County contracts are a white man’s game
Less than 10 percent of projects go to women- or minority-owned companies.
In all its shades and hues, Harris County prides itself on its racial and ethnic diversity, with large Latino, white, Black and Asian populations that have put our region at the forefront of the changing face of America. But a new report on government contracts finds that diversity ends when the color in question is green.
Less than 10 percent of county contracts go to women- or minority-owned businesses, according to a study sponsored by the Harris County Commissioners Court. And yet those same firms make up 28 percent of the market for available vendors.
The disparity breaks down differently across industries, but the shared feature in each is that businesses owned by white men get disproportionately large shares of the county contracts. For instance, the county spent $525 million on road and bridge contracts between March 2015 and May 2019. The total amount paid to minority- or women-owned businesses? Just $35.5 million, or less than 7 percent, despite the fact that those firms make up 35 percent of the available market. On a smaller scale, less than 10 percent of the $10.4 million Harris County paid for dry-walling and insulation during that same period went to minority- or women-owned firms, despite the latter making up 20 percent of the market.
All minorities are disproportionately underrepresented compared to the share of businesses owned. Out of every $100 spent by the county, 50 cents went to Black business owners, 60 cents to Asianowned businesses, $4.60 to Hispanic businesses, 10 cents to Native American companies and $3.20 to companies owned by white women.
As the country grapples with its history of systemic racism and inequality, it must address these economic disparities.
The study, conducted by the government consulting firm Colette Holt & Associates, found a host of obstacles faced by women and minority business owners, including discriminatory attitudes and assumptions that these companies are less qualified, pressure to lower prices when subcontracting, lack of access to capital and entrenched relationships that leave minority firms out of the loop.
These relationships are seen as key by some of the minority business owners interviewed for the study and quoted anonymously.
“You’re not in the frat. You didn’t get the letter, you know? You didn’t get the call. But whatever you need to do to get in, you need to figure it out,” one owner said.
“Figuring it out” may mean political contributions.
“When you go back and you look at who’s paid the most money to Commissioner X, and then who’s got the most work out of the commissioner those following months, there’s a correlation. And as a small business, we can’t afford to pay,” another owner told researchers.
Allegations of a pay-to-play culture are common. There is little oversight and even less incentive for politicians and contractors to change the system. Most of the money donated to Harris County commissioners’ political campaigns comes from vendors and contractors who do or want to do business with the county. Despite the obvious conflicts of interest this system entails, these contributions are legal.
Colette Holt was also tasked with making recommendations for how to fix the problem, and the commissioners should pay close attention.
The first step, the firm says, is to create a system of incentives that help boost minority- and womenowned participation naturally. This can mean hosting mixers so that large prime contractors can meet smaller firms who can later compete to be subcontractors. Nearly 23 percent of the $1.26 billion handed out by the county in the study period was paid to subcontractors. Or it could mean the county breaking up larger contracts into smaller ones, so that a wide range of firms could compete to be the prime contractor on a job.
Those steps and many like them will change the playing field without specifically establishing goals for minority participation. But the firm also urged the county to set such goals as a second step.
“How can we have a county spending $1 billion and the numbers be that low? It’s just embarrassing,” Precinct 1 Commissioner Rodney Ellis told the editorial board. Ellis, who was involved in creating minority participation programs in the city of Houston in 1984 and at the state level in 1991, spearheaded the study’s creation.
Those programs have been largely successful. Houston’s most recent disparity study, which is set to be updated this year, found that minorityand women-owned businesses make up about 35 percent of the construction market and received 30 percent of contracts.
The city’s efforts haven’t been problem-free. Questions of pay-toplay culture dogged the last mayoral race and the city has been bedeviled by lax monitoring of how well prime contractors follow-through on pledges to hire minority firms as subs. Beyond that, Colette Holt also recommends the county set goals for awarding contracts to minority firms based roughly on how big a share of the labor market they represent. To get those targets right, and for the program to withstand legal scrutiny, Harris County will have to make good on plans to collect better data on how its contracting dollars are spent — something Colete Holt said it had to painstakingly put together manually.
Minorities and women are driving the growth of new businesses in our area, making inclusive economic policies essential to long-term success. We commend the county in taking these first steps and helping ensure that our diverse region includes shared benefits.