A family-owned landscape construction company is suing both the City of Houston and Harris County over a Minority and Women-Owned Business (MWBE) program, calling it an unconstitutional violation of its rights.
Landscape Consultants of Texas is a small business with a mostly Hispanic 50-member workforce. However, its owners, Jerry and Theresa Thompson, are white.
The Thompsons argue that they are the victims of racial discrimination in government contracting, because despite being the lowest and most qualified bidders on a number of local government projects, they have been passed over for minority-owned firms because of requirements by Houston and Harris County that a certain percentage of government contracts must go to minority-owned or “socially disadvantaged” firms.
The Thompsons receive about 80-90 percent of their work from government contracts.
The Thompsons argue that they are not only bypassed for contracts but are forced to take a smaller percentage of the ones they do win, despite being fully capable, because of the requirements for a minority-owned firm to take part.
One example they cite is a 5-year, $1.3 million contract they were awarded by the City of Houston. The contract requirements stated that 11 percent of the contract, or $143,000 had to go to a minority-owned firm, regardless of the fact that the Thompsons’ business was capable of doing the work. The Thompsons argue that a similar business, if owned by a minority, would be permitted to keep 100 percent of the contract amount.
While Houston has had its program in place since 1984, the county’s only began in 2020, and it is also being challenged by the Thompsons.
According to the Thompsons’ attorneys:
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 and are both woefully overinclusive and underinclusive—for instance, Pakistani-owned businesses get a preference, while Afghani-owned businesses do not.
Since 2016, the Thompsons have won contracts from Harris County amounting to somewhere between $12-16 million, and their suit argues that they are now forced to submit higher bids to offset the amount they will have to pay a minority-owned firm in the event they win. Since competitors who are designated MWBE businesses do not have to do this, it puts the Thompsons at a disadvantage.
They also argue that when they are forced to subcontract with firms they have no pre-existing relationship with simply to comply with bidding requirements, it puts their reputation at risk.
Both suits are federal lawsuits filed in Houston and seek to declare MWBE programs unconstitutional under the Equal Protection Clause of the 14th Amendment, which requires all people to be treated equally under the law regardless of race, gender, or other characteristics.
The Thompsons are being represented free of charge by the Pacific Legal Foundation.
