Challenged by white contractors claiming discrimination along with Asian, Hispanic, and white women contractors fighting to stay in the program, Houston’s Minority/Women-owned (M/WBE) business enterprise program may soon be changing.
In a few weeks, the Houston City Council will decide whether to accept the recommendations of a 2024 disparity study. The findings revealed contractors, such as Asian Americans in professional service, Hispanics in construction and professional service and white women in goods, reached the target goals and could not be categorized as facing disparities anymore.
The Office of Business Opportunity (OBO), which certifies Minority Business Enterprises (MBE), Women Business Enterprises (WBE), Small Business Enterprises (SBE) and Persons with Disabilities Business Enterprises (PDBE) through the City of Houston’s local certification program, recommended businesses that no longer face disparities graduate to the race-neutral small-business enterprise program.
OBO director Cylenthia Hoyrd said that if the city does not follow the study’s findings, the M/WBE program will be jeopardized.
“I’d like to say without adopting the updated ordinance that supports the findings in the study, we do risk a 40-year setback,” said Hoyrd. “…we are at a kind of crossroads of having the study and going to litigation.”
Some business owners raised concerns about the study’s findings, citing a low response rate to the study survey at an Economic Development Committee meeting. While the city reached out to more than 30,000 businesses to participate in the survey, only 800 owners responded.
On another front, the city’s M/WBE program is dealing with the lawsuit Landscape Consultants of Texas, Inc. v. Harris County, Texas, et al. Jerry and Theresa Thompson, white contractors from Spring, alleged that the city hired businesses based on race and sought to end the program that has existed since 1984.
Houston City Attorney Arturo Michel indicated that the 2024 disparity study, instead of the 2006 disparity study that the city’s M/WBE program currently runs on, will help the city defend itself in the lawsuit.
Where do Black businesses stand?
The 2024 disparity study conducted by the city found that disparities existed among all racial and ethnic groups, particularly among Black-owned businesses, which faced disparity across all contract types and procurement categories. They also faced financial barriers, including higher rates of loan denials and paying higher interest rates compared to non-minority firms. Based on the findings from the study, Black American-owned businesses are underutilized in several areas, specifically:
- Black American firms accounted for only 5.55% of the total dollar amount spent in all procurement categories, which is below their availability in the market.
- In construction contracts, Black American firms received 5.28% of the total spending.
- In professional services, Black American firms received 7.57% of contracts, showing substantial underutilization.
“It [study] still shows Black business is at the bottom…deep disparity, professional services, construction. We’re not getting the bids,” Councilmember Tiffany Thomas told the Defender. “Black Houstonians led to create this program in the city. It started out with our Black Chamber saying that Black people need an opportunity to compete because, in the private sector, it was not happening…to see the results where we’re still at the bottom is very disheartening.”
What Houston City Councilmembers said
According to Councilmember Mario Castillo, the delay in the ordinance vote will allow stakeholders more time to participate in feedback sessions.
“Hearing from all the stakeholders at the Economic Development Committee hearing showed that while the data that was collected provided a snapshot, a lot of stakeholders for whatever reason, weren’t a part of that process and had ideas to share that we need to consider as we think about these recommendations,” said Castillo.
Councilmember Abbie Kamin believes the city needs to consider the impacts of litigation.
“Having the opportunity to make sure that we are not harming those that have a history of not having a shot at city business, to lift those communities up and continue to support those small businesses is absolutely important,” Kamin said. “It’s the right thing to do.”
Mayor Pro Tem and City Councilmember Martha Castex-Tatum stated that the 2024 disparity study validated the findings of the Ernst & Young efficiency study.
“These programs were not meant to be programs in perpetuity,” she said. “This is our time now to continue the engagement.”
