Washington—Today Mayor Vincent C. Gray announced the pilot Workforce Incentive Program (WIP) to increase the participation of District residents on locally funded projects. The initiative will first be implemented by the Office of Public Education Facilities Modernization (OPEFM) before eventually expanding to other District projects.
“As everyone is well aware, the unemployment rate in the District is staggering, and in some parts of our city it’s as high as 28-30 percent,” said Mayor Gray. “My Administration is committed to finding both short-term and long-term solutions to workforce development, job creation, education and training opportunities for our residents. The D.C. Workforce Incentive Program changes the paradigm for not only how we contract for publicly funded projects, but provides a series of incentives for companies doing business in the District to meet hiring goals.”
The pilot WIP initially involves six District-funded school construction projects totaling approximately $55.6 million. They are: Turner Elementary School modernization (Ward 8); Hart Middle School Phase 1 (Ward 8); Seaton Elementary School Phase 1 (Ward 2); Maury Elementary School Phase 1 (Ward 6); Emery Elementary School @Langley (Ward 5); and Reconstruction of Takoma Elementary School (Ward 4).
“This initiative is something that I have contemplated for some time,” said Mayor Gray. “The WIP will not only provide more employment opportunity for D.C. residents, but more importantly, this is a positive way to close an unintended loophole in the First Source law.”
This pilot program is designed to employ incentives to overcome certain obstacles in the current First Source Act. OPEFM’s construction contracts stipulate agreement with First Source, and despite general compliance with the Act’s provisions, only about 22percent of the construction workers employed on school renovation jobs are District residents.
The existing First Source Act focuses on “new hires” rather than hours worked and does not cover a majority of the workers in construction trades. Most of the work in the construction industry is performed by subcontractors, who typically call upon their existing labor force and move the workers from one job to the next rather than hiring “new” workers.
“The costs for this pilot program are minor compared to the many ancillary benefits to the District. As we increase job opportunities, we will also be increasing the local tax base,” said City Administrator Allen Y. Lew. “In addition, this signals to the business community that DC is serious about working with local firms and is willing to provide meaningful incentives to achieve something that aids the contractors, government and District residents at the same time.
Because most of the construction jobs are essentially “exempt” from the requirements of the First Source Act, the incentive program will be a more effective way of increasing the participation of District residents in construction projects. The Workforce Incentive Program incentivizes contractors and subcontractors to increase hiring of District residents by: 1) paying the general contractor an incentive of up to 5 percent of its fee for achieving District resident hiring targets established as part of its Guaranteed Maximum Price for the project; and, 2) paying subcontractors an incentive payment equal to 10 percent of the payroll that is paid to District residents on the project. The Workforce Incentive Program is designed to increase District resident participation in these pilot projects from the existing 22 percent to 35 percent or more.
“The pilot projects were selected because each is currently out for bid and all have relatively short schedules,” said Ollie Harper, Acting Executive Director of OPEFM. “Five of the six pilot projects are scheduled to be complete in time for the beginning of the 2011-12 school year. Takoma should be complete by the end of the year. By selecting projects with short schedules, we will be able to evaluate the effectiveness of the program quickly.”
Actual costs for the Workforce Incentive Program will vary depending upon the actual number of District residents working on the projects. If District resident participation is increased to 35 percent, the project cost will increase by 1 percent. If District resident participation is increased to 50 percent, the project cost will increase by 1.5 percent. OPEFM has set aside funds within the capital budgets for the pilot projects to cover these costs.
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