Texas’ Suspension of ‘Historically Underutilized Business’ Certifications Impacts State Contracting Processes
Takeaways
- The Texas comptroller suspended certification and recertification of Historically Underutilized Businesses (HUB) for state procurements.
- HUB-certified businesses remain eligible for state contracts pursuant to the statute that provides for education and training, but no contract preferences or quotas.
- The comptroller will continue to collect business participation data while conducting a detailed review of the program’s legal framework given recent prohibitions of DEI programs in Texas state government.
Related links
- Press release: Historically Underutilized Business Certification Process Suspended by Acting Texas Comptroller
- State agency guidance: Prohibiting Unlawful Discrimination in State Contracting
- Texas Executive Order GA-55 Prohibiting Government Race Discrimination
Article
On Oct. 28, 2025, Acting Texas Comptroller Kelly Hancock announced that he was suspending certification of Historically Underutilized Businesses (HUBs) for state procurements pending a review of the program’s legal framework in light of recent court rulings and Texas Governor Greg Abbott’s Executive Order GA-55 prohibiting diversity, equity, and inclusion (DEI) programs in state government.
Although new certifications and requests for renewal are suspended, the comptroller’s office will continue collecting business participation data. The comptroller’s guidance makes clear that eligible businesses may continue to compete for state contracts and register with the Centralized Master Bidder’s List.
The Texas HUB program was signed into law by then-Governor George W. Bush in 1999. Pursuant to the statute, a HUB is a business that is at least 51% owned and controlled by one or more economically disadvantaged persons. A disadvantaged person is either (a) a racial or ethnic minority, a woman, or a service-disabled veteran, or (b) a person who has suffered the effects of discriminatory practices or other similar insidious circumstances over which the person has no control.
State agencies are required to notify HUB-certified businesses about upcoming procurements with a value of over $10,000 and to use “good faith efforts” to achieve state-specified goals for contracting with HUB-certified businesses. HUB-certified businesses must compete for contracts. They do not receive contracting preferences.
The guidance to state agencies reiterates that agencies may not award government contracts based on race, ethnicity, or sex, and that preferences are prohibited. The guidance also requires that the basis for each contract award be documented in the procurement file.
Next Steps
- HUB-certified businesses should continue to identify and compete for state contracts.
- Companies bidding on Texas state contracts with expected value of at least $100,000 must continue to comply with agency requirements for a HUB Subcontracting Plan, including making good faith efforts to implement the Plan.
Jackson Lewis attorneys can assist with any aspect of compliance and answer questions regarding the law’s provisions or applicability to your business. For assistance, please contact your Jackson Lewis attorney.
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