Texas Republican leaders are halting a decades-old program designed to support minority- and women-owned businesses in state contracting. Acting Comptroller Kelly Hancock announced the suspension this week amid a wider crackdown on diversity, equity, and inclusion (DEI) initiatives. The change also affects companies owned by service-disabled veterans.
Legal and Policy Justifications Cited
Hancock stated that the Historically Underutilized Business (HUB) program conflicts with recent U.S. Supreme Court decisions limiting DEI practices and with a January executive order by Governor Greg Abbott that prohibits state agencies from implementing DEI programs. Hancock indicated his office will review the program’s legal framework to determine if the suspension becomes permanent.
“Businesses deserve a level playing field where government contracts are earned by performance and best value – not race or sex quotas,” Hancock wrote on X, adding, “We must END ALL DEI in Texas!”
HUB Program Background
The HUB program, created in the 1990s under then-Governor George W. Bush, requires state agencies to notify qualified HUBs about contracts exceeding $10,000. However, HUB certification does not guarantee contract awards or provide extra points in the evaluation process. Instead, it gives smaller businesses increased visibility and networking opportunities, according to Julie Irvin Hartman, who helps small businesses apply for government contracts.
A recent report showed that Texas’ 16,000 certified HUBs received roughly 11% of statewide expenditures, totaling about $2 billion in the first half of the fiscal year. Anglo-American women-owned businesses received 41% of the HUB awards, followed by Hispanic Americans with 35%. Black, Asian, and Native Americans, along with veterans with at least 20% service-connected disability, were also eligible for the program.
Potential Impacts on Businesses
Local business leaders expressed concern over the suspension. Ingrid Robinson, president of the Houston Minority Supplier Development Council, said the HUB program opened doors for smaller firms and feared larger companies may dominate future contracts without it. Many HUB-certified businesses have not received guidance about the changes or how to continue current contract bidding.
Political Context
Ending DEI has been a priority for Hancock since taking office in July. He is currently running in the GOP primary for a full term as comptroller, facing two Republican challengers: Christi Craddick and Don Huffines.
It remains unclear whether other state agencies are suspending their HUB-related practices or continuing to meet existing HUB targets. Abbott’s office stated that all state agencies should reject unlawful race- and sex-based discrimination but did not confirm agreement with Hancock’s legal interpretation.
Legislative and Legal Background
State Senator Royce West, a Dallas Democrat who helped establish the program, warned of potential legal challenges. He cited a lawsuit filed last year by a consulting company alleging that HUB programs illegally set aside dollars based on race, preventing non-eligible businesses from winning contracts. West called on local chambers of commerce and business groups to intervene and defend the program.
