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Section 3 for Businesses

Certain types of businesses qualify to receive contracting preferences similar to the ones that Section 3 residents receive in employment and training. Businesses registered, formed or licensed in accordance with District laws that meet one of the qualifications listed below are known as “Section 3 business concerns”. These are business concerns:

  1. That are fifty-one percent (51%) or more owned by Section 3 residents;
  2. Whose permanent, full-time employees include persons, at least thirty percent (30%) of whom are currently Section 3 residents, or within three years of the date of first employment with the business concern were Section 3 residents; or
  3. That provides evidence of a commitment to subcontract in excess of twenty-five percent (25%) of the dollar award of all subcontracts to be awarded to business concerns that meet the qualifications set forth in items (1) or (2) above.

The order for providing the Section 3 business concern preference is listed below:

Category 1: Business concerns that are fifty-one percent (51%) or more owned by residents of the development or immediate area where the construction work is performed, or whose full time, permanent workforce includes thirty percent (30%) of these persons as employees.

Category 2: HUD Youthbuild programs being carried out in the District of Columbia in which Section 3 covered assistance is expended.

Category 3: Business concerns that are fifty-one percent (51%) or more owned by a Section 3 resident(s), or whose permanent, full-time workforce includes no less than thirty percent (30%) Section 3 residents (category 4 business); or that subcontract in excess of twenty-five percent (25%) of the total amount of subcontracts to Section 3 business concerns.

Businesses must submit an application to DHCD to become certified as a Section 3 business concern in order to receive preferences in Section 3 contracts.

How to Become a Section 3 Business Concern

Any business meeting the qualifications listed here may apply to become certified as a Section 3 business concern by DHCD. The application is similar to the Certified Business Enterprise (CBE) certification that the Department of Small and Local Business Development (DSLBD) administers. Section 3 is NOT a CBE or minority or disadvantaged business category.

However, District businesses that are already certified as CBEs or small or disadvantaged, or minority or women owned businesses in Maryland or Virginia are eligible for the FAST TRACK application. Please contact DHCD for information on the Section 3 business concern application process. For more information about CBEs, please contact DSLBD. DSLBD offers CBE certification orientation and workshops. DSLBD may be contacted at (202) 727-3900.

Certifications are provided on a two year basis. Section 3 business concerns must meet the general conditions of compliance as referred to in 24 CFR §135.38, the Section 3 Clause. Section 3 business concerns that were previously certified and in which none of their qualifications have changed can submit a certification update to maintain their certification.

Below are links to documents relevant to Section 3 and to becoming a Section 3 business concern.

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