No New HUB Certifications: What the Freeze Means for State Contracting

Texas’ freeze on new and renewed certifications for Historically Underutilized Businesses (HUB) is raising concerns about how agencies will meet state-mandated participation goals as the program undergoes legal review.

The decision, prompted by Executive Order GA-55 from Gov. Greg Abbott, prohibits race-based preferences in public programs and could significantly reshape the HUB program’s structure and goals. While a statement from the Texas Comptroller expressed a desire to move to race- and sex-neutral standards for procurement, it did not mention standards related to veterans.

Announced in early November, the suspension immediately halted new certifications and renewals for existing HUB vendors, a move Acting Comptroller Kelly Hancock described as necessary to align the program with both federal and state requirements. While current HUB-certified vendors remain eligible to compete for contracts, those with expiring certifications are unable to renew their status during the freeze.

The HUB program has long served as a key policy tool to increase contracting opportunities for minority-, woman- and service-disabled veteran-owned businesses in state procurement. HUB status is used by agencies to meet participation goals and by vendors to qualify for subcontracting credit. The Comptroller’s Office confirmed it will continue to collect data on HUB participation during the suspension period, but no timeline has been provided for when certifications might resume.

Over the past two years, the program underwent several adjustments to tighten eligibility and improve oversight. In 2023, the Comptroller’s Office enhanced verification procedures for ownership and control, introducing stricter documentation requirements and increasing scrutiny of management structures. The program also clarified reciprocal treatment rules for out-of-state applicants, requiring their home states to offer similar certification opportunities to Texas-based businesses. In 2024, annual reaffirmation requirements were introduced, obligating certified businesses to confirm continued compliance without undergoing full recertification. These changes aimed to align HUB standards with federal disadvantaged business programs and strengthen program integrity.

According to the fiscal year 2025 semi-annual HUB report, certified HUBs received 11.02 percent of all statewide procurement expenditures through February, a figure that reflects a third straight year of decline. In FY 2023 and FY 2024, HUB vendors accounted for 12.31 percent and 11.58 percent of spending, respectively. None of the six procurement categories met the state’s HUB participation goals for the first half of FY 2025, with particularly low performance in heavy construction (4.45 percent) and commodities (7.96 percent) compared to their respective goals of 11.2 percent and 21.1 percent.

The ongoing freeze could exacerbate those challenges. With no new HUBs entering the vendor pool and no mechanism for renewals, the number of eligible businesses is expected to shrink over time, making goal attainment increasingly difficult for agencies. While the Comptroller’s Office has not rescinded any existing certifications, the inability to renew effectively sidelines firms whose certification lapses.

The state has indicated that it plans to revise the HUB program’s eligibility criteria to eliminate race- and gender-based classifications, transitioning to a race- and sex-neutral framework in line with Executive Order GA-55. The forthcoming rulemaking process is expected to restructure how HUB status is determined, though details remain pending.

Without intervention by the Legislature, a new comptroller, or an updated executive directive, the suspension could extend indefinitely. For now, Texas agencies must continue procurement efforts under a system in transition, while vendors face growing uncertainty about how and whether they will be able to participate in one of the state’s key small-business programs.