Texas Cancels HUB Certifications, Shifts Focus to Veterans

Texas has formally replaced its Historically Underutilized Business (HUB) program with a newly restructured initiative that centers exclusively on service-disabled veteran entrepreneurs, marking a significant policy shift in state contracting.

Announced on Dec. 2 by Acting Comptroller Kelly Hancock, the new program, titled Veteran Heroes United in Business (VetHUB), took effect under emergency rules submitted to the Texas Register. The rules have not yet been published in the Register at the time of this writing.

The changes immediately ended race- and sex-based eligibility preferences in state contracting. The revised focus aligns with Gov. Greg Abbott’s Executive Order GA-55, which prohibits the use of race-based preferences in state programs.

Under the new rules, only small businesses that are at least 51 percent owned and controlled by veterans with a service-connected disability rating of 20 percent or higher are eligible for VetHUB certification. All previous HUB certifications granted on the basis of race, ethnicity or gender will be revoked unless the business qualifies under the new veteran criteria.

Hancock described the move as restoring constitutional integrity to state procurement.

“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,” he said in a public statement.

The changes are the result of a multimonth freeze that began in October, when the comptroller’s office suspended all new and renewed HUB certifications pending legal review. During the suspension, current HUB-certified vendors remained eligible to compete for state contracts, but no new certifications or renewals were processed.

The state continued to collect HUB participation data while planning for a transition to race- and sex-neutral criteria. State officials indicated that eligibility for service-disabled veterans would likely remain, which is now reflected in the structure of VetHUB.

The transition comes as HUB participation rates have continued to decline. According to the most recent semiannual report, HUB-certified vendors accounted for 11.02 percent of state procurement expenditures through February 2025, down from 12.31 percent in fiscal 2023. None of the six procurement categories met the state’s participation goals for the first half of Fiscal Year 2025.

Agencies are now adjusting procurement efforts under the VetHUB framework. The comptroller’s office has started revoking outdated certifications and issuing new ones in line with the emergency rules. An FAQ on the comptroller’s website outlines VetHUB’s eligibility criteria, the application process and guidance for previously certified vendors.

Although the Legislature has not taken formal action on the program, VetHUB may represent a lasting policy model following growing legal scrutiny of race-based government initiatives.