‘Wrong direction’: Some council members worry change could hurt minority- and women-owned businesses

Downtown San Antonio shines on Friday, Oct. 7, 2022.
Billy Calzada/Staff photographer

San Antonio Express-News
By Megan Rodriguez
December 7, 2023

The city of San Antonio could take away a competitive edge that minority- and women-owned businesses have in the battle for some city contracts.

Currently, such firms start out with up to 20 points on the 100-point scale that officials use to grade their bids — a leg up that businesses owned by white men don't receive. The aim is to help these companies overcome disadvantages stemming from historical discrimination as they vie for public work.

Those additional points would go away under a proposal by the city's Economic Development Department.

The proposed amendment to Small Business Economic Development Advocacy (SBEDA) ordinance could affect about a quarter of the city’s contracts. City Council is set to vote on that change and other amendments to the ordinance on Tuesday.

Economic development officials are looking to eliminate those points because they say women- and minority companies have emerged as strong competitors for municipal contracts. A recent study found that these firms have won 53% of the city’s contracting dollars, exceeding the city’s goal by nearly 30%. 

Officials say they're also looking to prevent potential lawsuits claiming that the city's race- and gender-based accommodations are discriminatory. 

City Council members were briefed Wednesday on the potential amendments to the SBEDA ordinance, which was adopted in 1989. It was last amended in 2016.

Several members balked at the potential elimination of gender- and race-based points.

“It sounds like we’re taking our foot off the pedal, and the race is still going on,” District 6 Councilwoman Melissa Cabello Havrda said. “We’re slowing down because we’re afraid somebody else is going to slow us down. I think we’re going in the wrong direction.”

About 75% of city contracts go to the lowest bidder. The rest are discretionary contracts for which competitors are evaluated on experience, price, qualifications and other factors — on the 100-point scale. Minority- and women-owned businesses get extra points on discretionary contracts. 

When the city first conducted a disparity study in the 1990s, only 10% of the city's contracting dollars were paid to minority- and women-owned businesses.

"SBEDA is kind of looked at like a dimmer switch," economic development administrator Michael Sindon told City Council. "And when we first started and there was immense disparities, we had to turn the lights all the way up. Now that we’ve exceeded the goal by almost 30%, understanding there’s still some categories to work on, we’re kind of dialing it back in accordance with the law, understanding that we could easily go right back if this stuff doesn’t work."

Sindon said minority- and women-owned businesses will still be eligible to receive points for being small businesses. 

An analysis of bidders from 2017 through this year found that nearly all minority- and women-owned businesses that won city contracts would have done so even if they'd only gotten points for being a small business.

Sindon also said that the points are not the primary way the city tries to boost minority- and women-owned business participation. The city requires most companies it contracts with to subcontract work — sometimes up to 40% — to minority- and women-owned businesses. 

He noted that race- and gender-conscious programs are only legal if there is evidence of disparity and if the programs are tailored to the community it serves. Leaving the point system in place could open the city's SBEDA program to lawsuits if contractors feel it's unfair given the gains of  minority- and women-owned businesses in recent years.

However, the 2023 disparity study, conducted by Colette Holt & Associates, found that San Antonio is still lagging in the number of contracts awarded to Black-, Asian- and Native American-owned businesses.

The 2023 disparity study, conducted by Colette Holt & Associates, found that San Antonio is still lagging in the number of contracts awarded to Black-, Asian- and Native American-owned businesses. The study also suggested the city remove the minority- and women-owned business points in discretionary contracts.

"I know this recommendation is guided by a goal to make the program as legally defensible as possible," East Side Councilman Jalen McKee-Rodriguez said. "But I would much rather us to do right and have a judge tell us that it's wrong. We're always being sued, we're always going to be getting sued. We cannot move and make decisions cowardly, and I think that's what we're doing."

District 10 Councilman Marc Whyte pushed back, saying it would be financially irresponsible for the city to unnecessarily open itself to lawsuits. 

McKee-Rodriguez and Cabello Havrda said that instead of eliminating the point system, they'd rather expand it to include business owners with special needs or who are in the LGBTQA community.

Mayor Ron Nirenberg, Whyte and District 8 Councilman Manny Pelaez welcomed the proposed change. 

"The data is going in the right direction," Nirenberg said. "At some point, by design and by legal requirement, we have to start taking the training wheels off."

Removing the points, Pelaez said, gives people "that runway to be able to soar on their own."

"I think that's compassionate," he said. "And I believe in the power of our minority-owned and women-owned businesses."

Other, less controversial, amendments to the SBEDA ordinance include changes meant to streamline the program and a new requirement — if a business wants to be considered for SBEDA benefits, it must be headquartered in San Antonio. 

If council OKs the changes next week, they'll go into effect April 1.