In a 12-3 vote, the Houston City Council approved an amendment to the city’s ordinance that will transform the minority and women-owned business enterprise (M/WBE) program as it prepares to go to court.
The ordinance expands the Small Business Enterprise (SBE) program across all contracting categories, includes a veteran-owned business enterprise program and adopts new goals for the M/WSBE program based on the 2024 disparity study’s findings. It also adds wrap-around programs for micro and small businesses and allows the Office of Business Opportunity (OBO) more time to consider feedback on goal credit participation for small businesses.
The city is currently embroiled in a lawsuit, Landscape Consultants of Texas, et al. Inc. v. Harris County, filed by white contractors Jerry and Theresa Thompson. The lawsuit accuses the city of hiring businesses based on race and seeks to end the M/WBE program.
With the ordinance now passed, the City Council has adopted the findings of the 2024 disparity study and will submit its updated data as part of its legal defense in court, which City Attorney Arturo Michel said will help the city’s case.
The stakes remain high. If the city loses the lawsuit, it will eliminate its M/WBE program completely and Houston may lose one of its key equity tools, leaving many historically marginalized businesses behind.
“This is the most inclusive M/WBE program that we have ever had in the city of Houston,” said District K Councilmember and Mayor Pro Tem Martha Castex-Tatum. “We heard from our stakeholders and included everybody who wants to be included. We do need to accept the data and make sure we are providing opportunities for people who want to participate in city contracting.”
Leading up to the vote
Following weeks of deliberations, community advocacy and legal pressures tied to the M/WBE program’s future, the vote solidified expanding contracting policies.
After two delays, one due to community members’ pushback about the study’s data accuracy and another to receive more community feedback, the City Council finally made a decision.
The new disparity study found that Asian Americans in professional services, Hispanics in construction and white women in goods met contract goals and proposed moving them to a race-neutral small business program.
The study also indicated Black, Native American and women-owned businesses remain significantly underutilized in city contracting, despite their market availability. For example, Black-owned businesses received 5.55% of city contract dollars across all procurement categories, 5.28% of city spending in construction and 7.57% in professional services, well below their market availability.
What councilmembers and leaders said
Community leaders, particularly from Houston’s Black community, rallied behind the study and the need to preserve the M/WBE program.
“It [the program] was drafted because of historical systemic discrimination disparity,” said NAACP Houston President Rev. James Dixon. “We need to pass this ordinance, we need to move forward, but we need to move forward talking about what’s possible as opposed to what’s simply the problem has been.”
District I council member Joaquin Martinez called for another disparity study, one that does not take as long as 20 years to put together.
“That way, we ensure that folks moving into an SBE program aren’t pushed into disparity as well,” Martinez said.
Pushing for a gender-based disparity study, at-large position 4 councilmember Letitia Plummer highlighted the need to accommodate “blind spots,” especially for groups like Black and Hispanic women, business owners with disabilities, veterans and local firms.
Referring to an initial backlash against the study’s findings, during which more than 50 people expressed concerns about the study’s accuracy and a 2% response rate to the study’s survey, District H councilmember Mario Castillo said the amendment will allow the council to conduct more community engagement.
“This allows us to continue to engage those businesses and those stakeholders that showed up and said they want to be heard and they want to participate and then come back with a stronger set of recommendations that make the program better overall,” Castillo said.
District J councilmember Edward Pollard, on the other hand, stated that future disparity studies must come with accepting the findings of those studies and ensuring their credibility.
What’s next?
The OBO will continue public engagement and develop additional recommendations around goal credit participation and “micro programs” for small businesses.
“There is no perfect pathway to where we’re going, but we can’t get to where we’re going unless we all push the car forward together,” Rev. Dixon said.
