Texas HUB rollback hits 15,000 minority businesses, sparks lawsuit

State certification changes removed thousands of minority-owned businesses from eligibility, prompting legal challenge.

Apr 30, 2026 - 06:11

Texas HUB rollback hits 15,000 minority businesses, sparks lawsuit

Cortena Williams did everything right. She followed the rules, secured certification through a state program designed to create opportunity, and built her business in one of the most competitive industries in the country. For Williams, a Black woman in construction, certification through Texas’ Historically Underutilized Business program wasn’t a handout.

It was a foothold.

Cortena Williams

Credit: Cortena Williams

“It meant I finally had a fair shot,” Williams said. “Not a guarantee — just a chance to compete.”

That chance, she said, vanished overnight.

Williams is among more than 15,000 business owners across Texas who were notified that they were being stripped of their Historically Underutilized Business (HUB) certification — a designation created more than 35 years ago by the Texas Legislature to address systemic exclusion in state contracting. The move, carried out by the Texas Comptroller of Public Accounts, has triggered outrage, legal action, and renewed scrutiny over whether diversity-focused programs are being quietly dismantled.

A system designed to open doors

The HUB program was established to ensure that minority- and women-owned businesses had access to state contracts — a multibillion-dollar pipeline that has historically excluded them.

In 2024 alone, more than $4 billion in state contracts flowed through the program, helping businesses scale, hire employees, and build generational wealth.

“The program does not promise outcomes,” civil rights attorney Alphonso David said. “What it guarantees is opportunity — the ability to participate in a system that had long shut certain communities out.”

For entrepreneurs like Williams and Houston-area contractor Ruben Mercado Jr., that opportunity shaped entire business models. They hired workers, secured financing, and pursued contracts with the expectation that the system — though imperfect — would remain intact.

Then it didn’t.

‘The foundation disappeared’

According to notices sent by the state, businesses owned by Black, Hispanic, Asian, Native American, and women entrepreneurs were deemed ineligible under revised interpretations of the program. Service-disabled veteran-owned businesses, however, remained eligible.

“Businesses that had structured their growth around a program that existed for more than three decades suddenly found themselves locked out of the system entirely,” according to legal filings in the case.

Mercado said contracts tied to his certification were abruptly terminated. Williams said opportunities she had spent years positioning herself for simply evaporated.

“I had projects lined up, relationships built, momentum,” Williams said. “And then suddenly, none of it mattered. It felt like the rug was pulled out from under me.”

Lawsuit raises constitutional questions

In response, Williams, Mercado, and other business owners joined a lawsuit against the state — now known as “The HUB Case” — arguing that the Comptroller’s actions were not only harmful, but unlawful.

Attorneys contend the agency overstepped its authority by effectively rewriting a law passed by the Legislature.

“The Comptroller does not have the legal authority to strike out certain words in a statute or attempt to rewrite a law to align with personal or ideological beliefs,” David said. “That violates the fundamental separation of powers.”

Legal experts say the case could have far-reaching implications, not just for Texas but for how diversity-focused programs are treated nationwide.

New York civil rights attorney Alphonso David filed a lawsuit, saying the comptroller does not have the legal authority to take such action.

“And so we are suing him to make sure that we void these regulations and compel him to honor the statute that was passed by the legislature and signed by the governor,” David said.

State Sen. Royce West (D-Dallas) co-authored the bill in the 90s, when George W. Bush was governor.

“It was born out of the inability of minority and women-owned businesses to be able to even get an opportunity to compete for some of the billions of dollars in state contracts awarded each year,” West said.

‘Not accidental — intentional.’

Advocates and minority business organizations say the scale and specificity of the impact raise serious concerns.

“You cannot remove race, ethnicity, and gender from a program designed to address discrimination and call that neutral,” said one MWBE coalition leader who is tracking the fallout. “This was not accidental. The outcome speaks for itself.”

The removal disproportionately affected businesses owned by women and people of color — the very groups the program was designed to support.

The human toll

For Williams, the policy shift isn’t abstract — it’s personal.

“This isn’t just paperwork,” she said. “This is people’s livelihoods. This is payroll. This is families.”

She said the emotional toll has been just as significant as the financial one.

“You spend years building something, proving yourself in spaces that weren’t built for you,” Williams said. “And then to have that taken away without warning — it makes you question everything.”

These are business owners who built companies, hired employees, and competed fairly under a lawful framework.

Ruben Mercado, Jr: Ipsum General Contractors (Houston) – A Hispanic-owned construction firm whose long-term public contracting strategy was built around lawful HUB participation.

Tyrone Dixon: Mpulse Healthcare & Technology (Sugarland) – A Black-owned medical technology distributor actively pursuing state contracts when certification was revoked.

Cortena Williams: Williams Professional Water Restoration (Burleson) – A Black woman-owned restoration services company negotiating contracts when certification was stripped.

Ray Gutierrez: Houston Construction Services (Houston) – A Hispanic-owned contractor whose business development pipeline was directly disrupted.

Wendell Stemley, President of NAMC – Greater Houston Chapter – Representing more than 150 minority- and women-owned contractors statewide.

A broader national moment

What’s happening in Texas reflects a larger national trend, as diversity, equity, and inclusion initiatives face mounting legal and political challenges.

“If these actions are allowed to stand, they will send a signal far beyond one state,” David said. “Programs designed to expand economic opportunity could be dismantled administratively rather than through legislative debate.”

That, he added, could reshape how billions of dollars in public contracting are distributed — and who benefits.

What comes next

The lawsuit is ongoing, and affected business owners are exploring appeals, legal remedies, and advocacy efforts.

For Williams, the fight is about more than restoring a certification.

“It’s about fairness,” she said. “It’s about whether people like me are allowed to compete — or whether the rules can change the moment we start to win.”