Texas manages a contracting system valued at more than $250 billion across state agencies and higher education institutions — and for decades, the Historically Underutilized Business program served as a key entry point for minority- and women-owned firms seeking to compete for a share of those contracts. That access has now been significantly curtailed.
In December 2025, acting Texas Comptroller Kelly Hancock issued an emergency rule converting the HUB program into what he renamed the Veteran Heroes United in Business program, or VetHUB — restricting eligibility exclusively to businesses owned by veterans with at least a 20 percent service-connected disability. At the time of the change, state documents showed 15,790 certified HUB businesses. Just 485 were owned by service-disabled veterans. According to the comptroller, that number has since grown to 1,075 certified VetHUB businesses. More than 15,000 minority- and women-owned businesses lost their certifications.
The HUB program does not set quotas for the hiring of certified businesses, but establishes goals that state agencies generally strive to meet. For many firms, certification represented a meaningful competitive advantage in navigating the state procurement process. Ruben Mercado Jr., founder of Houston-based Ipsum General Contractors, said a contract he was preparing a $1 million bid for was withdrawn after Hancock restructured the program. Wendell Stamley, president of the National Association of Minority Contractors, said its members in Texas have seen government contracts canceled and work they were expecting unexpectedly returned to competitive bidding.
On March 2, 2026, four minority- and women-owned Texas businesses and the greater Houston chapter of the National Association of Minority Contractors filed suit against Comptroller Hancock, arguing that he lacked the legal authority to restructure a program created by the state legislature. The lawsuit alleges that Hancock violated the Texas Constitution’s separation of powers protections, exceeded his authority, failed to comply with emergency rulemaking requirements, and deprived minority- and women-owned businesses of due process. State Sen. Royce West, a Democrat who co-authored the original HUB legislation in the 1990s, questioned whether the comptroller had the statutory authority to alter the program without legislative approval.
Hancock has defended the changes by pointing to the 2023 U.S. Supreme Court decision ending affirmative action in college admissions and a 2025 executive order by Governor Greg Abbott promoting what he described as color-blind governmental action. The state has not yet formally responded to the lawsuit.
For the Houston business community in particular, where several of the plaintiffs are based, the outcome of the legal challenge carries direct financial stakes. The three agencies with the largest proportion of HUB-related contracts — the Texas Department of Transportation, the Texas Health and Human Services Commission, and the Texas Facilities Commission — have all implemented Hancock’s changes, and the lawsuit names their executive directors alongside the comptroller. A court ruling on the scope of the comptroller’s authority could determine whether more than 15,000 decertified businesses regain access to the state contracting system.