North Carolina’s Office for Historically Underutilized Businesses (HUB Office) was eliminated as part of the 2026 Appropriations Act, Session Law 2026-41, signed into law on July 7, 2026. The legislation not only abolished the HUB Office but also repealed the principal statutes that established North Carolina’s HUB contracting framework. As a result, the state’s HUB certification, HUB participation goals, statutory good-faith-effort requirements, and reporting requirements associated with the HUB program have ended effective July 7, 2026.
The change represents a significant shift in how North Carolina approaches participation by historically underutilized and minority-owned businesses in public construction contracting. For nearly three decades, the HUB program provided a statewide structure for certifying businesses, connecting them with public contracting opportunities, educating businesses about the procurement process, and collecting data on participation.
The impact is significant for both HUB businesses and general contractors. HUB businesses lose a state-recognized certification and the infrastructure that helped them identify, compete for, and participate in public contracts. General contractors, meanwhile, are no longer subject to the former statutory HUB participation goals and good-faith-effort requirements for projects covered by the repealed statutes. However, other small-business programs and certain federal requirements remain in place, and some statutory provisions concerning small businesses continue to apply.
What Happened to the HUB Office?
The HUB Office was eliminated immediately when the 2026 Appropriations Act became law on July 7, 2026. Section 22.5(a) abolished the Office for Historically Underutilized Businesses and advisory committees established by the Secretary of the Department of Administration. The HUB Office is therefore no longer operational, although its website remained active for a period after the legislation took effect.
At the same time, the legislation repealed the core HUB statutes, including G.S. 143-128.2, 143-128.3 and 143-128.4. Those statutes had provided the legal foundation for:
- Setting HUB/minority participation goals on applicable public building projects;
- Requiring local governments to make good-faith efforts to achieve those goals;
- Requiring prime contractors and bidders to document good-faith efforts to recruit minority businesses; and
- Reporting participation information to the HUB Office.
The elimination affected approximately 10 state employees who worked in the office.
One important exception is the North Carolina Small Business Enterprise (NCSBE) Program, which was previously administered by the HUB Office. The 2026 legislation transferred responsibility for that program to the Department of Administration’s Division of Purchase & Contract.
History of the HUB Program
The HUB program did not emerge overnight. It developed over approximately 37 years through legislation and executive orders.
The General Assembly first enacted legislation addressing minority participation in public building construction in 1989. In 1999, Governor Jim Hunt issued Executive Order 150, formally creating the Office for Historically Underutilized Businesses within the Department of Administration.
The HUB Office assumed responsibility for the state’s existing minority-business program, which had previously been administered by the Division of Purchase and Contract. The Executive Order also established the HUB Advisory Council to provide advice and support to the Governor, Department of Administration and HUB Office.
In 2001, the General Assembly formally codified the HUB Office. That same year, the minority participation requirements were recodified as G.S. 143-128.2. The law established requirements familiar to public owners and contractors today, including participation goals on building projects of $300,000 or more, good-faith efforts, and documentation of those efforts by bidders. Local governments were also required to report HUB participation data to the HUB Office.
The program was expanded again in 2005, when the General Assembly directed the Secretary of Administration to develop a statewide uniform certification program for HUB businesses.
This was particularly important because it gave businesses and public entities a statewide system rather than leaving certification and participation requirements to individual agencies or local governments.
Governor Pat McCrory established an advisory council in 2013. In 2017, Governor Roy Cooper created the Governor’s Advisory Council on Historically Underutilized Businesses.
In 2020, Governor Cooper directed the HUB Office to establish a Small Business Enterprise Program. The NCSBE Program officially launched in 2021.
Unlike the HUB program, NCSBE is race- and gender-neutral and is designed to provide contracting opportunities for small businesses generally.
To qualify, a business must be headquartered in North Carolina, be organized for profit, have 100 or fewer employees, and have annual net income of no more than $1.5 million after deducting the cost of goods sold.
The News & Observer reported that more than 6,000 businesses were HUB-certified as of February 2026. In fiscal year 2025, state agencies spent nearly $13 billion on goods, services, construction and design services, including just over $928 million—or 7.22%—with HUB-certified businesses.
The elimination therefore affects a substantial network of businesses that had participated in the state's public contracting system.
What Did the HUB Office Do for Businesses?
The HUB Office served functions that went beyond simply maintaining a certification list.
The office:
- Certified eligible businesses as HUB vendors;
- Helped businesses understand and navigate the public procurement process;
- Provided education and assistance to business owners;
- Helped connect businesses with public-sector contracting opportunities;
- Maintained information and data concerning HUB businesses;
- Tracked state spending with HUB-certified businesses; and
- Provided an institutional point of contact within state government for businesses seeking to compete for public contracts.
For a small contractor, particularly one without a large estimating, business-development or government-relations staff, knowing where to find opportunities, how to become certified, how to participate in the bidding process and how to document participation can be critical to successfully entering the public market.
What Does this Change Mean for HUB Businesses?
1. Businesses can no longer rely on the state HUB certification as a recognized contracting designation.
2. The state HUB support structure that provided education, assistance, certification and information about public contracting is gone.
3. HUB participation goals are gone:
Because G.S. 143-128.2 was repealed, local governments no longer have the statutory authority to establish the former HUB/minority participation goals under that statute.
The accompanying requirements for good-faith efforts and bidder documentation were also eliminated.
4. Competition for public contracts may change as one of the mechanisms designed to increase participation by these businesses has disappeared.
5. Small businesses still have an alternative pathway:
The NCSBE Program remains active and is now administered by the Division of Purchase & Contract.
Because NCSBE is race- and gender-neutral, eligibility is based on the size and characteristics of the business rather than ownership by a historically underrepresented group.
This means some former HUB businesses may still qualify for and benefit from the NCSBE Program, but NCSBE is not a replacement for the HUB program in every respect.
What Does this Mean for General Contractors?
The change is also significant for general contractors bidding public construction work.
1. The former HUB goals no longer apply:
For projects governed by the repealed HUB statutes, public owners can no longer establish the former HUB participation goals.
Similarly, bidders can no longer be required under those statutes to document good-faith efforts to recruit minority businesses, removing an important compliance obligation that general contractors previously had to manage during bidding.
2. HUB documentation requirements have changed:
The former process of identifying HUB subcontractors and documenting good-faith efforts under G.S. 143-128.2 is no longer required because the statutory authority has been repealed.
For procurements that were still in progress when the law took effect, local governments were instructed to remove HUB goals and requirements to list minority businesses or document good-faith efforts.
3. Existing contracts require careful handling:
The change does not necessarily mean that every existing commitment involving a HUB subcontractor disappears. For projects already underway, no action is necessary simply because the HUB statutes were repealed. Existing subcontractor relationships remain subject to other applicable state-law requirements concerning substitution of subcontractors.
For contracts that had been awarded but were not yet fully executed, local governments may need to amend the contract to remove references to HUB goals and statutory compliance.
4. General contractors should not assume all small-business requirements disappeared.
This is an important distinction.
The elimination of the HUB program does not eliminate every requirement or opportunity involving small businesses.
For example, the CMAR statute continues to require public owners to make a good-faith effort to recruit and select small business entities when selecting a construction manager at risk. The source notes, however, that “good faith effort” is not defined in that statute or other statutes.
Additionally, federal requirements remain relevant when projects are financed with federal grants or loans. The 2026 legislation specifically preserves compliance with federally imposed minority-business participation requirements in those circumstances.
What this Means Going Forward
The central change is a shift from a statewide HUB-specific participation system to a more decentralized system emphasizing race- and gender-neutral small-business opportunities.
For HUB businesses, the immediate priorities are likely to include:
- Determining whether the business qualifies for NCSBE certification;
- Understanding how public agencies will identify and engage small businesses;
- Building direct relationships with public owners and prime contractors;
- Monitoring state and local procurement opportunities;
- Understanding any remaining federal participation requirements;
- Developing business-development strategies that do not depend on HUB certification; and
- Staying informed about future legislative or administrative changes.
For general contractors, the immediate priorities include:
- Understanding which HUB requirements have been repealed;
- Reviewing current and pending public contracts for outdated HUB provisions;
- Understanding the requirements that continue to apply to subcontractor substitutions;
- Determining whether NCSBE, CMAR or other small-business requirements apply to a project;
- Continuing to identify qualified small and historically underutilized subcontractors as a business-development practice, even where statutory HUB goals no longer apply; and
- Carefully distinguishing between state HUB requirements and federal participation requirements.
Bottom Line
The elimination of the HUB Office is more than the closure of a state agency. It represents the end of a 27-year statewide infrastructure for identifying, certifying, supporting and tracking historically underutilized businesses in public contracting.
For HUB businesses, this means losing a dedicated state advocate, certification system and structured pathway into public contracting. For general contractors, it means the elimination of many of the statutory HUB compliance requirements that historically governed bidding and subcontractor recruitment.
At the same time, the state has retained the North Carolina Small Business Enterprise Program, which is now administered by the Division of Purchase & Contract, and certain small-business and federal contracting requirements remain in effect.
The practical question going forward is therefore not simply whether HUB participation has ended. It is what infrastructure will replace the HUB Office's role in helping small and historically underutilized businesses compete for public work—and how will public owners and general contractors continue to create meaningful opportunities for those businesses in the absence of the former statutory framework?
Sources:
The News & Observer, August 20, 2026 edition; UNC School of Government, Coates’ Canons: NC Local Government Law blog.