The Federal Highway Administration (FHWA) this week extended for one year a pilot program allowing state DOTs to include a geographic-based (local) hiring preference as a contract requirement on federally-assisted highway construction projects. The pilot was originally set to expire on March 6, 2015. When first proposed US DOT simultaneously proposed a new rule allowing the use of local hire requirements on a permanent basis. Thus far eight states have asked for and received permission to use local hire requirements as part of the FHWA pilot program. US DOT has indicated that it intends to approve and evaluate the results of these projects under the pilot program before deciding how to proceed with its proposed rule.
AGC was successful in getting language in the 2016 Omnibus appropriations bill to set some statutory limits on the use of local hire requirements under this pilot program. States seeking to use local hire requirements as part of the pilot program must certify the following:
(1) that except with respect to apprentices or trainees, a pool of readily available but unemployed individuals possessing the knowledge, skill, and ability to perform the work that the contract requires resides in the jurisdiction;
(2) that the grant recipient will include appropriate provisions in its bid document ensuring that the contractor does not displace any of its existing employees in order to satisfy such hiring preference; and
(3) that any increase in the cost of labor, training, or delays resulting from the use of such hiring preference does not delay or displace any transportation project in the applicable Statewide Transportation Improvement Program or Transportation Improvement Program."
FHWA sent a directive on January 8, to all of its state field offices directing them to comply this provision.
US DOT has traditionally denied states the ability to use local hire requirements on federally assisted projects. Last year, however, DOT instituted a pilot program, under its existing Special Experimental Project No. 14 authority, allowing states to use local hire requirements on an experimental basis and issued a notice of proposed rulemaking proposing to allow the use of local hire requirements permanently in the future. AGC submitted extensive comments and a legal brief on the proposed rule. DOT has not finalized that rulemaking but has moved forward with the pilot program.