On November 4, 2025, the Texas Comptroller’s office decertified 15,475 businesses from the state’s Historically Underutilized Business program, stripping the overwhelming majority of certified minority- and women-owned firms of their eligibility to compete for set-aside state contracts. The action, which affected 96.8% of all HUB-certified businesses, followed a freeze order issued October 28 by Acting Comptroller Kelly Hancock and represents the largest single-event disruption to a state small business certification pipeline in recent memory.
For a business holding a HUB certificate, decertification means immediate removal from the preferential bidding lanes that the program creates – no set-aside eligibility, no HUB subcontracting credit for prime contractors who partner with them, and no access to the agency-specific goals that direct a share of state procurement toward certified firms. In fiscal year 2024, HUB firms secured $3.9 billion in state contracts, representing 23.1% of total state procurement.
What the certification lapse covered and how it happened
The Texas HUB program, administered under Texas Government Code §2161, certifies minority-owned, women-owned, and service-disabled veteran-owned businesses for preferential access to state contracting opportunities. The program had certified more than 15,500 businesses as of mid-2024, with participation reaching $8.5 billion in fiscal year 2023.
Hancock’s October 28 freeze memo cited Governor Greg Abbott’s January 25, 2025, executive order – designated EO-45 – which prohibits DEI practices across state agencies. Hancock’s office argued the HUB program created impermissible preferences in violation of equal protection principles. The freeze halted new certifications and renewals; the November 4 decertification swept out all but 523 service-disabled veteran-owned firms carrying disability ratings of 20% or higher.
A September 2025 preliminary settlement in Aerospace Solutions v. Texas Comptroller (Travis County District Court, Case No. D-1-GN-24-007523), which awarded $1.2 million to a firm claiming reverse discrimination under the program, was cited in the comptroller’s rationale for the broader action.
How the lapse affects certified small businesses competing for contracts
Minority-owned firms, women-owned businesses, and historically underutilized contractors outside the veteran category lost their certifications entirely. For businesses mid-bid or holding active subcontracting arrangements built around HUB participation credits, the timing created immediate contract compliance questions.
Prime contractors who had structured subcontracting plans to meet agency HUB goals now face uncertainty over whether those plans remain valid. Small businesses that had built their state contracting pipeline around HUB eligibility – particularly those in construction, professional services, and IT, which historically draw the highest HUB participation – have no clear reinstatement path under the current order.
The Texas Association of Mexican American Chambers of Commerce condemned the decertification as “economic sabotage.” President Mario Castillo stated that the action targets “proven performers who’ve earned their certifications through rigorous audits.” Community chambers report a 40% drop in state bid submissions from affected owners since October 2025, according to the Texas Tribune.
The procurement access question the lapse raises
The scale of the decertification – nearly 15,500 firms removed by a single administrative action – raises a structural question about how dependent small business contracting pipelines are on certification continuity. Federal analogs like the SBA’s 8(a) Business Development program, HUBZone certification, and Women-Owned Small Business designation operate under separate statutory frameworks with defined review and appeal processes; a simultaneous mass decertification of this kind has no direct parallel at the federal level.
For businesses navigating government procurement access through certification programs, the Texas situation illustrates how a program that generated $8.5 billion in annual participation can be interrupted without a transition period or individual notice. The 2009 Disparity Study that underpins HUB’s legal justification documented a 47% disparity in awards to Black-owned firms and 32% for Hispanic-owned firms – data that had not been updated when the freeze occurred, as a planned 2024 refresh was halted alongside the program.
Small business attorney Fortunato Benavides described the action as “executive overreach attempting to nullify legislative intent,” and predicted additional litigation beyond what has already been filed.
Where the lapse stands and what affected businesses should know
A federal class-action lawsuit filed December 15, 2025, by more than 200 decertified owners in the U.S. District Court for the Western District of Texas (Case 1:25-cv-01123) seeks reinstatement of the decertified firms, with a hearing currently scheduled for June 2026. No emergency injunction has been reported as of the filing.
The Texas Legislature convened on January 13, 2026, for its 89th session. Senate Bill 12, pre-filed by Sen. Lois Kolkhorst, proposes to repeal or substantially reform Government Code Chapter 2161, which governs the HUB program. Competing legislative responses defending the program’s statutory basis are expected, though no floor votes have been scheduled.
The June federal hearing and the outcome of SB 12 in the legislative session will determine whether the 15,475 decertified businesses have a path back into the state contracting market and on what legal and administrative terms that reinstatement, if any, would occur.