BUSINESS OWNERS AND TRADE ASSOCIATION FILE LANDMARK LAWSUIT CHALLENGING UNLAWFUL AND UNILATERAL ACTIONS BY TEXAS COMPTROLLER & STATE AGENCIES TO DISMANTLE THE HUB PROGRAM
BUSINESS OWNERS AND TRADE ASSOCIATION FILE LANDMARK LAWSUIT CHALLENGING UNLAWFUL AND UNILATERAL ACTIONS BY TEXAS COMPTROLLER & STATE AGENCIES TO DISMANTLE THE HISTORICALLY UNDERUTILIZED BUSINESS (HUB) PROGRAM
Lawsuit seeks immediate court order to block emergency rules and restore legislatively enacted contracting program
AUSTIN, Texas (March 2, 2026) — Today, four minority- and women-owned businesses and a statewide trade association filed a landmark lawsuit in Travis County state court. The case challenges actions by the Texas Comptroller and various state agencies to strip thousands of small businesses of the legal rights and protections they have held for more than 35 years to participate in economic opportunities provided by the State of Texas that exceed billions of dollars. Acting Comptroller Kelly Hancock issued regulations that unilaterally dismantled the state's Historically Underutilized Business (HUB) program, removing all Black, Hispanic, and women-owned businesses from the program, and reducing the number of certified businesses from more than 15,000 to approximately 500.
“In this country, the legislature passes the laws, not the Comptroller, and Texas is no different,” said Alphonso David, civil rights attorney, President & CEO of the Global Black Economic Forum, and co-lead counsel for the plaintiffs. “The HUB case highlights a fundamental American principle — members of the executive branch cannot rewrite laws passed by the state legislature. They cannot deny citizens of their legal rights without a court order, legislative approval, or due process. Acting Comptroller Hancock took a program created by statute and rewrote it without any legal authority. His actions are baseless and unlawful and must be reversed.”
“These business owners showcase the work ethic and business growth that Texas has fostered for more than three decades. They followed the rules issued under the state’s system and successfully competed for state contracts. With no authority, the Comptroller illegally tried to eradicate the program established by the Legislature. Our job is to make sure that his invalid action does not stand," said Adam Schuman of Petrillo, Klein + Boxer and co-lead counsel for the plaintiffs.
EMERGENCY RULES, MASS DECERTIFICATIONS
In the early 1990s, the State of Texas legislature created the HUB program to provide greater opportunities for Black, Hispanic, Asian, Native American and women contractors, who were being excluded and locked out of the contracting process. The law does not guarantee that these companies will win a contract, but simply provides them with opportunities to participate and has been operating as legally intended for more than 35 years.
On December 2, 2025, acting Comptroller Hancock issued his emergency regulation singularly dismantling the program created by law and creating a new program called the “Veteran Heroes United in Business” (VetHUB). Per his new regulations, all Black, Hispanic, Asian and Native American and women-owned HUBs were decertified less than 60 days ago on January 6, 2026 and eligibility became limited to businesses owned and operated by veterans with a service-connected disability of at least 20 percent.
The acting Comptroller's actions are even more striking given that the legislature only a few months before rejected a proposal to change the program. In the 2025 legislative session, the Texas Legislature rejected House Bill 167, which would have done precisely what Hancock subsequently tried to do by his improper emergency rule — restricting the HUB program to businesses owned by disabled veterans. The Legislature said no. But Hancock went ahead anyway, attempting to act as the legislature, which is unlawful.
BILLIONS IN PUBLIC CONTRACTING AT STAKE
The removal of people of color and women from the state certification process has real implications for businesses, threatening to affect how and whether they can stay in business. In the 2024 fiscal year, more than $4 billion in Texas state contracts went to HUB businesses. That pipeline is now effectively closed to the minority- and women- owned business who lost their certification in January.
The three state agencies also named in the lawsuit—the Texas Department of Transportation, Health and Human Services, and the Texas Facilities Commission—spent more than $1.6 billion on HUB contracts last year alone.
Under the Comptroller's new VetHUB program, all that spending will flow to only roughly 500 businesses.
TEXAS BUSINESS OWNERS STANDING UP
The plaintiffs in this lawsuit include Houston-based general contractors Ipsum General Contractors, LLC (founded by Hispanic American Ruben Mercado Jr.) and Houston Construction Services (owned by Hispanic American Ray Gutierrez), Sugarland-based medical technology distributor Mpulse Healthcare & Technology, LLC (owned by Black American Tyrone Dixon), Burleson-based restoration firm Williams Professional Water Restoration Service LLC (owned by Black American woman Cortena Williams), and NAMC, Inc. – Greater Houston Chapter, a Houston-based nonprofit trade association representing 159 minority- and women-owned contractors.
“I returned to my home state of Texas in 2024 to grow my business and be a resource for my community. I am one of only a few Black-woman owned companies in the male-dominated construction industry. I did everything I was supposed to do. I built my business, I earned my certification, and I was immediately ready to work. This program was my opportunity — and the Comptroller took it away overnight,” said Cortena Williams, CEO of Burleson-based restoration firm Williams Professional Water Restoration Service LLC.
“For years, my company has provided civil construction services to Texans. I built my entire business around being HUB certified and developed relationships with state agencies. The Comptroller decided that didn't count anymore and the state agencies have followed suit. Without warning, all active contracts tied to my company’s HUB status were recently terminated. This is completely devastating to my business,” explained Ruben Mercado Jr, owner of Houston-based general contractors Ipsum General Contractors, LLC.
“My company has been HUB-certified for well over fifteen years and all contracts are tied to its HUB certification. If it were not for the HUB program, I know my business would not have the clientele it has today. The Comptroller’s actions threaten to set the progress of minority-owned businesses back decades,” said Tyrone Dixon with Mpulse Healthcare & Technology in Sugarland, Texas.
“I have been an entrepreneur for nearly my entire life. I have had to work twice as hard for half as much. Having a HUB certificate allowed my company access to lucrative opportunities. Now those opportunities are out of reach,” said Ray Gutierrez, CEO of Houston Construction Services.
“Our members are watching contracts get canceled, renewals go unissued, and work they counted on suddenly thrown back into open bidding — work they won fairly under a program that has existed for 35 years. This isn't an administrative inconvenience. For many of our Texas member businesses, this is an existential threat,” explained Wendell R. Stemley, the National President of the National Association of Minority Contractors.
MEMBERS OF THE TEXAS LEGISLATURE SUPPORT THE LAWSUIT
The lawsuit has drawn support from members of the Texas Legislature, who note that acting Comptroller Hancock's emergency regulations directly contradict the will of the body that created the HUB program by statute. State Senators Royce West, Borris Miles, Carol Alvarado, and José Menéndez, along with State Representative Barbara Gervin-Hawkins, are expected to appear at Monday's press conference in Austin.
“The Legislature passed this bill 35 years ago. The Comptroller doesn't get to override that law because he disagrees with it — that's not his role under the Texas Constitution, and these business owners deserve to have that principle upheld in court,” said State Senator Royce West.
A LANDMARK LEGAL CHALLENGE
“This is the first major lawsuit affirmatively challenging state government action taken to dismantle a legislatively enacted diversity-related contracting program,” David said. “A state official cannot effectively undo a law passed by the Legislature. The people elected members of the legislature to pass laws, not the Comptroller.”
The lawsuit alleges that the Comptroller: exceeded his statutory authority, failed to comply with procedural requirements governing emergency rulemaking, deprived previously certified businesses of a state-created property interest without due process, and violated provisions of the Texas Constitution, including separation of powers protections.
The business owners are seeking an immediate temporary injunction to halt enforcement of the Comptroller’s emergency regulations, as well as reinstating their HUB certification during the litigation. Ultimately, they hope to obtain a permanent injunction and to have the HUB program reinstated as enacted by the Texas Legislature.
The case was filed in Travis County state court, which handles challenges to state administrative actions. Plaintiffs are being represented by Alphonso David of the Global Black Economic Forum; Adam Schuman, David Hoffman, and Shanice Hinckson of Petrillo Klein + Boxer LLP; and Chad W. Dunn of Brazil & Dunn LLP.
The Global Black Economic Forum, Freedom Economy and the American Pride Rises are supporting the litigation alongside a coalition of business and civil rights organizations.
A press conference will be held in the Senate Press Room at the Texas State Capitol in Austin on Monday, March 2, 2026, at 1:00 PM CT. A livestream link will be available.
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