Home > Economic Development > Contracting

Contracting

Innovative contracting policies allow local governments to leverage the power of their purse directly into job quality. Where the city spends its budget in the private market, there is both clear ability and responsibility to ensure that public investment is used wisely in ways that move the city toward more inclusive prosperity. Cities are well within their legal authority to dictate certain requirements for hiring, job quality, and ownership when spending public money on contracts for longer-term services (vending, maintenance, etc) or on construction projects.

 

The primary lever for ensuring that jobs created by government contracts are available to local residents comes through priority hire ordinances, which require contractors to prioritize hiring local residents or, when more specific, to target hiring of marginalized residents. Local hire requirements often use markers such as zip codes to determine whether a contractor is hiring local workers at the desired rate. Targeted hire requirements aim to bolster the success of marginalized residents in the hiring process. Most targeted hire ordinances specifically prioritize people of color, low-income people, and women, citing the disadvantages these groups have and continue to face in hiring processes. In practice, many priority hiring requirements incorporate both factors, and most “first source” hiring providers screen workers for both local residence and disadvantaged identity.

 

Job quality standards are affected either through ordinances that set wage and benefits for workers across all city contracts, administrative policies that formally incorporate job standard criteria into bid evaluations, or in project-specific contracts (generally for construction) that address job standards. Ordinances that apply to all workers employed by contractors or sub-contractors with the city generally stipulate that workers must be paid either a pre-determined living wage or the prevailing wage for their position. There might also be ordinances providing specific benefits such as paid sick leave, paid family leave, or other benefits. Cities can also make an administrative policy that all departments must evaluate (in a way that contributes meaningfully to the bid outcome) the job quality offered by firms who are bidding - best value contracting is an example of this approach. On the project-specific level, there are several types of contractual additions with slight variations – project labor agreements, community workforce agreements, and community benefits agreements – that all strive to set good wages and require training and apprenticeship programs to be offered to workers.

 

Though affecting a smaller group of residents, cities are also evaluating contracting outcomes from the perspective of firm owners. Many cities have had long-standing initiatives to support people of color and women who are business owners. At their best, these initiatives not only monitor the rate at contracts are awarded to target groups, but also provide technical assistance to support business owners competing for contracts. Small and local business owners of all identities are often helped through policies that reduce overhead, whether by improving transparency about which bids are open (and how long in advance the RFPs circulate) or by breaking up large contracts into smaller components that firms with less capacity could fulfill. 


Building America While Building Our Middle Class: Best Practices for P3 Infrastructure Projects, In The Public Interest and Partnership for Working Families, March 1st, 2016. Read more.



Creating Good Jobs & Opportunity in Our Cities: Procurement as Economic Development, Nikki Fortunato Bas, Partnership for Working Families, January 22nd, 2016. Read more.



Contracting that Works, Karla Walter and David Madland, Center for American Progress, November 2nd, 2015. Read more.



Exploring Targeted Hire, UCLA Labor Center, March 1st, 2014. Read more.



Delivering Community Benefits through Economic Development, Ben Beach, Julian Gross, and Almas Sayeed, Partnership for Working Families, January 1st, 2014. Read more.



What is a Project Labor Agreement?, California Construction Academy, UCLA Labor Center, January 1st, 2013. Read more.



The Construction Careers Handbook, Kathleen Mulligan-Hansel, Sebrina Owens-Wilson, and Ben Beach, Partnership for Working Families, January 1st, 2013. Read more.



First Source Hiring, Sugar Law Center for Social & Economic Justice, August 31st, 2011. Read more.



The Road to Responsible Contracting, Paul K. Sonn and Tsedeye Gebreselassie, National Employment Law Project, January 1st, 2009. Read more.



Making Development Work for Local Residents, Kathleen Mulligan-Hansel, Partnership for Working Families, July 1st, 2008. Read more.



Contracting for Equity, Tim Lohrentz, Government Alliance for Race and Equity. Read more.



Cities Pave the Way: Promising Reentry Policies that Promote Local Hiring with Criminal Records, National League of Cities Institute for Youth, Education, & Families and National Employment Law Project. Read more.



There is new momentum among cities to ensure more inclusive hiring practices in public contracts. Newark led the way with a 2000 ordinance requiring city service providers to hire residents for at least 40% of positions through the contract’s duration. Seattle passed an ordinance in 2015 that incorporated priority hiring and training requirements on large city construction projects as part of their Labor Equity Program. Mayor Lee of San Francisco issued a 2011 executive order on priority hiring for infrastructure projects, and the city has been tracking outcomes in each department. The East Palo Alto, CA Redevelopment Agency created a policy to guide first source hiring.

 

Cities have also used contracting ordinances, policies, and agreements to strengthen job quality. Madison, WI uses a best value contracting policy to evaluate job quality criteria of bids, rather than just cost. There are many individual examples of project labor agreements, community benefits agreements, and related arrangements; in 2011 Los Angeles passed an ordinance requires the use of project labor agreements on city infrastructure projects. King County, WA has also developed criteria for using project labor agreements.

 

More cities are also revamping their contracting processes to support business owners, both those who are marginalized as well as all who own smaller firms. A 2014 executive order from Mayor Murray of Seattle required city departments to increase support for women- and minority-owned businesses and ensure that contractors are complying with WMBE inclusion plans (see results from this & priority hiring program here). Recently, Cincinnati began requiring city departments to meet benchmarks for the share of contracts awarded to African American- and woman-owned firms. To support smaller firms, Pittsburgh has revamped and digitized its procurement tools, increasing transparency and lowering the overhead as compared to the previous system. The office of Los Angeles Mayor Garcetti has spent several years evaluating the city’s procurement process to re-focus efforts on inclusive economic development.

POLICY CONTACT


Satya Rhodes-Conway
(608) 262-5387
satya@mayorsinnovation.org

At our 2016 Winter Meeting, we heard from cities leading on procurement and contracting as economic development. Learn more or view the presentations here.

 


 

Watch a panel convened by MIP as part of the New Economy Action Project track at Commonbound 2016 on "Leveraging Procurement for Community Wealth-Building and Local Jobs:"

 


 

Read more about leveraging contracting and procurement for economic development in our report Cities at Work: Progressive Local Policies to Rebuild the Middle Class.