The understaffed and underfunded agency responsible for certifying small and minority-owned businesses so they can compete for public contracts will be absorbed by Supply SA, a recently launched CEO-led effort to simplify procurement processes across their organizations.
On Tuesday, the board of the struggling South Central Texas Regional Certification Agency (SCTRCA) heard a presentation from consulting firm OCI Group that Supply SA voted unanimously on May 28 to bring the certification agency under its purview in a two-year pilot.
Because Supply SA is made up of the CEOs of the public entities represented by the SCTRCA — board members of that agency are largely procurement specialists from the same organizations — the SCTRCA board didn’t vote on the proposal.
For small, women-, disabled-, veteran- and minority-owned local businesses that depend on the certifications for a chance at major government contracts, the stakes are high.
In 2021, federal, state and local contracting opportunities in the San Antonio area represented more than $9 billion — $4.2 billion of that from local government contracts alone.
Billions more is expected to flow 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 local spending to complete the city’s 2022-2027 bond program.
Olivia Travieso of OCI Group briefed the SCTRCA board on the CEO vote. OCI Group is contracted to Supply SA for administrative support.
The goal of bringing certifications under the Supply SA umbrella, she said, is “to increase the number of small local businesses bidding on [available] work, increase the percentage of those small businesses actually winning the contract,” and to develop an independent evaluation process that will show progress and return on investment.
For now, the process for businesses to apply for certifications remains unchanged.
What is the SCTRCA?
The SCTRCA was formed in 1998 via an interlocal agreement among the City of San Antonio, Bexar County and 11 other public entities that use certified businesses in contracting and procurement. The agency administers 13 different certifications: 11 for local contracting opportunities, one state and two federal.
The agency had been limping along for years, providing certifications and doing outreach to small businesses with its small staff, funded by member dues that hadn’t appreciably increased in at least a decade.
A 2022 audit called for by its board identified staff shortages, training challenges and significant deficiencies in policies and procedures. The agency’s own procurement processes were described as “ambiguous.”
An audit by the Texas Comptrollers Office last spring found that 90% of the Historically Underutilized Business (HUB) certifications it reviewed “were missing information required to validate” the certifications.
Then in December, the agency was thrown in chaos when the board fired the executive director with no plan in place to keep certifications moving through the system. That ended up putting some local companies at risk of missing out on three lucrative San Antonio International Airport concessions contracts.
A consultant hired by the SCTRCA in January has been working to clear to agency’s backlog and confirm certifications, but without additional staff or funding, progress has been slow.
Jessica Bateman of Alamo Nex Construction attended Tuesday’s meeting to say her company is struggling to find local businesses with federal Disadvantaged Business Entreprise (DBE) certifications to work with, in order to fulfill its contractual requirements. Alamo Nex is responsible for a $1.59 billion design, construction and maintenance project on a 9.5 mile stretch of I-35 and Loop 410.
“We’ve seen a dramatic decrease in the number of available [Disadvantaged Business Enterprises],” she said. When capital projects are funded to a certain threshold with federal funds, firms like Alamo Nex must subcontract a portion of the work to qualified minority-owned firms. “So I wanted to know what efforts are being made to recruit and certify those potential DBEs.”
Bateman said the company has heard from firms that are trying to get certified but are denied, and then they can’t get their questions answered about what they need to do to reverse those denials.
What is Supply SA?
Founded in 2022, Supply SA grew out of a “procurement playbook” developed by Drexel University’s Nowak Metro Finance Lab with support from the Aspen Institute Latinos and Society program, the San Antonio Area Foundation and Rep. Joaquin Castro.
The city, county and UTSA convened the CEOs of 14 public entities, including CPS Energy, the San Antonio Water System, Alamo Colleges, Brooks, Port San Antonio and University Health, which collectively spend billions of dollars outsourcing goods and services through procurement contracts each year, using certified companies when possible.
The overarching goal of Supply SA is to use what researchers call “the procurement economy” as a tool for economic development, specifically to help get more contracting dollars into the hands of small and minority-owned businesses.
In April, the San Antonio City Council committed to spending up to $162,000 toward Supply SA’s first two-year budget of $608,000, with the other member organizations paying the rest.
The original plan was that roughly two-thirds was to be spent by UTSA, which 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 was earmarked for a consultant to develop a regional reporting system to monitor and evaluate the effectiveness of the effort.
All together now
Under the new structure, the SCTRCA will continue doing certifications, but as Supply SA. A new interlocal agreement will be signed by all the member organizations with updated bylaws and governance. A new director will be hired to oversee three areas: certifications, the navigators and small business outreach, and the independent evaluations, which are being developed by the consultant.
In addition to the new director, the integrated organization will have seven staff members. To pay for them, the Supply SA CEOs also voted to dramatically increase the dues each of their organizations pay.
Member organizations that each paid roughly $50,000 each this year — the City of San Antonio, Bexar County, CPS Energy, San Antonio Water System, VIA Metropolitan Transit and University Health — will contribute about $125,000 each next year.
The agency’s other members will see their dues rise from just under $8,000 annually to about $50,000. That includes Opportunity Home (formerly the San Antonio Housing Authority), Port San Antonio, San Antonio River Authority, Brooks, Alamo Colleges, Edwards Aquifer Authority and the San Antonio Independent School District.
Three universities that are part of Supply SA, UTSA, UT Health and Texas A&M-San Antonio, but aren’t members of SCTRCA, will also begin paying dues in fiscal 2025. The goal is a budget of roughly $1.2 million for each of fiscal years 2025 and 2026.
The entire organization will be located at UTSA’s downtown campus, Travieso said, creating the one-stop location envisioned by Supply SA so that small businesses seeking contracting assistance can be connected with the university’s existing Procurement Technical Assistance Center, or PTAC, and its Small Business Development Center.
As proposed, the integration “turns the tide toward long-term sustainability for this organization,” said Marisol V. Robles, the small business opportunities program manager for SAWS, who sits on the board of the SCTRCA. “And that’s great.”
