The state Comptroller’s office announced Tuesday it is removing women- and minority-owned businesses from the state program intended to give additional exposure to businesses owned by economically disadvantaged groups.
The Historically Underutilized Business program will now focus on businesses owned by disabled veterans and be renamed the Veteran Heroes United in Business program, or VetHUB. Only veterans with a 20% percent or higher service-connected disability will be eligible, according to a news release from the Comptroller’s office.
Businesses that have a HUB certification connected to their owners’ race, ethnicity or sex will have their certification revoked under the new rules, according to the office.
The restructuring, which the Comptroller’s office said was made under emergency rules and is effective immediately, greatly reduces the scope of the decades-old program created by the Legislature.
The HUB program was created with the intention of giving minority- and women-owned businesses a leg up when seeking state contracts. The program does not set quotas for the hiring of HUB-certified businesses, but sets goals that state agencies generally strive to meet.
State contracts that began prior to Tuesday’s announcement will not be affected by the rules change, according to a frequently asked questions page posted to the Comptroller’s website Tuesday.
The agency sent emails to HUB vendors that no longer qualify under the new rules on Tuesday, informing them that their certification has been revoked and their business will be removed from the HUB vendor directory.
On Tuesday, Comptroller Kelly Hancock released a written statement about the change: “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. 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 Comptroller’s office had frozen new and renewed HUB certifications at the end of October, citing the need to review the program to ensure it complied with executive orders by both President Donald Trump and Gov. Greg Abbott banning diversity, equity and inclusion initiatives in government.
After freezing the program, Hancock wrote in a social media post that the move was done to end “race or sex quotas” in government procurement.
A lawsuit filed by a non-HUB certified company that claimed its status caused it to lose out on state contracts is also currently playing out in federal court, although no ruling has been made in that case.
It is unclear what authority Hancock is relying on when changing the program, which was created by the state Legislature through a state law — revoking a state law typically requires either a court ruling or the Legislature repealing the law.
The Comptroller’s office did not immediately respond to a request for comment.
