Fort Worth council suspends DEI programs, adopts small-business plan to protect federal grants

The Fort Worth City Council voted Tuesday to suspend application and enforcement of certain diversity, equity and inclusion (DEI) ordinances and to adopt a small business development program intended to preserve federal grant funding and shift the city's procurement priorities toward locally based small businesses.

City staff warned council that recent executive orders, federal agency directives and related court rulings have required grant recipients to certify that they do not operate programs that use race, color, national origin, religion or similar criteria for participation. "These grant requirements do not affect our civil rights office and our ability to support our Human Relations Commission," Assistant City Manager Dana Bergdorf told the council, but she said the city faces the risk of losing active federal grants totaling about $277,000,000 across multiple departments and about $40,600,000 in annual awards if it does not act.

The immediate policy change will suspend DEI-related ordinances and resolutions that staff concluded would put the city and covered employees at legal risk under the federal False Claims Act and other federal enforcement actions if the city continued to certify certain grant documents. Council members were briefed that the city's annual HUD-related awards alone include approximately $13,300,000 for community development programs that support low-income households and fund neighborhood services staff positions.

To replace the now-suspended business equity rules, council approved an ordinance to establish a small business development program. Under the new ordinance: the city will apply a 5% bid preference for certified small businesses located within Fort Worth on procurements under $100,000; for procurements over $100,000 the city will adopt a 30% small-business utilization goal for firms located within the five counties that include Fort Worth (Tarrant, Denton, Johnson, Parker and Wise); and economic development incentives (such as negotiated property tax abatements) may include small-business utilization goals for both construction and goods and services.

Bergdorf said the city will initially rely on Small Business Administration (SBA) definitions to certify firms quickly through existing regional certification agencies; staff recommended evaluating and tailoring the local definition of "small business" after one year of implementation and returning to council with a recommended Fort Worth-specific SBE definition by June next year. She described other elements council approved or directed staff to pursue: contracts with the three local chambers of commerce to assist with outreach and certification, a planned small contractor development program (via RFP) to expand bonding and insurance capacity, and work to unbundle some contracts where feasible to increase opportunities for smaller firms.

Chamber executives who spoke during the staff presentation said they would support certification, matchmaking and training. "We are energized by the connections we have with the other chambers," Michelle Greenford said, noting efforts to prepare firms for contracting and access to capital. Steve Montgomery, president and CEO of the Fort Worth Chamber of Commerce, said the chamber would focus on outreach, convening and succession planning for local businesses.

Council members who supported the measures cited the immediate fiscal risk from federal enforcement and grants being withdrawn, the budgetary impact on city services and the need to preserve jobs funded by those grants. Council members who opposed the suspension expressed concern that the step surrenders local control, weakens long-standing civil-rights and equity enforcement structures, and signals acquiescence to federal pressure rather than legal challenge.

Votes at a glance: the council approved the resolution to suspend the application and enforcement of certain DEI-related ordinances and resolutions to preserve federal funding (motion carried) and separately approved the ordinance establishing the small business development program, including the procurement preferences and utilization goals (motion carried). The council split the policy decisions into two separate votes before adopting both.

Staff said the small business ordinance would take effect for bids advertised on or after Sept. 1; the economic-incentive language is effective immediately. Bergdorf and city manager Jay Chapa told council they plan to bring contract amendments for the Hispanic Chamber and Metropolitan Black Chamber of Commerce, plus a new contract with the Fort Worth Chamber, to the Aug. 26 agenda and to return next June with recommended local adjustments to the small-business size definition based on regional certification data.

The council's actions follow weeks of staff work, consultations with three chambers of commerce and outreach to certification agencies and stakeholders. City staff repeatedly urged that inaction could force the city to decline or stop certifying federal grants and federal agencies' awards, which they said would result in direct losses to active projects and positions funded by CDBG, HOME, HOPWA, ESG and other federal programs.

The council's decision does not eliminate the city's civil-rights enforcement functions; staff said the Human Relations Commission and ADA enforcement will continue within the city's civil-rights structures.

Ending: Council members and staff said they expect to monitor and report metrics quarterly for the chamber contracts and to review small-business utilization and the fiscal impact of the procurement preference after the first year; council directed staff to return within the timelines outlined during the presentation for contract amendments and for a recommended Fort Worth-specific small-business definition.