HOUSTON — The Houston City Council voted 12-3 on Wednesday to continue a contracting program that prioritizes certain businesses for city contracts based on the owner’s race or sex, despite a federal lawsuit challenging the program’s constitutionality.

Local business owners Jerry and Theresa Thompson filed the lawsuit, alleging the city’s minority business enterprise program discriminates against non-minority-owned businesses. 

The couple own Landscape Consultants of Texas, a small business with a mostly Hispanic workforce. However, because its owners are white, the business doesn’t meet the qualifications for the race-based contracting program.

The Thompsons claim they lost contracts due to the program’s racial classifications and that white-owned businesses are forced to subcontract to favored groups, even when they can complete the work themselves.

They argue this requirement puts their reputations at risk because they are not affiliated with the mandatory subcontractors and cannot vouch for their quality of work.

“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,” their attorney said.

In response to the legal challenge, city officials commissioned a disparity study. 

The study, according to the City of Houston, “evaluated how race, ethnicity, and gender affect businesses’ ability to participate in the city’s marketplace—including both public and private sectors—secure capital and win contracts or subcontracts within Houston’s markets.”

The study 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 had initially proposed removing these groups from the minority- and women-owned small business enterprise program in those sectors and placing them under 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.”

However, the council voted to accept the results of the disparity study without making changes to the existing program, continuing to offer advantages to business owners who are not disadvantaged in certain sectors over non-minority owned businesses.

The decision leaves open the possibility for future modifications as the city proceeds through litigation.

In addition to reaffirming the minority- and women-owned business program, the ordinance also creates a certification program for veteran-owned small businesses.

Houston’s Minority- and Women-Owned Small Business Enterprise Program, established in 1984 and overseen by the Office of Business Opportunity, aims to “stimulate the growth of local minority- and women-owned business enterprises by encouraging their participation in all phases of City contracts,” according to the city. 

The program supports participants through training, networking events and full opportunities to compete on city contracts.

More information on the disparity study can be found at https://houstontxdisparitystudy.com.