One local effort to help small businesses win more public contracts looks like a slam dunk; another is trying to walk a fine line that may ultimately satisfy no one.
On Thursday, the San Antonio City Council will vote to spend up to $162,000 on Supply SA, a collaborative effort with 13 other public entities to simplify procurement processes to get more money into the hands of local small and minority-owned businesses.
That’s the likely slam dunk.
At the same time, the city is trying to narrow the very policies that give small, minority- and women-owned businesses preferences for those contracting opportunities. This effort, which was planned to be on Thursday’s agenda alongside Supply SA, has run into opposition from some council members, small businesses and even one of the main movers behind Supply SA.
The stakes are high.
The goods and services purchased by the City of San Antonio and other public entities represented more than $4 billion in 2021, according to research from Drexel University’s Nowak Metro Finance Lab. Adding in state and federal contracting opportunities, that pie grew to roughly $9 billion.
A “procurement playbook” was developed by Nowak with support from the Aspen Institute Latinos and Society program, the San Antonio Area Foundation and Rep. Joaquin Castro.
That playbook is the basis for Supply SA, which is made up of the CEOs of those 14 public entities, who have been meeting since late 2022, developing recommendations to streamline and standardize local procurement processes and help build the capacity among small businesses to vie for bigger public contracts.
That effort is now moving into a public action phase, with each public entity expected to commit money for Supply SA’s proposed two-year, $608,000 operating budget. The other public entities, including Alamo Colleges, University Health, Port San Antonio, CPS Energy and others, will likely vote this month to approve funding.
Roughly two-thirds of the money will be spent by UTSA, which currently hosts Supply SA meetings at its downtown campus, to create a one-stop procurement center and hire navigators to help businesses connect to opportunities. The rest will go to a consultant to develop a regional reporting system to monitor and evaluate the effectiveness of the effort.
Future goals include standardizing procurement as much as feasibly possible across all local public entities and beefing up access to capital and bonding capabilities. The overarching goal is to use what researchers call “the procurement economy” as a tool for economic development.
With additional federal money flowing into local communities from the $1.2 trillion Bipartisan Infrastructure Act, the $280 billion CHIPS and Science Act, and the $411 billion Inflation Reduction Act, plus continued spending by the city on its 2022-2027 bond program, the $9 billion estimated in 2021 is only expected to grow.
Creating opportunities
Once Supply SA is launched, the city must still determine how to amend its SBEDA ordinance. It does so about every five years based on how well it meets its goals to create opportunities for minority- and women-owned businesses to win contracts.
The latest study, released last June, found the city spent more than 50% of its contracting dollars with minority- and women-owned businesses from 2014 through 2020, up from 23% over the previous five-year time frame.
Given that success, the city crafted a set of amendments to narrow the program’s scope, including getting rid of race- and gender-conscious points in its scoring matrix for contracts.
The city had originally planned to bring the proposed amendments to a vote last December but pulled them based on concerns from some council members, small businesses and Castro.
Last month, the Fair Contracting Coalition, a group of largely Black local business owners who advocate for more equitable procurement policies across all public entities, demanded to City Manager Erik Walsh, who attended, that the city leave the ordinance as-is.
“Tremendous disparities still exist,” said La Juana Chambers Lawson, a small business owner who co-leads the FCC.
Hispanic-owned and white women-owned businesses earned the lion’s share of the roughly $330 million the city spent with local small- and minority-owned businesses in fiscal 2023. African American, Asian and Native American businesses did not fare as well, nor did businesses owned by minority women.
She pointed to just one example: of the $12 million worth of goods and services the city purchased from women-owned businesses, $10 million went to white women-owned businesses. The city spent zero dollars on African American women-owned, Asian women-owned and Native American women-owned businesses in that category, she pointed out.
“We are being institutionally starved,” she said.
The amendments are once again back on the drawing board.
“We’ve got time and we don’t want to rush this,” said Assistant City Manager Alex Lopez last week.
Castro declined to comment on the SBEDA amendments, but he emphasized how important public contracting can be for small businesses.
“Over the coming years, billions of dollars will be coming to Texas as a result of recent major federal investments in infrastructure development and clean energy,” he said in a statement to the San Antonio Report. “As this money reaches San Antonio, our public entities need to be intentional about building procurement channels that give small businesses the chance to compete for publicly funded contracts.”
A procurement playbook
The procurement playbook identifies three major challenges with the existing procurement economy:
- procurement is “deeply fragmented” across local governments and other public entities;
- supplier diversity is treated mostly as a compliance exercise rather than a tool of economic development and
- business owners often don’t have access to the capital necessary to get bonded or grow the company to vie for larger contracts.
The city, county and UTSA convened the CEOs of each public entity, who now make up Supply SA, to tackle these challenges. They include:
- Alamo Colleges
- Bexar County
- Brooks Development Authority
- CPS Energy
- Opportunity Home San Antonio
- Port San Antonio
- San Antonio River Authority
- San Antonio Water System
- University Health System
- UT Health
- Texas A&M San Antonio
- VIA Metropolitan Transit
“If we get this right, San Antonio can become a national model for inclusive procurement that creates jobs and builds community wealth,” Castro said.
Correction: This story has been updated to clarify that the City of San Antonio is seeking to reduce preference points for women and minority-owned businesses in its contract scoring matrices.
