Infra Insight Blog

Federal transportation officials are contemplating new contract rules that would make it easier for states and cities to hire local residents to work on transportation projects.  Federal rules currently prohibit the Federal Highway Administration (FHWA) and the Federal Transit Administration (FTA) from allowing contract provisions that do not directly relate to the bidder's performance of work.  Thus, local hiring provisions have not been allowed in procurements for federally funded projects.  This month, however, U.S. Transportation Secretary, Anthony Foxx, announced a year-long pilot program that will take a closer look at the longtime prohibition.  Mayors of three cities—Eric Garcetti of Los Angeles, Kasim Reed of Atlanta, and William Bell of Birmingham, Alabama—voiced their support for the pilot program.  When we invest in L.A. infrastructure, we want to maximize our investment in L.A. jobs, and this provides us with a new way forward to boost our local economy as we cut traffic and fight smog, said Garcetti.  I thank Secretary Foxx for his commitment to strengthening my city and communities across the nation.

The program accompanies a recent Notice of Proposed Rulemaking to amend the common grant rule that would allow localities to, "impose geographic-based hiring preferences wherever not otherwise prohibited by Federal statute."  Many local governments already include local hiring provisions in their procurements that don't involve federal funding.  Such provisions are intended to ensure that the communities in which projects are located benefit from the jobs that result from their investments.

The pilot program announced by Foxx will allow the FHWA and FTA to test and evaluate the merits of such local hiring provisions and whether the existing competitive bidding process can be improved.  Greg Nadeau, deputy administrator of the FHWA, said, "This measure will go a long way to bridging the gap between the qualified workers who need work and projects that need them."  The pilot program is intended to determine whether the current federal rules "unduly limit competition."

The U.S. Department of Transportation is particularly interested in contracts for which bidders wish to use local or geographic  hiring preferences, economic-based hiring preferences, or hiring preferences for veterans.

"We want to create ladders of opportunities for them, as well as for low-income workers and veterans, to help put some of the transportation investments we make in the hands of those who would benefit most," Foxx said.

The agency will not approve projects that would involve altering the requirements of the Disadvantaged Business Enterprise (DBE) Program.  Therese McMillan, acting administrator of the FTA, added: "The investments we make in local communities are truly transformational.  These investments should not only change the landscape of a community, but it should also transform and improve the lives of its residents, too."

The pilot program is proposed as an experiment under FHWA's Special Experimental Project No. 14 (SEP-14) and FTA experimental authorities.  The DOT published a related proposal in the Federal Register to modify the "common grant" rule geographic preference provision applied to USDOT programs.  Comments on the proposed rule will be accepted through April 6.