The Texas Historically Underutilized Business (HUB) Program recently froze new and renewal vendor certifications. Is a big change in the works? Yes—and it’s already underway. What began as a certification suspension in late October 2025 has since moved to an emergency-rule restructuring that rebrands and narrows the program in ways that could materially affect state agency procurement operations and vendor strategy.
Just as important: the Comptroller has explicitly tied the review to constitutional concerns, and the shift comes amid active litigation challenging Texas’ race-based contracting framework—including a federal lawsuit filed in November 2024 targeting the HUB program.
Background on Texas HUB Program Requirements
The Texas Historically Underutilized Business (HUB) Program is a long-standing component of Texas’ procurement framework. Created under Chapter 2161 of the Texas Government Code, the program provides the structure through which state agencies and universities increase contracting and purchasing with certified vendors.
The Texas Comptroller of Public Accounts administers the program and certifies eligible businesses. Historically, eligibility has included firms at least 51% owned by certain socially or economically disadvantaged persons—often operationalized through categories tied to race, ethnicity, sex, and certain veteran statuses.
Each state agency has traditionally been expected to:
- Make good-faith efforts to solicit bids from HUB-certified vendors for qualifying purchases
- Submit annual HUB participation reports to the Comptroller and the Legislative Budget Board
- Require HUB subcontracting plans (HSPs) for eligible contracts expected to exceed $100,000, unless exempt
- Designate a HUB coordinator responsible for compliance monitoring
These duties are supported by rules in Title 34, Texas Administrative Code, Chapter 20, which historically standardized outreach, reporting, and subcontracting-plan processes across state government.
Recent HUB program developments at the Comptroller’s office
1) October 28, 2025: Comptroller froze new and renewal HUB certifications
On October 28, 2025, Acting Comptroller Kelly Hancock announced the Comptroller would stop issuing new HUB certifications and pause renewals while the office reviewed whether the program’s administrative procedures and rules were constitutional. The Comptroller indicated existing certifications were not immediately invalidated by the pause, but the pipeline for new entrants and renewals stopped.
2) December 2, 2025: The “big change” arrived—HUB restructured into VetHUB under emergency rules
On December 2, 2025, the Comptroller announced emergency rules that restructured the HUB program into “Veteran Heroes United in Business (VetHUB)”, limiting certification to small businesses owned and operated by veterans with a 20%+ service-connected disability.
Public reporting around the announcement also stated that certifications tied to race, ethnicity, or sex would be revoked under the new approach, reflecting the move toward race- and sex-neutral standards.
Why the Comptroller moved: constitutional risk + litigation pressure
The Comptroller framed the pause and overhaul as a constitutional compliance step. That posture matters because the HUB framework has been under direct legal attack:
- In November 2024, Aerospace Solutions, LLC (represented by Pacific Legal Foundation) filed a federal lawsuit challenging Texas’ contracting and HUB-related race-based mechanisms.
- The Comptroller’s October 2025 announcement specifically referenced reviewing the program to ensure the rules were constitutional—consistent with the increased litigation risk environment.
Bottom line: agencies and vendors should assume the state is positioning procurement practices to withstand equal-protection scrutiny and avoid adverse court rulings—and that litigation risk is one of the drivers of the change, not just policy preference.
What the changes mean operationally for agencies
Solicitation and evaluation language is now a compliance risk area
If solicitations still reference HUB categories or use HUB participation as a points lever in a way that can be characterized as race/sex-based, agencies may face:
- Protest risk (procedural and constitutional arguments)
- Reissuance delays and corrective procurement actions
- Inconsistent evaluation practices across agencies as templates change
Contracting and subcontracting plans (HSPs) may require revision
Many contracts embed HUB participation requirements in scopes, HSP forms, scoring, and reporting. If the Comptroller’s emergency-rule framework pushes race/sex neutrality, agencies may need to:
- Update HSP triggers, instructions, and scoring references
- Reconcile contract boilerplate with new Comptroller guidance
- Document “good faith” outreach in a way that does not rely on protected-class status
Reporting continues, but the data may become less comparable year-over-year
The Comptroller’s materials indicate ongoing program administration and FAQs for VetHUB, but agencies should expect:
- Different certification population (narrower pool)
- Trendline breaks in participation metrics
- Increased scrutiny of how agencies define outreach populations and measure “participation”
What the changes mean for vendors and primes
Vendors: certification strategy has shifted
- If your HUB status was tied to race/ethnicity/sex eligibility categories, your competitive positioning may change substantially under the VetHUB-only model described by the Comptroller and major reporting outlets.
- If you qualify as a service-disabled veteran-owned business (with the specified disability threshold), VetHUB may become a high-value differentiator in the near term.
Primes: subcontracting outreach and documentation need a reset
Expect near-term confusion across agencies about what “counts” for outreach, especially where older HSP language persists. Primes should:
- Track agency-by-agency revisions to templates and HSP instructions
- Preserve documentation showing race/sex-neutral outreach methods
- Monitor whether solicitations remove HUB scoring/targets or replace them with alternative vendor inclusion mechanisms
Legal and oversight implications to flag (and why agencies should be careful)
Even with the Comptroller’s emergency rules, agencies still sit under statutory expectations (Chapter 2161) and longstanding procurement guidance. That creates tension:
- Authority questions: Press coverage has already raised concerns that major structural changes to a statutory program may invite separation-of-powers or ultra vires arguments.
- Constitutional challenges: If the state eliminates race/sex criteria, litigation may shift toward whether the Comptroller exceeded administrative authority—or whether agencies are implementing changes inconsistently.
Practical implications at scale
Texas procurement is large, distributed, and template-driven. When certification rules and participation expectations move quickly:
- Agencies face mismatched procurement language across solicitations
- Vendors face uncertainty about what outreach and subcontracting commitments are meaningful
- Oversight bodies lose apples-to-apples comparability across fiscal years
The most immediate risk is not just legal—it’s operational drag: rework, retraining, slower awards, and vendor confusion.
Conclusion
The October 2025 certification freeze was not merely a “pause.” By December 2, 2025, the Comptroller moved to emergency rules that restructure the HUB program into VetHUB and narrow eligibility to a specific subset of service-disabled veteran-owned businesses.
And the “why” is not speculative: the changes unfolded amid constitutional scrutiny and litigation pressure targeting race-based contracting practices, including a lawsuit filed in November 2024 that directly challenged Texas’ HUB framework.
For agencies and vendors, the near-term priority is simple: audit your templates, update your outreach and documentation practices, and assume continued legal sensitivity around anything that looks like race- or sex-based contracting preference.
Need to stay in tune with what is happening in Texas government? The GovExperts Team is your trusted source of information. Contact us today!