PHAs receiving HUD funding above certain thresholds are required to comply with Section 3 of the Housing and Urban Development Act of 1968. Section 3 requires that, to the greatest extent feasible, employment and contracting opportunities generated by HUD-funded projects be directed toward low- and very low-income persons — particularly residents of public housing — and businesses that employ them. For construction contracts exceeding $200,000 and subcontracts exceeding $100,000, prime contractors are required to submit a Section 3 plan outlining how they will meet workforce and subcontracting goals.
Section 3 businesses and workers must be certified or self-certified under HUD's guidelines. In addition to Section 3, many PHAs have adopted Minority Business Enterprise (MBE) and Women-Owned Business Enterprise (WBE) participation goals as part of their contracting equity programs. Contractors responding to PHA solicitations should be prepared to document outreach efforts made to Section 3, MBE, and WBE firms, even if specific numerical goals are not mandated, as demonstrated good-faith effort is evaluated during the award process.