San Antonio City Contracts: Where Small Business Made Big Gains in 2017

Zarinah Shakir began cleaning windows in 2004, working part time to make ends meet. With her son, Rashad, she expanded to offer pressure washing two years ago. Last year, SJ&J Solutions won a major contract with the City of San Antonio to provide services at the airport.

“We are definitely growing,” Shakir said of the company named for her grandchildren and doing business as Affordable Window Washing Services. “We’re excited about the future.”

Shakir represents a growing number of local small, minority, and women-business enterprise owners (S/M/WBEs) who are bidding on – and winning – local government contracts since City Council authorized the first Small Business Economic Development Advocacy (SBEDA) ordinance 25 years ago.

As a result, the Fiscal Year 2017 Small Business Annual Report issued in January showed the largest spend to date – almost $246 million – paid to such businesses. That amount went to 503 small businesses owned by minorities and women, and represents 49 percent of the City’s spending on contracts in which the SBEDA program applied. Twelve businesses, like Shakir’s, earned City contracts for the first time during fiscal year 2017.

“We overhauled the program to include a lot of new initiatives within the SBEDA program, which include a bunch of new tools to help these businesses, including things like prime contractor evaluation preference points and subcontracting goals that were very specific,” said Michael Sindon, assistant director of the City’s Economic Development Department. His team of 10 City staffers evaluates 350 solicitations a year before they go out as Requests For Proposal (RFPs).

To bid on SBEDA program contracts for the City and Bexar County, businesses must be certified as S/M/WBEs through the South Central Texas Regional Certification Agency.

Small businesses of all kinds make up 97 percent of employer firms in the metro area. But, in 1992, when the ordinance was authorized, a disparity study showed only 10 percent of City purchases were going to minority- and women-owned businesses. By 2010, that number had increased to just 16 percent. Soon after, SBEDA was overhauled, and in 2015, 23 percent of City contract dollars were paid out to those businesses.

Economic Development Director Rene Dominguez called the SBEDA program an unsung hero. “I just love the fact it exemplifies all of those things under one program. And when you do that with intentional focus and the commitment from our leadership – from our city manager and council – you can see over time, if you just stay the course and you have a process in place, the results that we’re generating are phenomenal,” Dominguez said. “I don’t know any other program that’s generated the results that we have over the last five years.”

The purpose of the annual study is to measure the economic impact of the SBEDA program. From 2011 to 2015, the most recent year a disparity study was completed, there was a 25 percent overall increase in minority- and women-owned businesses on City contracts. Further amendments to SBEDA came in 2016.

“I think the big takeaway is we overhauled it in 2010, we enhanced it by reviewing contracts contract-by-contract, we established a goal-setting committee that has citizen input,” Sindon said. “And then we have a [subcontracting] compliance module that ensures that if a company says they’re going to use a small business, they actually use them.”

Yet Dominguez and Sindon concede there’s still work to do. With aspirational goals set for each minority segment, the City is at 37 percent of a 41.1 percent goal for minority/women-owned enterprise (M/WBE), for instance, and at 0 percent of a 1.1 percent goal for Native American-owned businesses (NABE). Other minority certifications include African American (AABE), Asian American (ABE), and Hispanic American (HABE) business enterprises.

“We are only meeting the goal in the women-owned business area,” Dominguez said. “We still have room to grow overall. You’ll see also some other gaps that we still need to make up. They are shrinking little by little. That is the intent, but we still have room to grow. They may be only 1- or 2-percent increases, [but] it’s significant dollars.”

The greatest gains in M/WBE utilization, by industry, were in goods and supplies, a 50-percent increase since 2011 (when it was zero), and architecture/engineering, a 46-percent increase. The smallest (14 percent) was in construction.

Between 2011 and 2015, the City paid $473 million to small businesses owned by women and minorities when the program was applied to a City contract. In that time, the SBEDA program supported 5,400 full-time jobs, or $292 million in earned income (including benefits), the report said. It generated $25 million in tax revenues for the City, County, and local school districts.

But the 2015 disparity study showed that local S/M/WBEs experienced disparities in both public and private sectors, such as lack of access to capital or low utilization in public-sector contracting. That’s when the Economic Development Department implemented programs like Launch SA, the Loan Buy Down Program, SBEDA, and a Business Empowerment Plan.

Sindon said “unbundling” is another tool his office has been using to increase opportunities. Bundled contracts are those that consolidate two or more procurement requirements – previously provided or performed under separate, smaller contracts into a solicitation for a single contract – making it suitable for a small business.

Last summer, City Council voted in favor of unbundling a contract for lifesaving defibrillators and supplies so that a local, women-owned small business could win a share of an estimated $2.4 million procurement agreement.

Julissa Carielo has owned Tejas Premier, a building contractor, for 12 years. It was during the most recent recession that she sought S/M/WBE certification, and her experience led her to establish the Maestro Entrepreneurship Center through the San Antonio Hispanic Chamber of Commerce. Maestro is a business accelerator, helping small, minority-owned businesses build capacity.

“Before the changes to SBEDA were in place, it was tougher to come in and compete [on bids] because it was not set up to be for prime contractors, more for subcontractors – the goals were set at that level,” Carielo said. “Now that the goals and processes are set up for us to be prime contractors, you’re going to see a big difference in more companies bidding as primes. … When that change went into effect, it’s like they opened the doors.”

In 2017, 8.8 percent of the City’s prime contracts went to women-owned businesses, and 12.2 percent to small-business enterprises.

Now it’s time for others in the city to follow suit, Carielo said, naming the Alamo Colleges District, CPS Energy, and Bexar County. “We’re seeing a big difference,” she said. “Small businesses feel like they have a voice. The City is listening, which I think is a big plus. But that’s not always the case” with other agencies.

Dominguez said the City has the most comprehensive and robust program for small businesses in the area. “But it’s not just providing small businesses an opportunity to win a contract,” he said. “It’s also them building their capacity so that they can eventually compete in the private sector.”

Shakir participates in the Mentor Protégé Program of the City’s Business Empowerment Plan, which assigned her a mentor for two years, and credits the Fair Contracting Coalition with helping her, too.

“I really believe the City affords you the opportunity to build your capacity because there are so many programs to help you as you’re growing your business,” Shakir said.

“It’s an opportunity to help us to grow, and we are able to know that money is going to come for sure, so we are able to hire people and pay taxes. When you have more money, you’re able to give more.”