Houston’s City Council members voted 12-3 to continue a program prioritizing certain contractors for city contracts based on the business owner’s race or sex.
Wednesday’s decision follows a federal lawsuit challenging the program’s constitutionality.
Local business owners Jerry and Theresa Thompson argue that the minority business enterprise program’s racial classifications discriminate against non-minority-owned businesses. The Thompsons claim they lost contracts due to the program’s racial requirements.
The Thompsons allege the city also forces white-owned businesses to subcontract a portion of the contracts they are awarded to businesses favored by the program, even when they have the capacity to complete the work themselves. They say this creates risk to their reputations since they are not affiliated with the mandatory subcontractors and can’t vouch for the quality of their work.
Prompted by the lawsuit, the city conducted a disparity study, which found no significant disadvantages for Hispanic and Asian-owned businesses in construction and professional services, nor for women-owned businesses in goods and services.
City officials initially proposed removing these groups from the minority and women-owned small business enterprise program in those sectors, reclassifying them under different race-neutral small business programs.
“If we don’t have this consensus going forward as we go to court to defend the entire program, it will be in jeopardy,” Mayor John Whitmire said.
“So that was certainly a consideration—get ready for court—because we have individuals in society that would end the program totally, and obviously we cannot tolerate that,” he added.
The council’s vote to accept the study’s results but not change the program leaves the door open for future changes as the city navigates ongoing litigation.
In addition to accepting the results of the disparity study, the ordinance also establishes a veteran-owned small business certification program.
The MWBE program was first introduced in 1984 and is overseen by the city’s Office of Business Opportunity.
