Did a Judge Just Kill Race-based Contracting?

Houston awarded $579 million to certified minority women and small business contractors last year, and now federal judges block the city from using race in those contracting decisions.

So what happens next? Well, last year on this show, we asked, you've heard of DEI, but have you heard of MWBE? It was an episode.

We told you about a Houston area family challenging the use of race in public contracting, and this week, they actually won their case.

A federal judge ruled that Houston's use of racial preferences in city contracting violates the Equal Protection Clause of the 14th Amendment of the Constitution.

The ruling blocks the city from continuing the race-based portion of a contracting program that has operated since 1984.

And that decision could change who receives hundreds of millions of dollars in public business, and it could provide a roadmap for challenging similar programs across Texas.

Now let's be precise about what was struck down.

So the MWBE stands for Minority and Women-Owned Business Enterprise.

Houston also certifies small businesses and operates separate programs for veterans, people with disabilities, and other communities.

This ruling does not automatically eliminate every one of those programs, but it does block Houston from considering race when awarding public contracts.

And so the lawsuit was brought by Jerry and Teresa Thompson, a white couple from Spring whose own landscape consultants of Texas in Metropolitan Landscape Management.

So their companies depend heavily on government landscaping contracts.

And because the Thompsons are white, their business could not qualify as minority owned.

So on certain contracts, they were required to subcontract part of the work to certified minority owned companies, even when they said they could perform that work themselves.

They argue that this prevented them from competing on equal terms.

Federal Judge David Hittner agreed and blocked Houston from using those racial preferences.

Houston awarded approximately $2.5 billion in construction professional service and other contracts during fiscal year 2025.

Of that, $579 million went to certified minority-owned and women-owned and small businesses through more than 1,600 contracts.

Hispanic-owned companies received 34% of those dollars, Asian, 22%, firms owned by white women, 17%, and Black-owned businesses received 14%.

But remember that $579 million includes women-owned and small businesses.

The ruling did not necessarily place every dollar in that category at risk.

The court targeted the city's use of race.

Houston also had an evidence problem.

So race-based government programs must be supported by strong evidence showing that discrimination exists and must be carefully designed to address that discrimination.

So Houston had not accepted a comprehensive contracting disparity study since 2006.