Could women- and minority-owned businesses lose their advantage on certain city contracts?

San Antonio considers dropping race- and gender-based preference points on non-low bid jobs

SAN ANTONIO – The City of San Antonio is considering a change that would mean women- and minority-owned businesses losing their advantage over other small businesses on certain city contracts.

Rather than getting additional points in the scoring process for non-low-bid contracts, city staff say all small businesses should get the same leg up over larger companies.

But whether it’s a step forward or a step back depends on who you ask.

Councilman Jalen McKee-Rodriguez (D2) represents the East Side and was one of the council members who opposed the proposed change during a briefing Wednesday afternoon, saying it was going in the opposite direction of where I’d hope to go.”

“We have, and have had, a race issue in our city, and it does no good to pretend that we don’t,” he said.

Councilman Manny Pelaez (D8), who is chairman of the council’s Economic and Workforce Development Committee and is considering a mayoral run, said he had been among the people who “fought tooth and nail” to give these businesses an advantage “with the understanding that there would be a day when we would begin to turn the dimmer knob on it.”

“I think it’s a good opportunity now for us to measure whether or not the program is ready to stand on its own two feet by not existing anymore,” Pelaez said.

The idea is being considered as part of a collection of proposed updates to the city’s Small Business Economic Development Advocacy (SBEDA) program. The program is meant to give small, minority, and women-owned businesses the opportunity to compete for city contracts against larger companies.

One aspect of the program is preference points on certain city contracts.

Roughly three-quarters of the city contracts are low-bid jobs based solely on the price a bidder puts forward to complete a contract. Most of the city’s construction jobs fall into that category.

The other quarter of jobs are what the city calls “discretionary” contracts, which also take into account considerations like a bidder’s qualifications, experience, and specific proposal for tackling a job.

The city scores those bids on a 100-point system. Within that, 10 points are available only to small businesses. An additional 10 points are available only to small businesses owned by women or people of color.

But city staff say a consultant has suggested San Antonio remove the race- and gender-based preference points. Instead, all small businesses would get 20 points, no matter what race or gender the owners are.

City officials say they have to tailor the SBEDA program to match data from the latest disparity study. Otherwise, the city could open itself up to a legal challenge.

And generally, they say, minority- and women-owned businesses are doing well. The 2023 study shows they received 53% of city payments, compared to only 23% in the 2015 study.

Michael Sindon, an administrator with the city’s Economic Development Department, told council members that city staff had analyzed nearly seven years of discretionary contracts in which women or minority-owned businesses were awarded the job as the primary contractor.

In 148 out of 153 cases, he said, the same company would still have been awarded the job if the city had used the proposed change in preference points and given all small business bidders the same amount.

“And the conversion exercise really showed me that, within the small business world, minority- (and) women-owned businesses were very successful in competing on a race-neutral basis,” Sindon said.

City officials say other race- or gender-based tools aren’t going away, such as the ability to dictate a certain percentage of a project be completed by minority- or women-owned businesses. That way, even if a larger company owned by a white man wins the primary contract, it will have to subcontract some of the job to hit that requirement.

Still, Councilwoman Melissa Cabello Havrda (D6) says she’s worried the proposed change could keep some of these businesses from securing city contracts in the future.

“And in a city that’s growing at the exponential rate at which we’re growing, we have to be really cognizant of bringing all the community with us,” said Cabello Havrda, who plans to run for mayor in 2025. “So if you’re going to remove these points now at this kind of precipice of us just about to really bloom and blossom as a city, I don’t think that they’re going to be able to have that same chance that they had five years ago.”

The city council had been scheduled to vote on the proposed changes to the SBEDA program at a Dec. 12 meeting. However, staff say the many questions that have arisen prompted them to delay it until next year.


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About the Authors:

Garrett Brnger is a reporter with KSAT 12.

Luis Cienfuegos is a photographer at KSAT 12.