Bucking the trend: Houston is expanding its affirmative-action programs. But will it help black contractors?

Black Enterprise, Feb, 1996 by Lloyd Gite

Brian Smith spends his days inspecting the progress on the $3.2 billion Greater Houston Waste Water Program. But he readily concedes that, had it not been for the city's affirmative-action program, his company would not be working on the five-year operation to overhaul Houston's sewer system.

Smith, an architect, began inspecting waste-water treatment plants in 1986 while working at a local firm. A year later, he formed his own company, Brian Smith Construction Inspection. After being certified, Smith began to compete for business under the city's affirmative-action program.

"Houston's affirmative-action program has been a tremendous opportunity for us," says Smith, 36. "It has helped to grow our company. Without it, I don't think we would have had the opportunity to participate on projects like the [waste-water facility]."

While affirmative-action programs are under attack across the country, Houston officials are strengthening and expanding theirs. If there's a lesson to be learned from Houston, it's that politicians respond to voters and voters alone. Houston's black community, about 28% of the city's population, has consistently demanded a fair share of the region's economic wealth and will band together to oppose anyone who threatens their participation.

Recently, Houston's Mayor Bob Lanier signed an executive order that increased the goals of the city's affirmative-action program. Lanier, a wealthy, 70-year-old white businessman, says the time is not right to eliminate or scale back affirmative action. "To pretend that we're in a world in which there is equal opportunity is just nonsense to me," says the popular, two-term mayor.

Expanding Houston's program hasn't been welcomed by all the city's residents. But few can deny that it has strengthened the region's economy by creating more taxpayers. Smith, for example, now employs 21 people. Last year, his company had revenues of $1.8 million; $1.6 million came from city contracts. This year, he expects to earn $2.2 million in revenues, with $1.9 million of that coming from city contracts.

MOVING FORWARD

In March 1995, Lanier signed an executive order that increased the city's affirmative-action goals. The mayor's order was unanimously passed by Houston's city council. Under the old goals adopted more than a decade ago, 12% of the city's construction contracts went to women- and minority-owned firms. Eight percent of the city's purchasing contracts and 19% of the professional service contracts went to women- and minority-owned firms.

In 1994, that translated to close to $100 million that was paid to Minority and Women Business Enterprises (MWBEs) by Houston - about 17% of the $603 million in city contracts. Under the new goals recommended by the mayor, those percentages increased to 17% of construction dollars, 11% of purchasing dollars and 24% of the city's professional service dollars.

It's too early to tell whether the increased goals will funnel more money to black contractors, but Houston is striving to increase minority participation, not scale it back. Women and minorities make up more than 60% of its population.

"To shut down or cut back on affirmative action would send a chilling message to those groups and the youngsters in those groups," Lanier says. "It's not uncommon for us to incur a cost to have particular groups have a stake in our economy. We do it for farmers, those in the shipbuilding industry, and those in the home-building industry. I think there is a cost to affirmative action, but it's an absolute cost we ought to bear."

Not only did Lanier increase the city's affirmative-action goals, but he also strengthened the program, which some critics had labeled weak in enforcement and compliance. Lanier included a number of other measures, such as reducing the size of contracts (when feasible) to let smaller contractors compete, speeding up payments, making performance bonds more accessible and imposing sanctions against prime contractors who try to circumvent the program by setting up "front" companies.

THE ROCKY ROAD TO

INCLUSION

In August 1984, Houston's then Mayor Kathy Whitmire and the city council passed a MWBE ordinance that established citywide goals for minority and women-owned companies. It was the first such ordinance in Texas. The goals were 7% for purchasing, 10% for construction and 16% for professional services.

Statistics for minority- and women-owned businesses participating in city contracts are not available before 1981. From 1981 to 1983, MWBEs earned a pittance of city contracts, $7.4 million, an average of $2.5 million a year. Under Whitmire's leadership, the amounts quickly rose and, from August 1984 to December 1990, more than $383.6 million (approximately 13% of city contracts) went to MWBEs.

Houston restaurateur Harlon Brooks became certified in the city's affirmative-action program in 1985, and he's benefited greatly. Today, Brooks, 51, has two barbeque restaurants at Intercontinental Airport and one at Hobby Airport, and he has a mobile food court at the George R. Brown Convention Center. This year, Brooks expects close to $5 million in sales from his eateries on city property. "There is no way I could have gotten into those airports without the city's affirmative-action program," says Brooks, who employs more than 70 people. "They helped me get financing and opened many doors." Brooks plans to open a 6,000-sq.-ft. restaurant at a city-owned facility in downtown Houston in 1996.