ConstructionPro Week, Volume: 3 - Issue: 34 - 08/22/2014

Can Apprentice Programs Favor Local Bidders?

By Bruce Jervis


It is understandable that local government entities would like their public works projects to generate jobs for local residents. The projects are frequently funded, at least in part, by local taxpayers. An out-of-town contractor with out-of-town employees is a galling sight. The public procurement laws, however, with their emphasis on open competition, generally prevent hometown favoritism.


Some communities are trying a new tactic. They create an apprentice training program, or participate in an existing program, to train local workers in construction trades. They then stipulate than any bidder on a public works contract must employ a certain number of recent graduates from that program.


The U.S. Court of Appeals for the First Circuit just struck down such a requirement. It runs afoul of the federal Employee Retirement Income Security Act. The Eighth Circuit reached the same conclusion several years ago. It appears apprentice training programs are not a viable form of local favoritism.


The desire to create local employment opportunities is not base or self-serving. It is usually community spirited. Yet, open competition, free of favoritism, is a cornerstone of public procurement. What is your opinion? I welcome your comments.



These programs are very challenging when you are a specialty trade, and the required ratios of core employee to apprentice totally impact production and quality
Posted by: Jeff Andrews - Friday, August 22, 2014 11:03 AM

These Apprentice Programs sound terrific. My hope is that they now have the skills to be competitive in the open market.

As a procurement professional, I believe it would be a disservice to them to put preferences in place that would be used against them in a reciprocal manner outside of their "local" area.

Additionally, taxpayers should never foot the bill to subsidize any businesses through public contracts.
Posted by: KATHY ELGIN - Friday, August 22, 2014 11:07 AM

'Open Competition' is an economic theory, while local employment is real, political practice. Let's not mix them up. Local jobs will, and should be, always a part of local projects.

As a local, I want to see my community benefit by both the process and the product. They competition is levelized when all bidders are required to hire locally trained workers.
Posted by: David Dwyer - Friday, August 22, 2014 11:33 AM

As a contractor who does most of its work out of town, we always hire as many local craft-workers as possible to avoid OT living expenses. These municipalities are legislating a solution to a problem that doesn't exist.
Posted by: J Ard - Friday, August 22, 2014 11:36 AM

'Open' bid invitations are required for government projects to stop 'exclusionary' practices often used in awarding contracts.

The open bid invitation process leaves taxpayers wide open a mountain of paper to process, higher project costs, completion time delays and less quality control. This subsidy of inefficiency is our law. Local stipulations cannot be applied.

Private owners may screen on the basis of qualifications, expertise, project work history and quality of work. Among competive

bids solicited, expert judgement can be used.

Will there ever be a just balance between political award of contracts to 'a friend of a friend' and public bids open to ALL comers?

Who would decide if correct judgement with integrity is used awarding public projects? Trust that decisions would be made in the best interest of the community is lacking. After 40 years in construction, I don't see any balance found yet or even on the horizon.

Posted by: Theresa M. Galloway - Friday, August 22, 2014 12:21 PM

As a contract administrator with a federally funded state employment agency, on the surface, hiring local seems to make sense. However, given legal requirements governing competitive bidding, one cannot foster hiring local or otherwise. One must follow the letter of the law, without fail. This precludes stacking the deck in anyone's favor. It cannot be done.

Davis-Bacon & Related Acts were designed to ensure competitive bidding opportunities for local businesses by establishing a pay rate for specific work in specific states and counties. Davis-Bacon & Related Acts apply to federally funded projects of $2,000 or more, and apply if work is even partially financed with federal money - even if federal contribution is 1/2 a cent - if any federal money is used to pay for the project, and the project meets the financial threshold of $2,000, then Davis-Bacon rules apply.

Local businesses cannot be underbid by out of state businesses employing disenfranchised populations. So, at least everyone knows what costs must be accounted for, in Davis-Bacon related projects. This ensures all have competitive opportunities with an equal playing field.

As stated earlier, these laws were put in place to guarantee local businesses, using local pay rates, have a fair shot at bidding opportunities.
Posted by: Helen A. Dinsmore - Friday, August 22, 2014 12:36 PM

I understand the goal, but all of us frequently deal with the unintended consequences of government programs both in our professional and private lives.

In my professional experiences with a disadvantaged and small business targeted program in Omaha, NE the "goal" was usually unattainable without using substantially higher cost bids from targeted businesses. Therefore, a general contractor that chose to use the lowest and best bid rarely met the goal.

Because the law said "quotas" were illegal, they allowed the general contractor to prove that a good faith effort was made to reach the "goal". This was also nearly impossible to do. I think the company I work for was the only one to succeed in proving good faith effort in several years of the program.

As a result, the project was usually awarded to a general contractor at a 5 to 15% higher cost to the tax payers. They used higher priced less qualified bidders and probably threw in more money to handle the anticipated issues of dealing with them.

If a public entity wants to promote higher employment of local citizens, get out of the way and let the "free market" work. Outside companies cannot ship people around the country unless the local market has inflated the labor rates. As indicated in J Ard's post, even out of town contractor's hire as many locals as possible.
Posted by: Jim from Omaha, NE - Friday, August 22, 2014 1:00 PM

The Davis-Bacon Act is clearly another government program that inflates the cost to the tax payers. I work for a general contractor that in several areas of the Davis-Bacon Wage rates is comparable. However, in the locally heavily unionized trades, the rates are grossly inflated not to make things "fair", but only to political payback to unions for their political contributions. In other words, it exists to be "fair" to the unions not the taxpayers or the competition.
Posted by: Jim from Omaha, NE - Friday, August 22, 2014 1:12 PM

In Chicago the apprentice rules are pushed by the unions as they are the only ones with recognized programs set up. But even if you are a union shop , if your trade doesn't offer a training program, and mine doesn't, you are out of luck. some large companies can go to the time and expense of setting up a program on their own. Most can't. So this doesn't help anyone but the union and a large company that can afford to go it alone
Posted by: karen morby - Friday, August 22, 2014 2:17 PM


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