Texas Comptroller Overhauls HUB Program, Excluding Minority and Women-Owned Businesses

The Texas Comptroller of Public Accounts has significantly restructured the Historically Underutilized Business (HUB) program, now renamed VetHUB, which will exclusively serve businesses owned by service-disabled veterans. This decision, made by Acting Comptroller Kelly Hancock, follows a belief that the original program's eligibility criteria, which included female and minority-owned businesses, were unconstitutional and discriminatory. Hancock stated that the program's previous definition of "economically disadvantaged person," based on race and gender, violated the Equal Protection Clause of the Constitution.

The Hill

The HUB program, established in the 1990s, aimed to enhance the participation of small businesses owned by economically disadvantaged individuals in state procurement processes. However, Hancock's changes have resulted in over 15,000 businesses losing their eligibility, as the new VetHUB program only recognizes service-disabled veterans. Hancock expressed a desire to eliminate perceived discrimination in the procurement process, asserting that the new rules create a level playing field for all businesses, regardless of ethnicity.

The Hill

State Senator Royce West, who was instrumental in the original HUB program's creation, criticized the overhaul, arguing that it oversteps the agency's rulemaking authority. He emphasized that the program was not merely a diversity, equity, and inclusion initiative but a good faith effort to ensure equal opportunities for all businesses in the procurement process. West's disappointment reflects concerns that the changes undermine the original intent of the HUB program.

The Hill

Hancock, however, remains firm in his stance, asserting that the new rules are necessary to comply with constitutional mandates. He hopes that the changes will not lead to legal challenges, although West indicated that affected businesses might pursue legal action against the Comptroller's office.

The Hill

The overhaul of the HUB program raises questions about the future of minority and women-owned businesses in Texas. Critics argue that the exclusion of these businesses from state procurement opportunities could have detrimental effects on their growth and sustainability. The fiscal year 2025 semi-annual report indicated that there were 15,762 registered companies under the HUB program prior to the changes, highlighting the significant impact on the business landscape.

The Hill

In response to the changes, Hancock stated, “It’s leveled the playing field so that all businesses, regardless of ethnicity, are treated equally.” Conversely, West remarked, “I have never seen an executive agency, or the governor, repeal a statute and rename a program specifically designated in the statute,” indicating his concerns about the legality of the changes.

The Hill

While Hancock believes the changes align with constitutional requirements, critics, including West, argue that the modifications could lead to legal disputes regarding the agency's authority. The potential for litigation remains a significant concern, as many affected businesses may seek to challenge the new eligibility criteria.

The Hill

• “To assume somebody is economically disadvantaged simply based on race or eliminate people from having this preferential treatment in the procurement process, or the contract process with the state, that’s just discriminatory and doesn’t abide within the Constitution,” — Kelly Hancock, Acting Texas Comptroller

The Hill

• “It’s a good faith program to make sure that all businesses, female and male, get an opportunity to participate in the procurement process.” — State Sen. Royce West, D-Dallas

The Hill