City removes contract preferences for minority, women-owned architect and engineering firms

Brenda Vickrey Johnson

By Jolene Almendarez

Without any public input, the City of San Antonio removed long-standing preferences for local small minority and women-owned businesses who compete for city contracts. The affected business owners are not happy.

An email quietly sent out by city officials in mid-November said the city would no longer give architecture and engineering businesses the option to apply for a 20-point preference system as prime contractors while trying to land city bids.

The Nov. 14, 2018 email, which was sent to the Bexar County Chapter of Professional Engineers in Private Practice, said the percentage of city payments to small minority and women-owned businesses exceeds the availability in the architecture and engineering industry.

“Due to these positive results and the flexibility in which the SBEDA (Small Business Economic Development Advocacy) program was created to apply to City solicitations based off the degree of disparity documented toward M/WBES, SBEDA program prime evaluation preference points will no longer be applied by the Goal Setting Committee on City architecture and engineering solicitations,” the email said.

The email was signed by Rene Dominguez, director of the Economic Development Department, and Mike Frisbie, director of Transportation & Capital Improvements.

The point system is part of an effort by the Small Business Economic Development Advocacy, known as SBEDA, to eliminate disparity among businesses selected to receive city contracts. SBEDA has been active in the city since the early 1990s but the point system was part of an overhaul of the program that took effect in 2011.

Since then, city staffers in both the Economic Development Department and Transportation & Capital Improvements say there has been a 46 percent increase in the amount of city money given to architecture and engineering companies taking part in the SBEDA program. But local business owners are skeptical of the data.

About a dozen business owners and their representatives spoke against the removal of the points at the Small Business Advocacy Committee, SBAC, meeting Nov. 30, 2018. 

Watch the meeting or scroll down to read the comments

“All the outreach that was done, all the meetings that we had, were undone by a letter that only a select few knew of and participated in,” said architect Grace Rose Gonzales. ”Regardless of the numbers and the charts and the pies that you're going to show me, it is after-the-fact and an insult to all the people and business who gave time and resources to it.”

Gonzales was part of the SBAC when the point system was created and implemented. She owns the Grace PG Design Group, which does not have any city contracts and has not used the point preference system.

She said the city’s Economic Development Department can modify and remove language about how the preferences are applied without a vote from the City Council, which contributes to the lack of transparency about the changes. The EDD, she said, also did not reach out to the small business owners being directly impacted by the change. 

Adding to her concerns, she said, are what she calls “chatter” in the business community. She said she’s heard that large engineering firms are threatening to sue the city because of preference points and, statewide, companies are trying to eradicate state law that allows for minority and women business to receive preference.

“I believe the ordinance needs to be amended to make sure (different) processes are in place in the future,” Gonzales said.

Christopher Herring, chairman of the SBAC, said during the meeting that committee members did not drop the ball on keeping people informed, nor were they being secrative. With other major projects in the works, such as the Diversity Action Plan, he said mere talk about revoking the points didn't push the issue to center stage.

As chairman of the committee, he said he was aware of some discussion happening among city officials that the preference points legally had to be revoked. But the first time he knew the points had been officially taken away was when Gonzales showed him the Nov. 14 email. 

"I wish that the city would have come to the SBAC first to say, 'This is what we're considering doing.' Because that's why we're all here because now we're explaining why the train left the station,” he said.

Other people who spoke during the meeting included Brenda Vickrey Johnson, president and CEO of Vickrey & Associates, Inc., a business that she said has used the preference points for years.

She said she’s skeptical of the data the city is presenting, in part, because there was a previous instance where diversity data compiled by the city was incorrect.

“To say that (about) 62 percent of all architect and engineering, these that have been contracted by this city have gone to minority and women owned business, for me, is absolutely hard and extremely difficult to understand that calculation,” Vickrey said.

Former Councilwoman Elisa Chan also said she was wary about whether the numbers being presented were accurate. Chan, who owns a business in the architecture and engineering catagory, is calling for the raw data to be released so people can see for themselves how the city doled out contract money.  

"The goal is to level the playing field...but I do have some questions about data," she said. 

Michael Sindon, assistant director at the city’s Small Business Office, told the Small Business Advocacy Committee the data is accurate. 

He said the city has carefully tracked which businesses receive contracts and the businesses are placed in categories of preference based on race, ethnicity and gender in descending order. The businesses are not double-counted to inflate numbers. For instance, an business owned by a black woman be counted in the category of race, not also as a female-owned business. 

For the past four years, Sindon said the minority and women-owned architecture and engineering category of businesses is “at parity” with white and male-owned businesses. The data for those years, he said, was analyzed to ensure there was a greater number of businesses participating over the years and that there wasn’t one or two large contracts that skewed the numbers. 

For instance, there were about a dozen businesses using the SBEDA points in 2014 and more than 50 using the program in 2017. Upon looking at the data, he said it was clear the rise in women-owned and minority business contract procurement is a trend.

“Had we of reduced those SBEDA points down to zero, our utilization would have only dropped by 2.89 percentage points on those projects, meaning they were winning based on their qualifications. That is ultimately what we wanted to see through this program,” he said.

But the city can only give preference to women and minority-owned businesses if it can be proved that there is a disparity in the local market and a method can be developed to narrowly correct that disparity, according to state law.

Sindon said he can provide specific data about which businesses received contracts from the city and how much those contracts were worth but didn’t have it on hand during the meeting.

There are still unanswered questions about how the preference points were eliminated. For instance, Sindon didn’t address why local businesses were not consulted with regarding the change or whether the city was under pressure from engineering companies to eliminate the point system.

Sindon declined to be interviewed about the details before press time but consented to an interview later this month.