AUSTIN (Nexstar) — The Texas Comptroller of Public Accounts recently removed information from its website about the Historically Underutilized Business (HUB) program — which provides exposure to minority and female-owned businesses in the state procurement process — to conduct a “legal review of the program’s administration and rules,” according to an agency spokesperson.

One of the architects of the decades-old program, State Sen. Royce West, D-Dallas, confirmed with Nexstar that a lawsuit against the state sparked the decision to remove information about HUB from the agency’s website.

“There are persons out there who obviously don’t want to see the HUB program in the state of Texas,” West explained. A spokesperson with the Comptroller’s office said the agency is continuing to assist Texans with “questions or needs related to state procurement.”

What is the HUB program?

The HUB program began in Texas in the 90s and was codified by the state legislature in 1999. West co-authored the bill that statutorily created the program to ensure minorities and women were included in the mix to be government contractors. At the time when the program began, West said minority business owners were never even thought of.

“We always talk about making certain that we continue with a robust business economy. That includes everyone,” West said. The program covers businesses in a range of services from heavy construction work to providing landscaping and promotional items.

The program allows the Texas Comptroller to certify a business as a HUB if a majority of the ownership is controlled by economically disadvantaged persons. The government code defines an economically disadvantaged person as someone who belongs to these groups:

• Black Americans
• Hispanic Americans
• women
• Asian Pacific Americans
• Native Americans
• veterans who suffered at least 20% service-connected disability.

Not only did the program identify HUBs, but it also set requirements for state agencies when they put contracts out for bids. For any non-IT commodity items with a value between $10,000 and $25,000, an agency must solicit at least three bids from the Centralized Master Bidders List, and two of them must be HUBs.

For all contract types with a value greater than $100,000, agencies must “consider whether there are probable subcontracting opportunities and if so, require a HUB subcontracting plan for vendor responses,” according to the Texas Comptroller.

The state of Texas did set statewide HUB goals it strives to meet in the procurement and contracting process. The goals are based off a 2009 State of Texas Disparity Study, which was also removed from the Comptroller website. The goals include:

• 11.2% Heavy Construction other than Building Contracts
• 21.1% Building Construction, including General Contractors and Operative Builders’ Contracts
• 32.9% Special Trade Construction Contracts
• 23.7% Professional Services Contracts
• 26.0% Other Services Contracts
• 21.1% Commodities Contracts

Who benefits from the HUB program?

Jancy Darling is the owner of Darling Promo, a company that provides promotional products and a certified HUB in Texas. “Anything you can think of that has a logo, our company produces those products,” Darling explained.

She started the company in 2007 and said it was tough sledding to garner big contracts with state agencies for her services. She said the HUB program gave her a better chance to be considered for government contracts, but she explained her company still had to put in the work to prove it was the best choice to be the vendor.

Darling said your company has to provide the best bid financially for the state and also provide proof and referrals that you deliver on the services an agency is requiring. “It gave me exposure initially to these state agencies who now know they can rely on us,” Darling said of the HUB program.

On top of the exposure, Darling said she also attended many trainings offered by the HUB program that helped her run her business better. She now holds formal contracts with two state agencies, and if you ask her, she stresses that she earned those contracts through years of good service, and not because she is female-owned business.

“Just because we are a HUB does not mean we’re awarded the business without having merit,” Darling said.

Critics of the HUB program

State Rep. Brian Harrison, R-Midlothian, has made it clear from his social media to his comments on the House floor, he is not a fan of Diversity, Equity, and Inclusion (DEI) policies in the state government. Harrison calls the HUB program DEI on steroids.

“It’s discrimination on the basis of things such as race, gender, ethnicity, in the determination of the awarding of billions of dollars of contracts,” Harrison explained.

He was happy to learn of the changes made to the Comptroller website and hopes they remain permanent. “It better be real,” Harrison said. “It better not just be optics for the appearance of change.”

He is not alone in his thinking. Earlier this year, Gov. Greg Abbott issued an executive order directing state agencies to ban DEI policies. “We must always reject race-based favoritism or discrimination and allow people to advance based on talent and merit,” Abbott said in a news release.

Last November, a company called Aerospace Solutions filed a lawsuit against Abbott and the Texas Comptroller’s office. The non-HUB company alleged in its suit that because it is not eligible for the program, “it is at a significant disadvantage when bidding on state contracts.”

The company further alleges in the suit that the HUB program violates the Equal Protection Clause’s demand not to discriminate based on race.

West disagrees and argues HUB is a good-faith program. Eric McDaniel, a professor in the Government Department at the University of Texas at Austin, said he views the recent changes to the website as “part of a larger movement on the part of the executive branch to curb what they perceive as DEI projects.”

West and McDaniel both stress that the HUB program does not guarantee a contract award for a minority business, but it does guarantee consideration for a contract.

“Something like this is basically trying to make people aware of other businesses that are around that they could frequent,” McDaniel said.

Agencies do have to report if they are meeting the statewide HUB goals when they submit their budget request every two years. In its most recent budget request, the Texas Water Development Board (TWDB) reported 12% of its expenditures in Fiscal Year 2023 were spent on HUB contracts. The agency failed to meet the statewide goal in three of the four HUB categories it pulls from.

In its reasoning of why it fell 15.1% short of its professional services goal, the agency wrote “it encourages HUB participation, but is required by statute to award the multitude of engineering, accounting, and other professional services contracts based upon qualifications and expertise, and improved upon, but did not meet the target goal.”

Harrison argues that number should be at 0%.

What happens next?

West said his office is working on finding a copy of the latest lawsuit against the Texas Comptroller. He did add that the Office of the Texas Attorney General, which usually would defend the state in this case, is not a part of the case. Instead, the Comptroller has hired outside counsel to litigate.

West added he has talked with interim Comptroller Kelly Hancock about the recent developments, and said he is curious to see how the Comptroller will respond if the judge dismisses the case.