(Texas Scorecard) – Houston City Council members will vote next week on proposed changes to a program that favors some contractors based on race or sex.
The Minority and Women Owned Small Business Enterprise program was first introduced in 1984 and is overseen by the city’s Office of Business Opportunity using guidelines shaped in part by a 2006 disparity study.
However, some individuals are proposing amendments to the program based on a recent disparity study, which found that Hispanic, Asian, and non-minority women-owned businesses do not face disadvantages in certain sectors, such as construction or professional services.
The proposed action by the city council would adopt the findings of the study as a first step to update the MWSBE program, removing advantages given to Hispanics, Asians, and women-owned businesses from categories the study found they have no disparity in.
The program is currently facing a legal challenge from local business owners who claim the measure is discriminatory and unconstitutional.
“The program’s racial classifications are both arbitrary and unconstitutional. They stereotype minority and women business owners as socially disadvantaged without requiring any evidence of actual discrimination,” stated the plaintiff’s lawyers.
Represented by the Pacific Legal Foundation, Jerry and Theresa Thompson argue for a race-neutral approach emphasizing equal opportunity without racial preferences.
The lawsuit alleges the Thompsons’ business—Landscape Consultants of Texas—has lost city contracts because it is not considered a minority owned business. It also states that the company is forced to subcontract portions of awarded contracts to minority-owned firms to meet city bid requirements.
“Landscape Consultants is in year three of a five-year contract with the city. The contract is worth $1.3 million, but the Thompsons are required to subcontract 11 percent of the total value, or $143,000, to a minority-owned business—even though Landscape Consultants is perfectly capable of doing the work itself.”
The Thompsons argue that being forced to subcontract with firms that have no pre-existing relationship with them to meet bidding requirements puts their reputation at risk.
City officials say the proposed changes will help the city preserve the MWBE program while addressing real legal vulnerabilities.
Houston also has a program that prioritizes giving contracts to LGBT businesses.