Vendors Push Back as Texas Comptroller Moves to Codify VetHUB

Business owners and trade groups are pushing back as the state moves to permanently replace Texas’ Historically Underutilized Business (HUB) program.

Texas Comptroller staff on Tuesday outlined proposed rule changes that would permanently align the state’s Historically Underutilized Business program rules with the emergency framework that rebranded the program as Veteran Heroes United in Business (VetHUB).

The hearing comes after the comptroller’s office suspended new and renewed HUB certifications late last year while it conducted a legal review tied to constitutional concerns and Gov. Greg Abbott’s Executive Order GA-55. That review culminated Dec. 2, 2025, when Acting Comptroller Kelly Hancock announced emergency rules replacing HUB with VetHUB and limiting certification to small businesses at least 51 percent owned and controlled by veterans with a service-connected disability rating of 20 percent or higher, while revoking prior certifications granted on the basis of race, ethnicity or gender unless the business met the new criteria.

In March, minority-owned and women-owned businesses and NAMC Inc. — Greater Houston Chapter filed suit in Travis County challenging the emergency rulemaking and seeking to void the regulation and reinstate certifications.

At the April 7 hearing, Jared McCrossin, data and technology manager for the statewide procurement division, said the comptroller is proposing amendments to multiple sections of Title 34, Texas Administrative Code to “match the emergency rules” adopted Dec. 2, 2025. McCrossin told attendees the agency’s aim is to avoid “unconstitutional application” of the program by eliminating classifications that could be applied in a way that violates equal protection provisions.

McCrossin described a series of changes the comptroller says are embedded in the proposal, including replacing the term “gender” with “sex,” removing references to remediation of disparities and eliminating the definition of “disparity study” from the rules. He said the amendments would also eliminate statewide quantitative utilization goals, leaving agencies to set their own goals for increasing utilization “based on relevant factors,” while removing instructions for agencies to consider a disparity study.

A significant portion of the agency’s presentation focused on subcontracting rules. McCrossin said the comptroller proposes to replace “HUB subcontracting plan” with “subcontracting plan” and remove methods that previously incentivized selection of HUB subcontractors, arguing the revised approach requires the same outreach steps regardless of subcontractor selection. Under the proposed approach described at the hearing, respondents that intend to subcontract would demonstrate good faith through either inviting small businesses to bid or stating they intend to self-perform.

He also said the comptroller proposes reducing the minimum number of HUB firms to solicit from three to two, citing more stringent eligibility requirements and an expectation that the number of certified firms available for subcontracting will “substantially decrease.”

Public commenters, many of them previously certified HUB owners and representatives of business organizations, argued the emergency change and proposed permanent rule adoption have already altered competitive dynamics in state contracting.

Jeff Postell, CEO and president of Post L Group, said his company’s forecasted revenue dropped by 23 percent after the emergency order and said negotiations stopped on projects where the company had won work.

Deidre Norville, owner and CEO of Human Potential Consultants, said her company had been disqualified from active bids exceeding $3 million and halted planned hiring. Several speakers raised similar concerns about disqualification from bids, contract risk and layoffs or downsizing tied to the loss of HUB status.

The hearing also included warnings about downstream effects for agencies and taxpayers. Tiffany Rattler, owner of Rattler Management Consulting Group, said narrowing participation would reduce competition and increase costs.

Stacy Bean, owner of Tech Creation LLC, who said her company was previously HUB certified and is now VetHUB certified, argued fewer vendors could increase costs and procurement cycle time and said a smaller pool of vendors could increase security risks for IT procurements if larger vendors are not properly monitored.

Several organizations also challenged the process behind the shift. J.R. Gonzalez, representing the Texas Association of Mexican American Chambers of Commerce, questioned how the program was deemed unconstitutional through emergency action and asked whether the state conducted an economic impact study.

Margo Posey, president and CEO of the DFW Business Council, said the emergency changes decertified more than 15,000 businesses “overnight” and said member companies had been disqualified from bids and forced to consider layoffs or restructuring.

Ingrid Robinson, president and CEO of the Houston Minority Supplier Development Council, said her organization has served as a recognized certifying body for the state’s program and described the certification process as rigorous. Robinson told the comptroller that more than 15,000 minority-owned and women-owned businesses were decertified and said the active vendor pool has dropped to fewer than 1,000 firms qualifying and registered as VetHUB, while also citing more than $4 billion in awarded state contracts tied to HUB participation in 2024.

The comptroller’s office did not respond to comments during the meeting. Additional written comments on the proposed changes are due April 12.