The Metropolitan Transit Authority of Harris County (METRO) has long positioned itself as a regional leader in supporting small, minority and women-owned businesses. Since its last disparity study, the agency has sought to strengthen equitable access to contracting opportunities while balancing the realities of Houston’s competitive procurement market.
A close examination of contracting data from fiscal years 2020 through 2025, obtained through a public records request, paired with insights from METRO’s leadership, reveals measurable progress and areas where challenges persist.
Prime contract awards: Shifts and setbacks
METRO’s prime contract awards data from Fiscal Year (FY) 2023 to FY 2025 shows stark disparities across racial and gender lines.
In Fiscal Year 2023
- African American-owned firms received 2.5% of prime dollars ($9.7 million)
- Asian-owned businesses captured 7.2% ($27.9 million)
By FY 2025
- The share for African American firms fell sharply to 0.3% ($0.3 million)
- Asian-owned firms comprised 2.8% ($2.7 million)
- Hispanic-owned firms made up 4.2% ($4 million)
- White women-owned firms made up 2.8% ($2.7 million)
Perhaps the most striking figure lies in the “other/undetermined” category, which includes contractors whose race or gender could not be verified, as well as corporations.
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In Fiscal Year 2023, that category accounted for 76% of total prime dollars, totaling $292.9 million. By FY 2025 (partial year), it comprised nearly 90% of prime dollars, or $86.4 million.
Karen Hudson, METRO’s Director of Business Economic Opportunity, clarified that this category essentially represents Caucasian males and corporations, with only a small share truly unidentified.
“We have a full-time staff dedicated to just collecting that data and putting it in B2Gnow,” Hudson said of the tool METRO uses to track demographic data. “We use several methods to try to identify firms, where they can self-identify.”
Subcontracting trends: A pathway for minority firms
Subcontracting tells a different story. In FY 2023, African American-owned firms received 42.3% of subcontract dollars for construction, general services and professional services ($40.7 million), while Hispanic-owned firms captured 20.4% ($19.7 million). These shares, although fluctuating year to year, consistently show that minority-owned businesses secure a far larger footprint as subcontractors than as prime contractors.
Hudson acknowledged this reality, noting that many small firms either lack the capital or the desire to transition into prime contracting.
“It takes a lot to be a prime,” she said. “We can’t control that. We can develop them and even if they don’t have the desire to move up to the prime level, we can make them very strong subcontractors and help them develop and grow their firms.”
To encourage this growth, Hudson says METRO runs “Metro Business University,” a year-round training program that includes Occupational Safety and Health Administration (OSHA) certification, access-to-capital workshops and one-on-one business assessments. Firms are gradually introduced to opportunities through informal or multi-trade contracts, allowing them to build experience before competing on larger bids.
METRO emphasized that its contracting process is built on open competition, without set-asides and that year-to-year comparisons of contract awards can be misleading since contracts vary in scope and duration. To address disparities identified in its study, METRO created an advisory committee that includes the Greater Houston Black Chamber of Commerce, the Regional Black Contractors Association and the Tri-County Regional Black Chamber of Commerce, contractors’ associations and women’s organizations.
Hudson added that the organization offers favorable payment terms, 15 business days for primes and five additional days for subcontractors. It also runs targeted development programs, which start small firms with single-trade construction projects, like painting, plumbing and electrical work, and supports their growth into larger contracts.
Small business participation: Mixed results since 2020
Looking back to FY 2020, METRO’s small business engagement shows significant variation. That year, African American-owned small firms received 20% of prime awards ($16.2 million), but by FY 2023 their share had declined to just 1.6% ($5.6 million), despite receiving the highest number of contracts among all groups. Hispanic-owned small businesses saw a similar drop, from 7.4% ($6 million) in FY 2020 to 3.2% ($11 million) in FY 2023.
Subcontracting patterns for small businesses also fluctuate. In FY 2021, African American-owned firms captured over 50% of small business subcontract dollars ($64.8 million). However, by FY 2022, their share had fallen to under 9% ($5.8 million).
Hudson cautioned against interpreting these swings as a decline in the overall trend.
“When you look at this chart and you’re comparing year to year, it’s not apples to apples,” explained Hudson. “In one year, we might’ve been really heavy in construction, but the next year, maybe not, because the construction projects were multi-year projects. When we look at firms, some groups are very high in certain industries than in other industries. I’m not really sure what explains it other than that’s the area they tend to gravitate to.”
Instead, Hudson pointed to the agency’s aspirational 35% small business participation goal, which METRO often exceeds.
“When we don’t meet the 35%, it’s because we had a contract that might’ve been $200 million and we could only get 15% participation on it,” Hudson said. “But we’re gonna go for that 15%. You’ll see maybe we only achieved 25% that year, but we tripled the dollars that were awarded.”
Industry breakdown: Persistent gaps
The industry-level data offers a clearer picture of where barriers remain. In FY 2023, African American firms secured $1.4 million in construction contracts and $8.2 million in general services contracts; however, they did not receive any funding in professional services. Asian-owned businesses secured $12.9 million in construction but only $5 million in general services.
Hudson confirmed these gaps. She said METRO has a “gap list” to identify underrepresented industries and is working with partners to recruit firms into those areas. Barriers like bonding requirements and access to capital remain significant hurdles for many minority contractors. Some industries, such as rail maintenance, remain persistently challenging due to a lack of industry capacity.
“METRO buys everything: Parts, buses, trains. In those areas, it’s very hard to put a goal on,” Hudson said. “If we could get 10%, we’ll put a 10% goal on it. We try to get participation wherever we can.”
Gaps also exist in terms of profit margins. A spokesperson from Sparkle Cleaning Services, Inc. stated that they did not pursue a METRO contract because the numbers showed little to no profit and potential losses. According to her, the agency chooses the lowest bids.
“We usually just do a construction final clean so we won’t have to deal with large contracts that need daily cleans,” she said.
Accountability and enforcement
A key feature of METRO’s program is its insistence on accountability for prime contractors. METRO sets small business goals on contracts with subcontracting opportunities, requiring bidders to document their commitments.
When we set a goal on a contract, our solicitation language clearly states that if you do not meet this goal with identified firms, you will not be considered for contract award,” Hudson said. “There are times Metro had to go to the next low bidder and paid a little bit more money, but that was Metro’s commitment to the small businesses.”
Once contracts are awarded, METRO staff monitor compliance through the B2Gnow system, ensuring subcontractors are both utilized and paid promptly. Primes must submit letters of intent from their subcontractors and METRO’s Office of Business Economic Opportunity tracks payments “from cradle to grave.”
What can businesses do?
Small Black-owned businesses often feel hesitant to pursue larger contracts, per Dr. Asheli S. Atkins, president and CEO of the Greater Houston Black Chamber. For these business owners, Atkins recommends collaborating with other businesses to increase visibility.
“That’s what more established black businesses are doing who have contracts with organizations like METRO,” Atkins said.
She added that the Chamber holds a series called Doing Business, during which members meet with large organizations and processes to become prime and subcontractors.
Still, barriers remain. Many Black businesses seek certification but are often unprepared for the level of documentation, financial stability and readiness required, Atkins said. Others lack awareness of opportunities or feel excluded from the procurement process altogether.
When it comes to raising visibility, she emphasizes the importance of showing up at procurement-focused events and subscribing to agency email blasts, attending expos and making face-to-face connections to increase a firm’s chances of getting noticed. By combining preparation with strategic networking, Black businesses can strengthen their foothold in the contracting landscape and increase their chances of landing both prime and subcontracting opportunities.
“And so at these type of events, you’re able to have direct contact with these organizations so they can know your business, look out for your name when your application comes across their desk,” Atkinson said.
Looking ahead: Building sustainable growth
The disparity study confirmed METRO as the only Houston-area agency without across-the-board disparities in contracting. Yet challenges remain, particularly in helping minority firms transition from subcontractors to prime contractors and closing industry-specific gaps.
Hudson highlighted new initiatives, such as METRO’s mentor-protégé program and IDIQ contracts, which pre-qualify firms for larger projects.
“We develop firms not just to work with METRO, but so they’re ready to compete regionally and nationally,” she said.
As METRO prepares for future infrastructure demands, including rail maintenance and large-scale construction, the question is whether its race- and gender-neutral small business program can continue to deliver equitable results. The data shows progress, but also underscores the importance of targeted outreach and capital access in ensuring Houston’s diverse business community shares in public investment.
