State Cuts to HUB Program Raise Concerns for Houston’s Small Businesses

Texas has removed women- and minority-owned firms from the state’s Historically Underutilized Business (HUB) program, a shift that could reshape how many small companies in Houston compete for state contracts. State officials say the change follows a legal review, while business groups warn the move may reduce access to public projects for long-excluded communities.

What Changed in the HUB Program

The HUB program has long offered certification to businesses owned by women, Black, Hispanic, Asian, and Native American entrepreneurs. That certification often helps firms stand out when bidding on state contracts. Texas is now removing race- and gender-based eligibility, leaving only businesses owned by people with disabilities or those considered "economically disadvantaged."

State officials argue the change reduces the risk of legal challenges and aligns with recent court decisions. However, many business groups expected a more gradual transition. They say the shift arrived with little notice and leaves many firms unsure how to compete for upcoming contracts.

How the Decision Affects Houston’s Business Community

Houston relies heavily on small and midsize contractors for public infrastructure, technology upgrades, and service projects. Many of these firms have used HUB certification to build their reputations and secure first-time state work. Without that credential, businesses may face more competition from larger firms.

Local chambers and advocacy groups say the change could impact sectors where minority and women entrepreneurs have gained momentum, including construction, engineering, consulting, and health services. Because Houston has one of the most diverse business communities in the country, the shift may hit the region harder than other parts of Texas.

Why It Matters for Houston

• HUB certification often helps small firms qualify for subcontracting opportunities on major state projects.
• Without the designation, Houston companies may need to rely more on city or county programs for competitive advantages.
• Loss of visibility in state procurement databases could reduce the pipeline of new opportunities.

Business owners say the biggest concern is uncertainty. Many firms have built long-term growth plans around their HUB status, and the sudden shift may force them to adjust hiring, bidding strategies, or pricing.

What’s Next

Texas has not announced any replacement program that would specifically support women- or minority-owned firms. Some local leaders want the state to create a new race-neutral system that still prioritizes disadvantaged businesses. Others encourage Houston firms to maintain local certifications, such as those offered by the City of Houston’s Office of Business Opportunity and METRO.

For now, affected businesses continue to seek clarification while watching how state agencies update their procurement processes in 2025.

This article is a summary of reporting by Houston Public Media. Read the full story here.