San Antonio quietly ended a rule that encouraged city contractors to give a large share of their work—sometimes up to 40%—to minority- and women-owned businesses. City leaders say they did this to protect important federal funding and to match new federal rules that limit the use of race- or gender-based requirements. Some city staff feel relieved by the change, but business advocates are upset, saying it reverses years of progress toward fairness and opportunity, as reported by San Antonio Express-News.
According to the San Antonio Express-News, Walsh issued the order on Sept. 10, instructing staff to stop applying the subcontracting goal to future agreements. Council members were briefed in a closed executive session shortly before the directive went out. The city’s roughly $4 billion fiscal 2026 budget leans on about $150 million in federal funds, and officials worried that keeping the quotas in place could put that money at risk. The city’s SBEDA program will continue to encourage subcontracting to small and local firms, but all race- and gender-specific criteria have been stripped out.
Federal Rule Forced The Change
The city’s pivot tracks an interim final rule from the U.S. Department of Transportation that took effect Oct. 3, 2025 and "removes race- and sex-based presumptions of social and economic disadvantage" for Disadvantaged Business Enterprise (DBE) and Airport Concession DBE (ACDBE) certifications. The DOT rule also calls for a nationwide reevaluation of currently certified firms and advises agencies that receive federal funds to pause setting DBE contract goals until those recertifications are finished.
In plain terms, the federal government told local agencies to clean up their certification lists and stop counting race and sex the old way while they do it. San Antonio’s decision to remove race- and gender-specific subcontracting criteria is being framed at City Hall as a defensive move in the middle of that federal reset.
Local Reaction: Mixed And Loud
The decision has split the city’s civic and business leadership. "We’re going backwards now," said Ramiro Cavazos of the U.S. Hispanic Chamber of Commerce, warning that the change could erode hard-won progress toward equity in city contracting, as stated by San Antonio Express-News.
District 10 Councilman Marc Whyte took the opposite view, arguing that the policy shift is overdue. In his words, the "race or gender when awarding contracts." For him, removing the targets is about focusing on results, not demographics, as per San Antonio Express-News.
Mayor Gina Ortiz Jones has tried to thread the needle. She has said she remains committed to supporting small businesses and artists even as the city adjusts to the new federal guidance, signaling that City Hall is not abandoning smaller players, just changing how it keeps score.
What This Means For Certifications And Small Firms
Supply SA, the CEO-led regional procurement initiative that recently absorbed the South Central Texas Regional Certification Agency (SCTRCA), will keep handling certifications and providing training and technical assistance for small, minority and women-owned firms, according to the San Antonio Report. So while the city has removed race- and gender-specific subcontracting goals, the certification and support infrastructure for those firms is still in place.
The city’s procurement rules also spell out how the new landscape will work in practice. Formal solicitations and City Council approvals apply to contracts above $50,000, and SBEDA subcontracting goals are set on a per-contract basis, according to the City of San Antonio vendor handbook and related SBEDA materials. That means the real impact of the rule change will be felt case by case as new contracts are designed and awarded.
Legal And Funding Risks
The DOT’s new rule says programs for disadvantaged, minority, and women-owned businesses must be nondiscriminatory. It also requires all current certifications to be reviewed and tells agencies to pause using race- or gender-based goals until that review is finished, as reported by San Antonio Express News.
This is a major reason San Antonio removed its race- and gender-based subcontracting rules. City leaders say it’s safer to do this while federal rules are changing. The results of the federal recertifications, how well Supply SA supports small businesses, and the city’s 2026 contracting plans will determine whether minority- and women-owned firms can still get steady city work—or whether they’ll lose opportunities as the rules change.
