners bewildered. Vendors received emails informing them of certification cancellations, and their companies were removed from the state’s HUB directory. Many businesses, like Julie Irvin Hartman’s, had their renewal applications approved only to be notified later that these approvals were rescinded. This lack of clarity surrounding the Texas HUB Program fuels uncertainty.
The Comptroller’s office has not provided a clear, detailed explanation for the rescinded approvals. This lack of clarity fuels uncertainty for businesses unsure about their certification status and future contract opportunities within the revised Texas HUB Program.
The program’s scope has been significantly reduced. It was created to give women, minorities, and disabled veterans a leg up, but now focuses only on service-disabled veterans. Eligibility requires a 20% or higher service-connected disability. This new focus means thousands of previously certified businesses are no longer eligible. For example, one report noted that of nearly 500 eligible HUB businesses, zero were owned by women under the new VetHUB program, highlighting a drastic shift from the original Texas HUB Program.
Legal Questions and the Future Outlook for Texas State Contracts
The legal basis for these sweeping changes to the Texas HUB Program is also a point of discussion. The program was established in state statute. Significant policy changes typically require legislative action or court rulings. The agency has not publicly explained the authority for this unilateral overhaul, raising questions about the legality of these Texas HUB Program changes.
Some experts anticipate legal challenges to the Comptroller’s actions. The program’s restructuring under emergency rules raises questions about due process. The Texas HUB Program‘s sudden transformation may lead to further legal scrutiny.
Existing state contracts Texas are not affected by this change. However, new or renewed certifications for women and minority-owned businesses are off the table. State agencies can no longer use HUB participation as an evaluation factor and must adopt race- and sex-neutral practices, moving away from the original goals of the Texas HUB Program.
The Texas Comptroller’s office will continue collecting business participation data and undertake rulemaking to revise standards. For now, many small business owners are seeking clarification and exploring local certifications and other avenues for work. This current news buzz highlights a major shift in Texas’s contracting landscape. The future implications for diverse businesses, including those pursuing small business certification, remain uncertain as the state navigates these significant Texas HUB Program changes.
