Hundreds of Rio Grande Valley companies lost state certification as Hispanic-owned. Here’s why

For 26 years, Texas operated a system that encouraged state agencies and universities to purchase goods and services from minority-, women-, and veteran-owned businesses, until sweeping changes took effect earlier this month. 

As a result, the state stopped certifying new applications in October, and then deactivated hundreds of companies statewide — including 234 businesses across the Rio Grande Valley. 

That included engineering firms, construction companies, car dealerships, security businesses, and landscapers, among others, who secured more than $105 million in state contracts between 2016 and 2025, records analyzed by the Rio Grande Valley Business Journal show. 

For example, Mission-based B2Z Engineering, LLC was awarded a $4 million contract by the Texas Department of Transportation in 2023 for geotechnical engineering services in the Austin and Dallas districts. Aisha Gonzalez serves as president of B2Z Engineering, which was founded in 2009. The company did not respond to a request for comment for this news story. 

Fight to restore the program

But the Mexican American Legislative Caucus — which includes Rio Grande Valley lawmakers such as State Reps Terry Canales, Bobby Guerra, and Sergio Muñoz Jr. — signed a letter against the move. 

“We respectfully urge your office to reverse course immediately. The legislature alone holds the power to create or modify state law, and the HUB program remains a statutory requirement unless the legislature acts,” the letter said. “This action also creates significant uncertainty for state agencies and hundreds of Texas businesses that rely on the HUB program for predictable procurement practices and long-term planning.” 

The Texas Association of Mexican American Chambers of Commerce is also pushing back against the move. 

The statewide chamber asserts that the program has addressed disparities in the state contract market through a competitive process and that 11% of the state budget went to HUB-certified businesses. 

“We are working closely with business owners, lawmakers, and our membership to advocate for the full reinstatement of this critical program,” said Pauline Anton, president and CEO of the Texas Association of Mexican American Chambers of Commerce. “While equal treatment under the law is vital, this suspension raises legal and constitutional concerns. Suspending HUB certifications violates legislative mandate and undermines proven, data-driven efforts to create economic opportunity for all Texans.” 

The Historically Underutilized Business program was created by Texas lawmakers in 1999 under then Republican Gov. George W. Bush. Often, that meant during the contracting process, minority-, women-, and veteran-owned companies may be awarded extra points in the initial evaluation, or contractors may be required to subcontract with HUB companies.

Challenged in court 

But a lawsuit filed in November 2024 challenged the program’s constitutionality. 

In January 2025, Gov. Greg Abbott signed an executive order prohibiting the state government from engaging in any diversity, equity, and inclusion efforts. 

State leaders blamed the lawsuit for ultimately halting the effort, citing a costly court fight.

“When I entered office, we were in the middle of litigation. Our job is to make sure that we utilize taxpayer dollars appropriately, and we began looking towards a settlement in a way that would enhance our veterans,” Kelly Hancock, acting Texas Comptroller, told the Rio Grande Valley Business Journal. “To make sure that we met our constitutional requirements, we didn’t discriminate against anyone at all. And that we’re not spending taxpayer dollars in litigation that we can avoid by sitting down and resolving those issues.” 

A new vision for vets only 

Instead, the program has been restructured as Veteran Heroes United in Business, which encourages state contracting with small businesses owned by military veterans with a service-related disability. 

Records show that there are 21 businesses with state certification across the Valley, owned by service-disabled veterans. 

The decision will also affect contracting for cities statewide, according to the Texas Municipal League. When cities are considering spending more than $3,000 on a new contract, they are still required to contact two historically underutilized businesses to bid on the deal, but the pool of potential bidders has narrowed to only certified veteran-owned companies. 

“All businesses previously HUB certified based on race, ethnicity, or sex have been revoked unless they proved ownership and control by service disabled veterans,” according to the Texas Comptroller’s office. 

Companies are still encouraged to compete for state contracts, but no extra points will be allocated for HUB status beyond those for veterans.