City Uses Clout to Dictate Contractor Hiring Practices

Originally published by: Construction DiveJuly 2, 2018

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Editor's Note: The article below brings to light a growing trend of municipalities (in this case, Denver) using their funding clout to require contractors to hire at least a certain percentage of their workforce for a project from the local populous. While currently limited in scope to large infrastructure projects, this precedent could easily carry over into the building construction industry.

Dive Brief:

  • Denver is anticipating a $4 billion building boom that could require up to 30,000 workers during the next five years, and the city believes construction job opportunities should be accessible to all its residents, including those in disadvantaged, low-income neighborhoods. According to The Denver Post, the city council last month mandated a pilot workforce requirement as part of a $275 million site work contract with contractor Hensel Phelps for the $1 billion city- and county-owned National Western Center project.
  • The contract requires Hensel Phelps to implement WorkNOW program requirements, which include stipulations that the contractor hire a set amount of residents who were either formerly incarcerated, reside in economically depressed areas, or are veterans. Hensel Phelps' scope of work includes bridge, road, rail and infrastructure construction, relocation and management services.
  • Hensel Phelps must also help build awareness about the careers available in construction through outreach programs to the local community, local schools and relevant organizations, as well as through job fairs, job seeker support and connections to training opportunities. The contractor must track all elements of the plan and report quarterly on the program's success, which could spur the city to make the hiring goals more permanent.

Dive Insight:

Many local governments that foot all or a portion of the bill for massive publicly funded projects are not content to watch out-of-town general contractors and subcontractors bring in their own crews to the job and cut out local residents from reaping the benefits of construction jobs and the good paychecks that go along with them.

To ensure that contractors meet local, minority, veteran or other hiring goals, some agencies use the threat of hefty monetary fines. Contractors working on the $863 million Little Caesars Arena in Detroit failed to meet the hiring requirement of 51% local residents and were fined a total of $5.2 million by the city. In 2016, when the city first announced initial fines, officials said that contractors had made good faith efforts to find local workers but that the skilled labor pool was limited.

In Detroit's case, the fines were routed to job training programs so that local workers could be better prepared for future opportunities.