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Texas Judge Hits Pause on HUB Program Changes, Reinstating Women and Minority-Owned Businesses

Source: Politics – Houston Public Media5 min read

Key Takeaways

  • A temporary injunction reinstated women and minority-owned businesses into Texas's HUB program.
  • Plaintiffs argue the acting Comptroller overstepped his statutory authority by unilaterally changing a program created by the Legislature.
  • The lawsuit asserts businesses were denied state contracts without due process, potentially violating the Texas Constitution.
  • The case presents a direct challenge to the principle of separation of powers within Texas government.
Hey, pull up a chair. There’s a big legal skirmish brewing in Texas that really makes you think about who calls the shots when it comes to state programs. Recently, an Austin judge stepped in and put a temporary stop to the state’s decision to remove women and minority-owned businesses from a crucial state contract program. It's a significant win for these businesses, at least for now, but it's really just the opening round in a much larger fight over power in Texas. You might recall the Historically Underutilized Business, or HUB, program. It was created through a bipartisan effort back in the 1990s. The core idea was pretty straightforward: give businesses owned by women and minorities a better shot at securing state contracts. It wasn't about quotas, but setting goals for state agencies to strive for. The aim was to ensure a more even playing field for groups that have traditionally faced barriers. For years, the program helped funnel billions of dollars in state contracts to these businesses. We're talking more than $4 billion in 2024 alone, according to the Comptroller's Office. That's real money, supporting real businesses and local economies across Texas. But then things took a sharp turn. Last year, acting State Comptroller Kelly Hancock started to push back. He announced in October that his office would stop issuing new or renewed HUB certifications, citing a review. Then, in December, he used what he called "emergency powers" to drastically restructure the program. Suddenly, women and minority businesses were out. The program, which used to include over 15,000 participants, shrank to under 500, focusing solely on service-disabled veteran business owners. Hancock defended his actions, saying contracts should be earned based on performance and value, "not race or sex quotas." He pointed to the 2023 U.S. Supreme Court ruling that limited affirmative action in college admissions and Governor Greg Abbott's 2025 executive order banning DEI policies in Texas agencies. He essentially argued that the playing field should be entirely race and gender-neutral from the government’s perspective. But for those affected, this wasn't about philosophical debates; it was about their livelihoods. Many businesses had built their entire strategy around their HUB certification. When it was stripped away, they quickly saw contracts disappear. That's where the legal challenge began. Four business owners and a trade association, including Houston-based companies like Ipsum General Contractors and Houston Construction Services, decided to sue the state and Comptroller Hancock in March. Their main argument? The Comptroller went too far. Way too far. Think about the core of our government structure: the separation of powers. The Legislature, your elected representatives, passed a law to create the HUB program. State Senator Royce West, who helped write that 1999 bill, was pretty clear: the Legislature voted, and they didn't want to kill the program. He argues that the Comptroller doesn't get to just override that legislative decision because he disagrees with it. That's a fundamental constitutional principle that the plaintiffs are fighting to uphold. So, an Austin district judge, Amy Meachum, heard the arguments. And on Monday, she issued a temporary injunction. This isn't the final word on the whole lawsuit, but it's a huge step. It basically says: "Hold on. Let’s put things back how they were while we figure this out." The Comptroller's emergency rules are now blocked, and those women and minority-owned businesses get their HUB certifications back, at least for now. This means they can once again compete for those state contracts. For businesses like Ruben Mercado Jr.'s Ipsum General Contractors, this means potential relief. He saw a $1 million bid get pulled after Hancock's changes. Wendell Stamley, president of the National Association of Minority Contractors, said his members watched government contracts get canceled and expected work unexpectedly reopened to competitive bidding. The plaintiffs’ lead counsel, Alphonso David, really drove home the legal point. He stressed that the executive branch can't just rewrite laws passed by the state legislature. He also emphasized that you can't deny citizens their legal rights – like those certifications or the opportunity to compete for contracts – without proper due process, legislative approval, or a court order. They believe Hancock's actions were simply "baseless and unlawful." This temporary injunction sets the stage for the full legal battle. Judge Meachum has scheduled a trial date for November 9th. The businesses want the court to restore the HUB program to its original form. They're making strong arguments that Hancock lacked the statutory authority to make such sweeping changes, that his actions denied them state contracts without due process, and that he violated the Texas Constitution. While the Comptroller's office hasn't commented directly on the injunction yet, their earlier statements indicate they’ll continue to defend the changes, framing them as promoting fairness and equal treatment under the Constitution. For you, this case is about more than just state contracts. It's a real-world test of our constitutional system here in Texas. It's asking whether an agency head can unilaterally undo what the Legislature has established, and what protections businesses have when the government suddenly changes the rules of engagement. We'll be watching closely to see how this fundamental legal challenge unfolds in our state.