San Antonio Slashes Final Boost for Minority- and Woman-Owned Businesses

Tribune News Service — The city of San Antonio quietly slashed the last advantage it gave minority- and woman-owned businesses in the competition for municipal contracts out of fear that keeping it on the books would cost millions in federal grant dollars.

Gone is a rule that required some companies contracting with San Antonio to subcontract as much as 40 percent of work to minority- and woman-owned businesses. It was intended to help companies overcome disadvantages stemming from historical discrimination in the awarding of city work.

In past years, the contracting goals were touted as one of the city’s most effective tools to boost the participation of such businesses.

City officials struck down the rule because federal grants now require cities to confirm they are not using race, gender, ethnicity or national origin to the exclusion of others in bidding for contracts, said Ana Bradshaw, who administers the city’s Small Business Economic Development Advocacy, or SBEDA, program.

The city’s $4 billion Fiscal Year 2026 budget, which began Oct. 1, relies on about $150 million in federal dollars for a slew of initiatives, including childhood education, airport runway work, training for the fire department and health services through the Metropolitan Health District.

The SBEDA program will continue to require businesses to subcontract work to small and local companies.

City Manager Erik Walsh’s order to cut the subcontracting goals on future agreements came down on Sept. 10 without a public discussion or vote from the City Council. Bradshaw said council was briefed in a closed-door executive session shortly before Walsh’s directive went out.

City spokesman Brian Chasnoff said a council vote wasn’t necessary because the ordinance governing the program “provides flexibility as to when and how it is applied to specific solicitations.”

By comparison, the previous overhaul of the SBEDA program dragged on for a year and six months and included multiple public meetings before the City Council voted in December. The most controversial change in that round of amendments also took aim at minority- and woman-owned business owners, removing a competitive advantage that owners once received when fighting for certain city contracts.

Last year’s amendments — made in part to head off lawsuits claiming the city’s race- and gender-based accommodations were discriminatory — came after a city-commissioned study found that woman- and minority-owned companies won more than half of the city’s eligible contracting dollars. That exceeded the city’s goal by nearly 30 percent.

Not all city contracts are subject to the SBEDA program’s rules. They apply only to certain contracts valued at more than $50,000.

Water, sewer and electrical services, contracts governing the city’s lease or purchase of property and emergency contracts that affect public health or safety were among the exclusions to the rule.

Even if a contract must abide by the ordinance, not all will be required to meet gender- and race-conscious contracting goals since some fields have too few minority- and woman-owned firms.

Bradshaw said that out of the 121 solicitations that operated under the ordinance in the fiscal year that ended Sept. 30, about 60 were given contracting goals.

Though all race and gender considerations have been struck from the program, Bradshaw said the city is still working to connect small business owners with resources and information about contracting opportunities with the city.

“It’s about trying to be more holistic as opposed to really relying on SBEDA as our only tool,” Bradshaw said. “It’s still a great tool, but we recognize we’ve got approach it in a broader way.”

Supply SA, which is separate from the city, issues certifications to small-, minority- and woman-owned businesses, making them eligible to benefit from San Antonio’s SBEDA program and similar initiatives at other public agencies.

Supply SA issues more than 1,000 certifications each year and provides training and one-on-one assistance to small business owners trying to secure public contracts.

Businesses certified for the first time must show that they have the basic necessities to be a sound company, including a designated bank account and insurance.

Executive Director Melanie McCoy said Supply SA will continue to issue certifications for minority- and woman-owned businesses when owners request it just in case federal mandates return to allowing race- and gender-conscious contracting rules.

So far, McCoy hasn’t noticed a drop in requests for the gender- or race-based certifications or heard concerns from local businesses about San Antonio’s recent decision to roll back subcontracting goals.

McCoy said getting certified as a small business is still important since many public agencies want to contract with small and local companies.

Programs similar to SBEDA are being attacked at all levels of government as Pres. Donald Trump pushes to eliminate initiatives that promote diversity, equity and inclusion.

Last month, the state of Texas froze its Historically Underutilized Business program, which assists businesses owned by women, minorities and disabled veterans seeking state contracts. The U.S. Department of Transportation issued a rule on Oct. 3 that prohibited the Disadvantaged Business Enterprise Program — which earmarks federal transportation dollars for women- and minority-owned contracting firms — from considering race or gender when awarding contracts.

Supply SA stopped issuing certifications for those two programs.

McCoy said the rollback of efforts that help minority- and woman-owned businesses is “bad for small business.”

“There were other disparity studies all across the nation for different cities, and they showed that there was a disparity — that there was economic and social disadvantage, and so those programs were created,” McCoy said. “I still think they’re really important. But we are where we are, so now we have to figure out how we operate and continue to grow small businesses in this climate.”

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