Section 3 information - Procurement and Modernization



Overview of the Section 3 Program

Section 3 (24 CFR 75) is a Provision of the Housing and Urban Development Act of 1968, as amended (12 U.S.C. 1701u). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by the U.S. Department of Housing and Urban Development (HUD) Public Housing Federal Financial Assistance, to the greatest extent feasible, and consistent with existing Federal, State and local laws and regulations, be directed to low- and very low-income persons (Section 3 Workers), particularly those who are recipients of government assistance (Targeted Section 3 Workers), and to business concerns which provide economic opportunities to low and very low-income persons (Section 3 Business Concerns).  Contractors are required to report monthly on the total number of Labor Hours worked under a Section 3 Covered Contract by all employees, and of the total hours worked under the contract, how many hours were worked by Targeted Section 3 Workers and/or Section 3 Workers. Reporting benchmarks of Labor Hours to meet the Section 3 requirements under a Section 3 Covered Contract are twenty-five percent (25%) of all employee Labor Hours will be worked by Section 3 Workers and five percent (5%) will be worked by Targeted Section 3 Workers.  A Targeted Section 3 Worker’s Labor Hours may be credited under both Section 3 Workers and Targeted Section 3 Worker’s reported hours.  All Labor Hours worked by employees of verified Section 3 Business Concerns are defined as both Section 3 Workers and Targeted Section 3 Workers for the duration of a contract.  Contractors who do not meet the goals must report on the efforts utilized to meet the obligations under a Section 3 Covered Contract.

A Medford Housing Authority (MHA) Section 3 Contract Provision will be incorporated into all Requests for Proposals and Bid Documents to assist Contractors to implement the requirements of an MHA Section 3 Covered Contract. Regulation 24 CFR 75 Economic Opportunities for Low-and Very Low-Income Persons will be inserted into and a part of the Section 3 contract provisions. Service Contractors. Construction Contractors and Sub-contractors, and other organizations with a Contract/Purchase Order from the MHA hereto after are referred to as “Contractors.” Staff of the MHA Procurement and Modernization Departments will work closely with Contractors, Service Providers and others to provide assistance to meet the obligations and requirements of Section 3.

All new hires or trainees, if feasible, will be Section 3 Workers/Targeted Section 3 Workers. Contractors may meet their Section 3 obligations by identifying active employees working on the contract, who were hired within the last five years, and whose income at the date of hire or within the last calendar or annualized year is below the low and very-low income as defined by HUD. Section 3 is not intended for Contractors to terminate existing employees, but to make every effort feasible to employ qualified low and very-low-income persons or give businesses owned by low and very low-income persons or that employ low and very-low-income persons, and particularly businesses owned or operated by individuals who participate in an MHA housing program, the opportunity for growth and self-sufficiency through employment or training. Consistent with existing Federal, State and local laws and regulations, Contractors must make their best efforts to provide employment and training to Section 3 Workers and/or Targeted Section 3 Workers.  

Professional Services contracts and Materials Supply contracts are exempt from Section 3.  However, Professional Services or Material Supply Contractors are encouraged to voluntarily participate in Section 3 by a) seeking a low and very low-income person for a position under the contract and/or b) reporting all hours worked by Contractor’s current employees who identify as Section 3 Workers and/or Targeted Section 3 Workers under the contract. All Labor Hours worked by all employees under the contract would not have to be reported.

Section 3 is both race and gender neutral. The standards provided under this regulation are based on income-level and location.  A minority and/or women owned business enterprise must provide evidence that it meets at least one criterion of a Section 3 Business Concern in order to be considered a Section 3 Business Concern. HUD is hopeful that Section 3 will serve to support, and not impede, contract opportunities for minority business enterprises.

A Section 3 Provision will be incorporated into a Contract to be awarded by the Medford Housing Authority. All proposers, consultants and contractors will be required to review all sections of this Section 3 Contract Provision in order to be fully advised of all procurement phase and contract phase requirements.  24 CFR 75 Economic Opportunity for Low and Very Low-Income Persons will be attached and incorporated into Medford Housing Authority (MHA) Section 3 Contracts.