Active: Lawsuit filed challenging discrimination in city contracting

Jerry and Theresa Thompson have called Houston, Texas, home for more than 30 years. They love the area, having raised their family and built Landscape Consultants of Texas and Metropolitan Landscape Management, Inc., two thriving companies whose landscapers maintain parks, playgrounds, and other government-owned properties.

Now, however, as the semi-retired couple prepares to hand off the family business to their two adult children, the city they love is squeezing them out of business for one reason: their race.

Landscape Consultants and Metropolitan are among many companies whose success depends primarily on winning large, multi-year government contracts with the City of Houston, Harris County, and other local agencies.

The Thompsons have seen opportunities for these contracts dry up in recent years, even where their business is the lowest, most-qualified bidder. The culprit is Houston’s Minority Business Enterprise (MBE) program that requires non-minority-owned businesses to give away a portion of contracts’ value to MBE subcontractors.

Landscape Consultants has a mostly Hispanic workforce. But because Jerry and Theresa are white, their company does not qualify for the MBE program’s racial set-asides.

Right now, for example, Landscape Consultants is in year three of a five-year contract with the city. The contract is worth $1.3 million, but the Thompsons are required to subcontract 11 percent of the total value, or $143,000, to a minority-owned business—even though Landscape Consultants is perfectly capable of doing the work itself.

Competing companies owned by eligible minorities have no such obligation. That is, under the same contract, a minority-owned competitor could do all the work and keep the entire contract.

For decades, racial set-asides in public contracting have fed into stereotypes that some racial groups cannot succeed without government help and led to corruption and fraud. Courts even have struck down these programs for violating the constitutional promise of equality before the law; yet—bolstered by dubious disparity studies—racial set-asides are picking up steam.

While Houston has had an MBE program on the books since 1984, Harris County—where Houston is located—implemented an MBE program in 2020, followed by the Port of Houston Authority, METRO Houston, and the Harris Health System.

Government at all levels is supposed to treat every citizen equally, regardless of gender, skin color, or where you come from. MBE programs do the exact opposite. They classify businesses based on the owners’ race when all that should matter is which company can do the best job at the best price.

Instead of trying to lift up all small business owners with programs like loan assistance, networking opportunities, lower bond requirements, or other efforts to tear down barriers to success, the City of Houston is boxing out opportunity through racial classifications.

The Constitution’s equal protection guarantee protects the right to be free from unjust racial preferences. And taxpayers should get the best prices for public contracts. So, the Thompsons are fighting back.

Represented by Pacific Legal Foundation at no charge, Jerry and Theresa filed a federal lawsuit to protect their companies’ future, and their children’s future, and for public contractors to provide their communities with the best service at the best price without racial discrimination.

What’s At Stake?

  • The government is supposed to treat every citizen equally, regardless of gender, skin color, or where you come from. Government contracting programs that assign benefits or burdens based on the race of a company’s owner violate the constitutional promise of equality before the law.
  • For public contracts, taxpayers should get the best work at the best price, period. The government should select contractors based on their ability to perform the work needed, rather than on the race of their owners.

Case Timeline

September 19, 2023