Texas’ Traditionally Underutilized Enterprise program (HUB) has abruptly stopped after an emergency rule change from the Texas Comptroller’s Workplace.
Now, hundreds of minority and women-owned companies are now not eligible for the certification that when boosted their competitiveness. The state changed HUB with a dramatically narrowed model of this system, now known as the Veteran Heroes United in Enterprise program, or VetHUB. Solely veterans with a 20% or increased service-connected incapacity are eligible, based on the Comptroller’s Workplace. Any enterprise beforehand licensed based mostly on the race, ethnicity, or intercourse of its homeowners will lose its standing.
The HUB program was created to present minority-and women-owned companies a foothold when searching for state contracts. The certification doesn’t assure awards, but it surely helps companies acquire publicity in a aggressive market and units “good-faith effort” objectives that state businesses typically attempt to fulfill.
Interim Comptroller Kelly Hancock stated the change was essential to “restore constitutional integrity” and guarantee state contracting is “free from gender or race discrimination.”
“Our nation’s veterans have all the time stepped up for us. VetHUB is Texas’ manner of stepping up for them,” Hancock stated in a press release. “These emergency guidelines guarantee Texas’ state contracting is free from gender or race discrimination and maintain this system centered on those that earned this assist via their service.”
For the ladies and minority enterprise homeowners who relied on HUB as a lifeline, the query now could be easy — and pressing: What occurs subsequent?
Companies face uncertainty, lawmakers cry foul
State Sen. Royce West, D-Dallas, one of many architects who codified HUB into state legislation in 1999, stated the comptroller’s transfer represents an unprecedented rollback.
“The place we’re is that the HUB program is threatening to be dismantled,” West stated in an interview with The Defender. “I’ve tried to get the interim comptroller to take a seat down and go to with me about this. For some unusual cause, he has been reluctant to take action.”
West stated he believes the Legislature should evaluate whether or not Hancock overstepped his authority by successfully repealing and renaming a statutory program.
“In my tenure, I’ve by no means seen an government department company repeal a statute and rename a program particularly designated in legislation,” West stated. “This isn’t how state authorities works.”
State Rep. Ron Reynolds, D–Missouri Metropolis, additionally blasted the transfer, calling it “an assault on equity and equal entry.”
“I’m outraged by this reckless resolution,” Reynolds stated. “The State of Texas has chosen to show its again on equity and equal entry, and in doing so, it has turned its again on the hardworking Texans who make this state what it’s.”
Reynolds stated stripping away HUB assist disproportionately harms entrepreneurs who’ve traditionally confronted systemic boundaries.
“For the reason that comptroller gained’t meet with the teams, they haven’t any different selection however to hunt a judicial treatment. We’ve obtained to stop saying what we will’t do and do what must be accomplished. Ain’t no person gonna save us however us.”
Senator Royce West
“When the state dismantles applications that assist stage the taking part in subject, it sends a painful message to numerous small enterprise homeowners that their goals matter lower than the consolation of the well-connected,” he stated. “Texas can’t declare to be the land of alternative whereas stripping alternative away from those that want it most.”
A push towards authorized motion
With state leaders unlikely to intervene quickly, West stated affected companies and chambers of commerce should contemplate litigation.
“For the reason that comptroller gained’t meet with the teams, they haven’t any different selection however to hunt a judicial treatment,” West stated.
He urged enterprise homeowners to “come collectively, set up a authorized protection fund, and take this matter to courtroom.”
West acknowledged considerations about price however stated unity is important.
“We’ve obtained to stop saying what we will’t do and do what must be accomplished,” West stated. “Ain’t no person gonna save us however us.”
Reynolds echoed that sentiment, invoking civil rights leaders.
“Dr. Martin Luther King Jr. warned us that injustice anyplace is a menace to justice all over the place,” he stated. “And as John Lewis taught us, there comes a time to get into good bother — crucial bother — for the soul of your group. That is a kind of moments.”
State Sen. Borris Miles, D-Houston, stated the comptroller’s resolution represents a direct assault on alternatives for Texas’ various enterprise group.
“Let’s name this what it’s: an assault on our group,” Miles stated in a press release. “Texas is a majority-minority state, however enterprise alternatives don’t mirror our various inhabitants. Eradicating women- and minority-owned companies from the HUB program may have dire penalties on the material of our state’s economic system.”
Miles, who has lengthy labored with state businesses to strengthen participation of minority- and women-owned companies, stated the comptroller should reverse course. “I’m calling on Performing Texas State Comptroller Kelly Hancock to reinstate the HUB program and be certain that women- and minority-owned companies are included,” he stated.
How we obtained right here
The modifications comply with a months-long freeze on HUB certifications and are available amid a nationwide wave of challenges to range, fairness, and inclusion efforts. In Texas, the shift accelerated after Gov. Greg Abbott issued an government order in January banning DEI applications throughout state businesses, mirroring federal efforts below the Trump administration.
The comptroller’s Workplace cited a lawsuit filed by Aerospace Options, a non-HUB firm, which argued this system violated equal-protection requirements. No courtroom, state, or federal, has dominated the HUB statute unconstitutional.
HUB certification was beforehand accessible to companies majority-owned by girls, Black Individuals, Hispanic Individuals, Asian Pacific Individuals, Native Individuals, and service-disabled veterans.
In keeping with the state’s fiscal yr 2025 semi-annual report, 2,995 HUB companies obtained about 11% of statewide expenditures — a quantity West warns will plummet.
“It’s not like we have been getting an outsized share,” he stated. “Now you’re going to see that quantity go down.”
Past coverage: Actual-world financial influence
The freeze impacts greater than 11,000 HUB-certified companies throughout the state. Julie Irvin Hartman, co-founder of B2G Victory and a HUB certificates holder, stated the results ripple far past particular person firms.
“This issues as a result of it’s an financial subject,” Irvin Hartman stated. Her agency has helped companies safe greater than $4.5 billion in authorities contracts over 20 years. “This system freeze and the U.S. authorities shutdown create totally different challenges for companies. It’s slowed down the procurement course of for state and county jobs tied to federal {dollars}.”
She recommends that companies pivot instantly.
“Proceed to diversify your online business — whether or not that’s doing enterprise with a Okay-12 college district, increased training, or one of many 200-plus counties within the state of Texas,” she stated.
She additionally advises shut monitoring of current contracts.
“Learn your agreements, attain out to your prime contractor, attain out to the federal government company in case you’re impacted by the federal shutdown,” she stated. “There might even be casual alternatives accessible, even whereas the HUB program is frozen.”
The street forward
For now, the comptroller’s Workplace says current state contracts held by former HUB companies shall be honored. However for hundreds of companies whose certifications are expiring or whose pipeline depends upon HUB visibility, the longer term stays unsure.
Houston-area chambers, authorized organizations, and minority-business advocates are exploring subsequent steps, together with potential authorized challenges.
“There’s nothing solidified but,” West stated. “However we have to get in courtroom and get this matter heard, as a result of clearly the comptroller exceeded his authority.”
Reynolds agreed, calling it a defining second for the state’s identification.
“Texas is strongest when each Texan has the prospect to rise,” he stated. “This second requires braveness. This second requires motion. I’m ready to fulfill it.”
Till then, lawmakers warn that the implications shall be felt statewide.
“HUBs strengthened our economic system, created jobs, and allowed all entrepreneurs an opportunity to succeed,” Miles stated. “Dismantling it units us again many years.”
