Texas catches federal suit for dismantling diversity-related business contract program

AUSTIN, Texas - A first-of-its-kind lawsuit for the United States is unfolding in Texas, challenging state government action to dismantle a diversity-related contracting program. 

The lawsuit was launched against acting state Comptroller Kelly Hancock and at least three state agencies after the HUB program was changed to cut out women and minorities in favor of veterans.

Texas reshapes HUB programs

The backstory:

Late last year, as DEI policies began being pulled down nationwide, Hancock used an emergency rule to effectively change a law passed by state legislators.

It opened the door for minority and women-owned businesses (MWBE) to be able to compete where they had been excluded from some of the billions of dollars awarded each year in state contracts.

MBWEs have had a chance to win state contracts under a 35-year-old law that created the historically underutilized business program.

Hancock, by emergency rule in December, decertified some 15,000 MBWE's out of that program. 

New lawsuit against Texas

The latest:

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

What they're saying:

"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 told FOX 4 in an interview.

Woman-owned business affected

Cortena Williams, owner of Williams Waer Restoration Service and Construction, told FOX 4 that she built her business model around the Texas HUB certification. She moved to the state two years ago, opening her business in Burleson.

The good faith bill makes no guarantees about getting a state contract, but Williams says she was in deep negotiations with two different entities on contracts when Hancock took action. 

Hancock was a state senator and desk mate of West in the chamber before being appointed acting comptroller by Governor Greg Abbott.

"Before he dismantled it, I called him, and to this date he has refused to call back," West said. "So you know, this was done all for political purposes, an attempt to get him elected, and what happened? He came in third place."

Hancock was running for the comptroller seat in the March 3 primary. The Republican nomination went to Don Huffines, another former state senator. 

What we don't know:

FOX Local made multiple calls seeking an interview with Hancock. None were returned.

In a statement announcing his emergency rule, the acting comptroller said:

"Texas has ended DEI-based preferences in state contracting and replaced them with a program that is fair, focused and constitutional. Most importantly, we made service-disabled veterans the focus of this program."

Eliminating from HUB all others — Black, Hispanic, Asian, Native American and women-owned businesses.

"The comptroller can not look at a statute that has been passed by the legislature and signed by the governor and start crossing out certain words or certain provisions and then decide to create a new program that he believes should be enforced," David, the New York lawyer, said. 

The state has not responded to the lawsuit, which was filed Monday.