D.C.’s ‘First Source’ Contracting Program Faces Federal Lawsuit

In 1984, the D.C. Council passed the First Source Employment Agreement Act, which required contractors who work on city-funded projects to hire at least 51 percent of their employees from among D.C. residents and to list their job openings with the D.C. Department of Employment Services.

The law was passed in response to D.C.’s growing unemployment rate and the declining presence of D.C. workers on local development projects. In 2011, the act was amended to impose heavier penalties, such as debarment from placement on future project contracts or higher monetary fines, for those contractors who fail to comply with the regulation.

Some builders currently working on city projects in the District of Columbia say that abiding by the First Source requirement poses challenges to the efficient operation of their business. Now, contending that they are hampered by regulations that they consider unfair and impossible to comply with, employers and disenfranchised workers living outside of the District have challenged the law in court.

In May, the Associated Builders and Contractors of Metropolitan Washington, together with two local companies and three individual workers who live outside the District, filed suit against the city in the U.S. District Court for the District of Columbia claiming that the program is unduly burdensome. They assert in their complaint for declaratory judgment and injunctive relief that the requirements ultimately lead to business failures since building companies are forced to hire from a specific pool of workers – a group that they claim is composed of workers who tend to be less skilled than those workers who reside outside the District.

And because they say the law creates barriers for skilled laborers who live in surrounding states, such as Maryland and Virginia, the plaintiffs claim that it infringes on the fundamental right to pursue employment free from discrimination and that the law is unconstitutional because it discriminates against interstate commerce in favor of intrastate commerce.

The plaintiffs also say that problems arise when construction firms move on to a project outside of the city after completing a project in the city. Often, a lack of transportation or affordable housing opportunities near the new job site prevents the workers hired under the First Source program from continuing employment with the firm. As a result, they say, D.C. workers are unable to gain permanent employment or meaningful skills – and thus, they say, the purpose of the rule is frustrated, and the construction companies are forced to bear the brunt of the incidental effects of the law.

First Source has, however, amassed a good deal of support from city officials, as well as from D.C. workers and residents. On June 14, 2012, the Laborers Union of Washington, D.C, along with community groups and city leaders, held a rally to support the program. Supporters of the law note that unemployment in D.C. is above the national average and that D.C. residents are particularly underrepresented in the construction industry. They deny that D.C. laborers are less skilled than those outside the city and point to the number of D.C. residents who have worked on city projects since First Source was implemented in 1984.

The result of the lawsuit will have lasting effects on development in the city. The council stands firm in the assertion that if employers want city subsidies, they must comply with the conditions of the subsidy. But if employers and construction firms find that the regulations are too burdensome, it may cause them to avoid bidding on projects in the District. If that happens, the city may see a decline in quality contractors.

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