$40.6 million is the figure at the heart of Fort Worth’s recent shift in economic development strategy. That’s the annual amount of federal funding the city risked losing after the Texas legislature passed a law restricting Diversity, Equity, and Inclusion (DEI) initiatives, prompting a 7-4 City Council vote to suspend those programs last year. The resulting scramble to maintain federal eligibility has led to a surprising outcome: a surge in applications for “Small Business Enterprise” (SBE) certification, effectively replacing targeted minority and women-owned business incentives with a broader, though arguably less impactful, program. Follow the money, and the story isn’t about DEI anymore – it’s about risk mitigation and the evolving definition of “small” in a rapidly changing economic landscape.
From DEI Suspension to SBE Surge
The city’s pivot, formalized in August with the creation of the Small Business Development Program, offers a 5% bid preference on city contracts up to $100,000 for certified SBEs. For contracts exceeding that threshold, a 30% utilization target for SBEs has been established. This isn’t a complete dismantling of support for historically disadvantaged businesses, but a significant recalibration. While the previous DEI-focused goals directly incentivized contracting with specific groups, the SBE program casts a wider net, potentially benefiting a larger number of businesses – including those not traditionally considered underrepresented. Andrea Duffie, city spokesperson, confirmed the launch of a dedicated website section for the program, signaling a formal commitment to the new structure.
The Hispanic Chamber Sees Opportunity in a New System
The Fort Worth Hispanic Chamber of Commerce is actively encouraging its members to pursue SBE certification, reporting sustained interest despite the program’s origins in the DEI suspension. According to Gilberto Atayde, VP of Operations, the appeal lies in increased visibility and access to bid opportunities. “People are always looking to find ways to stand out in the market,” Atayde stated, highlighting a pragmatic response to the altered landscape. The bi-annual recertification requirement, while adding an administrative burden, is framed as a positive – a formal verification of a business’s financial health and operational legitimacy. This emphasis on “paperwork in order” suggests a move towards prioritizing demonstrable business competence alongside size.
Based on the original fortworthreport.org report.
A Broader Legal Battle Over Set-Asides
Fort Worth’s experience isn’t isolated. A lawsuit filed in Texas challenges recent changes to the state’s Historically Underutilized Business (HUB) certification program, alleging that Acting Comptroller Kelly Hancock overstepped his authority in revising the program following the Supreme Court’s decision on affirmative action and Governor Greg Abbott’s ban on DEI policies. Alphonso David, lead counsel for the plaintiffs, argues Hancock “rewrote” the program without legal basis. This legal challenge underscores a fundamental tension: the conflict between efforts to promote equitable economic opportunity and legal interpretations surrounding equal protection. The outcome of this case could have ripple effects beyond Texas, influencing how municipalities navigate federal funding requirements and support for small businesses.
Beyond Fort Worth: A National Trend of Re-Evaluation
The situation in Fort Worth reflects a broader national trend. Following the Supreme Court’s ruling on affirmative action, cities and states are re-evaluating their economic development programs to ensure compliance with evolving legal standards. The emphasis is shifting from explicitly race- or gender-conscious initiatives to programs focused on broader definitions of “disadvantage,” such as small business size or geographic location. This isn’t necessarily a retreat from equity, but a strategic adaptation to a more constrained legal environment. The 30% utilization target for SBEs on larger contracts suggests Fort Worth is attempting to maintain a commitment to inclusive contracting, albeit through a different mechanism.
What this means for your wallet
For Fort Worth residents, this shift could translate to a more competitive bidding process for city contracts, potentially leading to lower costs for taxpayers. However, the effectiveness of the SBE program in truly supporting historically disadvantaged businesses remains to be seen. Will the broader definition of “small business” dilute the impact of the program, or will it create a more level playing field for a wider range of entrepreneurs? Investors and consumers should watch closely to see if the city’s SBE program demonstrably increases contract awards to minority- and women-owned businesses, or if the benefits primarily accrue to established small businesses already well-positioned to compete for city work. The key question is whether this new program will deliver on its promise of mitigating the impact of the DEI suspension, or simply represent a costly compliance exercise.
