Four business owners and a trade association filed suit in Travis County district court challenging emergency rules issued by Kelly Hancock that reshaped Texas’ Historically Underutilized Business program.
The plaintiffs argue Hancock exceeded his statutory authority when he restructured the HUB program in December, stripping thousands of minority- and women-owned firms of certification and limiting eligibility to service-disabled veteran businesses.
They seek a temporary injunction blocking the rules and reinstatement into the program while litigation proceeds.
Lead counsel Alphonso David, president and CEO of the Global Black Economic Forum, said the executive branch cannot rewrite laws enacted by the Legislature.
The complaint contends Hancock denied businesses due process and violated the Texas Constitution by altering a statutory program without legislative approval.
Named plaintiffs include Houston-based Ipsum General Contractors and Houston Construction Services; Mpulse Healthcare & Technology of Sugar Land; Williams Professional Water Restoration Service of Burleson; and the greater Houston chapter of the National Association of Minority Contractors, which represents 155 minority- and women-owned contractors.
The lawsuit also names Marc Williams, Stephanie Muth and Will McKerall, whose agencies implemented the revised rules.
Hancock defended the overhaul, citing a 2023 U.S. Supreme Court decision ending affirmative action in college admissions and a 2025 executive order by Gov. Greg Abbott barring DEI policies in state agencies.
He said all qualified businesses remain eligible to compete through the Centralized Master Bidders List.
The HUB program, created in the 1990s through bipartisan legislation, set participation goals for minority- and women-owned businesses seeking state contracts. It did not mandate quotas. In 2024, HUB-certified firms received 3,634 contracts totaling more than $4 bn, according to the Comptroller’s Office.
Hancock’s December changes reduced program participation from more than 15,000 businesses to fewer than 500.
Some contractors say bids were withdrawn or returned to open competition after certifications were revoked.
State Sen. Royce West, who co-authored the 1999 legislation codifying the program, said the Legislature rejected efforts to eliminate HUB last year and retains authority over its structure.
According to Beinsure analysts, disputes over procurement eligibility frameworks often carry secondary impacts for insurers and surety providers underwriting contractor performance and bid bonds, particularly when certification status influences contract flow and revenue stability.
