Section 3

Contract Awards

Contract awards will only be made to responsible contractors possessing the ability to perform successfully under the terms and conditions of the proposed contract. These requirements are provided in additional detail under the Monitoring and Compliance PlanThe hiring authority (i.e., DED, Subrecipient, or Successful Applicant) must maintain documentation or ensure that a contractor maintains documentation to demonstrate compliance with the regulations.

Bidding

During the bidding process for activities associated with the CDBG-DR Program, the hiring authority (i.e., DED, Subrecipient, or Successful Applicant) must perform due diligence by verifying Section 3 eligibility and collect and maintain documentation related to Section 3 certification. 

Quarterly and Final Reporting

In quarterly and final reports to DED, Subrecipients and Successful Applicants must collect and provide documentation related to compliance with Section 3 as defined in Chapter 13: Section 3 of the CDBG-DR Manual (see also Monitoring and Compliance Plan).

Recordkeeping

HUD and DED will have access to all records, reports, and other documents or items of the Subrecipient and Successful Applicant that are maintained to demonstrate compliance with the requirements of 24 CFR Part 75 or that are maintained in accordance with the regulations governing the specific HUD program by which the Section 3 project is governed.  

• Contractors will verify eligibility documents; and
• Subrecipients and DED will verify contractor reports.

The hiring authority (i.e., DED, Subrecipient, or Successful Applicant) must also maintain documentation, or ensure that a contractor, or subcontractor that employs the worker, provide documentation to ensure that workers meet the definition of a Section 3 worker or targeted Section 3 worker, at the time of hire or the first reporting period.

HUD established Section 3 benchmarks for the number of hours Section 3 workers and targeted Section 3 workers work on a project. The Section 3 benchmarks are key targets for DED, Subrecipients, and Successful Applicants.

To ensure Section 3 projects are meeting the Section 3 benchmarks, Subrecipients and Successful Applicants must report the following to DED:

• The total number of labor hours worked;
• The total number of labor hours worked by Section 3 workers; and
• The total number of labor hours worked by targeted Section 3 workers.

Subrecipients and Successful Applicants are not required to report the total labor hours worked for professional services jobs. However, if professional services workers meet the definition of a Section 3 worker or targeted Section 3 worker, Subrecipients and Successful Applicants can report their labor hours in the applicable worker hour category to help meet Section 3 benchmarks.

Subrecipients and Successful Applicants must adequately document the qualitative efforts taken to meet the numerical goals. Such qualitative efforts may include, but are not limited to, the following:  

1. Engage in outreach efforts to generate job applicants who are targeted Section 3 workers. 

2. Engage via online platforms such as Subrecipient and Successful Applicant websites and social media platforms. 

3. Announce opportunities related to Section 3 jobs in community meetings and public hearings. 

4. Post notices in public buildings and in high traffic areas.

5. Post advertisements through traditional methods such as television, radio, billboards, and other signage. 

6. Provide training or apprenticeship opportunities. 

7. Provide technical assistance to help Section 3 workers compete for jobs (e.g., resume assistance, coaching).

8. Provide or connect Section 3 workers with assistance in seeking employment including drafting resumes, preparing for interviews, and finding job opportunities connecting residents to job placement services.

9. Hold one or more job fairs.

10. Provide or refer Section 3 workers to services supporting work readiness and retention (e.g., work readiness activities, interview clothing, test fees, transportation, childcare).

11. Provide assistance to apply for, or attend, community college, a four-year educational institution, or vocational or technical training.

12. Assist Section 3 workers to obtain financial literacy training and coaching.

13. Engage in outreach efforts to identify and secure bids from Section 3 business concerns. 

14. Provide technical assistance to help Section 3 business concerns understand and bid on contracts.

15. Divide contracts into smaller jobs to facilitate participation by Section 3 business concerns.

16. Provide bonding assistance, guarantees, or other efforts to support viable bids from Section 3 business concerns.

17. Promote the use of business registries designed to create opportunities for disadvantaged and small businesses. 

18. Outreach, engagement, or referrals with the state one-stop system as defined in Section 121(e)(2) of the Workforce Innovation and Opportunity Act.

Prioritization

Regulations specifically prioritize opportunities and training to Section 3 workers residing within the Section 3 service area or the neighborhood of the project and participants in YouthBuild programs.

Worker Certification

For both Section 3 and targeted Section 3 workers, the hiring authority (i.e., DED, Subrecipient, or Successful Applicant) will utilize the appropriate Certification Form to document the status of the worker. Nothing in 24 CFR Part 75 shall be construed to require the employment of someone who meets either of the definitions of Section 3 worker or targeted Section 3 worker (see Chapter 13: Section 3 of the CDBG-DR Manual for definitions of Section 3 worker and targeted Section 3 worker). Such workers are not exempt from meeting the qualifications of the position to be filled and shall not be negatively affected by a prior arrest or conviction. 

Professional Services

Professional Services hours are excluded from the reporting requirement for Section 3 and targeted Section 3 workers. The hiring authority (i.e., DED, Subrecipient, or Successful Applicant) should not include labor hours worked for professional services jobs in the total labor hours worked on the project. However, if employees in the professional services roles meet the definition of a Section 3 worker or targeted Section 3 worker, Subrecipients and Successful Applicants can report their labor hours in the applicable worker hour category. The effect of this reporting structure is to give a Subrecipient or Successful Applicant a bonus if they can report Section 3 labor hours in the professional services context.

To the greatest extent feasible, and consistent with existing Federal, state, and local laws and regulations, hiring authority (i.e., DED, Subrecipient, or Successful Applicant) will ensure contracts for work awarded in connection with Section 3 projects are provided to business concerns that provide economic opportunities to Section 3 workers residing within the metropolitan area (or nonmetropolitan county) in which the project is located.

The hiring authority (i.e., DED, Subrecipient, or Successful Applicant) will perform due diligence by verifying Section 3 eligibility before awarding contracts to businesses that are self-certified as a Section 3 business. The status of a Section 3 business concern will not be negatively affected by a prior arrest or conviction of its owner(s) or employees.  Nothing in 24 CFR Part 75 will be construed to require the contracting or subcontracting of a Section 3 business concern. Section 3 business concerns are not exempt from meeting the specifications of the contract.