training

1. CDBG-DR
FEDERAL CIVIL RIGHTS COMPLIANCE
LEVEL 1 SECTION 3 AND M/WBE COMPLIANCE FUNDAMENTALS
SECTION 3 AND M/WBE
2021 V2

2. AGENDA FOR LEVEL 1 SECTION 3 & M/WBE
In this learning module we will cover:
1. Subrecipient and Contractor Roles and Responsibilities
2. What is Section 3 and M/WBE
3. How does Section 3 & M/WBE apply to CDBG-DR Funded
Projects

3. Section 3 seeks to provide real opportunities for
people who are low and very low income and want
to engage in the laborforce through jobs, training or
other economic opportunities.
Section 3 and M/WBE seeks to provide real
purchasing and contracting opportunities for
businesses who are small, owned by local
residents, registered as MBE or WBE and business
owners who also qualify as Section 3.
These compliance areas foster long term economic
growth for families, businesses and individuals.
WHY COMPLIANCE MATTERS

4. Section 3
SECTION 3 FINAL RULE 24 CFR 75
• An “interim rule” has been in effect since 1994.
• The implementation is in effect starting July 1, 2021.
• 24 CFR 75

5. Section 3
SECTION 3 FINAL RULE 24 CFR 75
Why did HUD make changes to Section 3?
• Focusing on key outcome metrics, such as the
sustained employment of individuals in targeted
populations.
• Crediting retention of low- and very low-income
employees and successful sustained employment in the
reporting metrics.
• Aligning Section 3 reporting with standard business
practices and payroll tracking methods.
• Allowing for tailored outcome benchmarks for different
geographies and/or different projects.
• Reducing reporting requirements for grantees who are
meeting outcome benchmarks.
• Integrating Section 3 oversight into the work of the
program offices who are in regular contact with the
grantees.

6. 1.Assign staff who will attend to the day-to-day activities for
compliance
2.Complete Webinars, Attend Trainings and Workshops
3.Use templates provided by PRDOH
4.Work with your project team to implement outreach
activities
5.Complete Quarterly Reporting
STEPS TO SUCCESS WITH COMPLIANCE

7. TRAINING CURRICULUM
Level 1 Section 3 and M/WBE Compliance Fundamentals
This module introduces the federal compliance statutes and other federal
guidance on what is Section 3 and MWBE, its applicability, and what triggers
the need to comply. It frames additional supporting documentation and
overall process for achieving compliance as a part two to the introduction to
federal compliance for Section 3 and MWBE.
Level 2 Section 3 and M/WBE Completing Documentation & Activities
This module uses the documents discussed in the 101 training to review the
documents themselves in depth and address questions about the document
areas and discuss different examples of how to complete the documentation
Level 3 Section 3 and M/WBE Completing Efforts and Quarterly Reporting
This module uses the quarterly reporting form and covers in depth how to
complete each of the areas for the quarterly reporting form and addresses
technical questions from the audience.
Level 4 Section 3 and M/WBE Best Practices and Implementation Tips
This module discusses some best practices for how to implement activities and
create workflows around the compliance requirements to ensure
subrecipients or contractors will be successful in completing activities.

8. WHAT IS SECTION 3

9. SECTION 3 24 CFR 75
Section 3 of the Housing and Urban Development Act of
1968, as amended by the Housing and Community
Development Act of 1992 (Section 3), contributes to the
establishment of stronger, more sustainable communities by
ensuring that employment and other economic opportunities
generated by Federal financial assistance for housing and
community development programs are, to the greatest
extent feasible, directed toward low- and very low-income
persons, particularly those who receive government
assistance for housing.

10.  PRDOH has published the
Section 3 Policy and made it
available in English and
Spanish.
 Subrecipients and Contractors
should read, implement
activities and oversight for
direct contractors or
subcontractors to ensure
compliance.
SECTION 3 POLICY GUIDE

11. 25% of the Total Labor Hours should be work hours of Section 3 Workers
5% of the Total Labor Hours should be work hours of Targeted Section 3 Workers
SECTION 3 BENCHMARKS
Section 3 Workers
Targeted Section 3 Workers
All Workers

12. SECTION 3 THRESHOLD TRIGGERS
Applies to:
• The subrecipient receives more than
$200,000 in a covered project and
• A contractor or subcontractor performs
work on a Section 3 covered project for
which the covered contract or
subcontract exceeds $100,000.

13. SECTION 3 COVERED PROJECTS
Section 3 applies to:
• Certain HUD-funded Housing and Community Development projects:
• Housing rehabilitation;
• Housing construction; and
• Other public construction.
• All awards:
• Subrecipients; and/or
• Construction contracts.
• The entire project that is funded with Section 3 covered assistance.

14. SECTION 3 COVERED CONTRACTS
• A contract or subcontract for construction work that is awarded by PRDOH, a
subrecipient or contractor for work generated by the expenditure of Section 3
covered assistance, or for work arising from a Section 3 covered project.
*Contracts not covered by Section 3:
• Contracts for the purchase of supplies and materials, unless the contract for
materials includes the installation of the materials.
• Professional services are exempted from Section 3: Refers to non-construction
services that require an advanced degree or professional licensing, including, but
not limited to, contracts for legal services, financial consulting, accounting services,
environmental assessment, architectural services, and civil engineering services.
However , they can be included for reporting of Section 3 labor hours and
excluded from total labor hours.

15. SECTION 3 WORKERS
Any worker who currently meets or when hired
within the past five years meet the criteria of at
least one of the following categories, as
documented:
• The worker's income for the previous or
annualized calendar year is below the income
limit established by HUD.
• The worker is employed by a Section 3 business
concern.
• A Youthbuld Participant

16. TARGETED SECTION 3 WORKERS
A worker who currently meets or when hired meets at
least the criteria of one of the following categories,
as documented within the past five years:
• Living within the Service Area or the
Neighborhood of the Project, as defined herein;
or
• A worker employed by a Section 3 business
concern; or
• A Youth Build participant

17. PR INCOME LIMITS 2020 PR INCOME LIMITS 2021
Family Size Income limit: less
than or equal to*
1 $29,900
2 $38,200
3 $38,200
4 $42,400
5 $45,800
6 $49,200
7 $52,600
8 $56,000
Family Size Income limit: less
than or equal to*
1 $29,400
2 $33,600
3 $37,800
4 $41,950
5 $45,350
6 $48,700
7 $52,050
8 $55,400
*80% AMI
*80% AMI

18. SECTION 3 BUSINESS CONCERN
Refers to a business concern meeting at least one (1) of
the following criteria, documented within the last six (6)-
month period:
It is at least fifty one percent (51%) owned and controlled
by low- or very low-income persons.
It is a business at least fifty one percent (51%) owned and
controlled by current public housing residents or residents
who currently live in Section 8-assisted
housing.
Over seventy-five percent (75%) of the labor hours
performed for the business over the prior three (3)-month
period are performed by Section 3 Workers;

19. GREATEST EXTENT FEASIBLE EFFORTS FOR SECTION 3
“Greatest Extent Feasible”
Subrecipients and contractors
must make every effort to
recruit, target, and direct
economic opportunities to
Section 3 Workers and Section
3 Businesses to the greatest
extent feasible.
Failure to document efforts will result in non-compliance.
Using the PRDOH templates for Contractors or Subrecipients
will help you be successful with this task.

20. EXAMPLES OF GREATEST EXTENT EFFORTS
For Potential Section 3 Workers and Targeted Section 3 Workers:
• Engage in outreach efforts to generate job applicants by distributing
flyers, creating mass mailings or posting the information in PRDOH
CDBG-DR webpage.
• Provide training or apprenticeship opportunities.
• Contact neighborhood community organizations to request their
assistance in notifying residents of the available training and
employment opportunities.
• Advertise employment opportunities by posting job vacancies on the
PRDOH CDBG-DR webpage and in other locations where resident
may access community information such as common areas of
PRDOH Headquarter Offices and Regional Offices as well as in
facilities of resident councils, resident management corporations,
and neighborhood community organizations.

21. EXAMPLES OF GREATEST EXTENT EFFORTS
• Develop and maintain a database of eligible potential Section 3
Workers and Targeted Section 3 Workers who can list their information
to be contacted by other program subrecipients and contractors.
• Assist Section 3 Workers to obtain financial literacy training and/or
coaching.
• Invite potential Section 3 Workers and Targeted Section 3 Workers to
participate in Networking events or job fairs with subrecipients and
contractors working with CDBG-DR funding.
• Provide technical assistance to help Section 3 Workers compete for
jobs (e.g., resume assistance, coaching).
• Provide or referred Section 3 Workers to services supporting work
readiness and retention (e.g., work readiness activities, interview
clothing, test fees, transportation, childcare).

22. EXAMPLES OF GREATEST EXTENT EFFORTS
• Provide Section 3 Worker Self-certification forms and instructions for
supporting documentation to be provided for review.
• Provide a listing of contractors and their contact information/ website
who are working on CDBG-DR projects for Individuals to submit their
resumes and self-certification forms and supporting documentation.
For Section 3 Businesses:
• Promote use of business registries designed to create opportunities
for disadvantaged and small businesses.
• Develop, maintain, and make available a database of self-
identified potential Section 3 Workers and Targeted Section 3
Workers with copies of their resume.
• Engage in outreach efforts to identify and secure bids from Section 3
Business Concerns.

23. EXAMPLES OF GREATEST EXTENT EFFORTS
• Provide technical assistance to help Section 3 Business Concerns
understand and bid on contracts.
• Divide contracts into smaller jobs to facilitate participation by
Section 3 Business Concerns.
• A database will be made available of eligible qualified Section 3
Business Concerns for subrecipients and contractors to contact with
new contract opportunities.

24. SECTION 3 IMPLEMENTATION TOOLS
PRDOH has developed tools help identify
methods to achieve Section 3 hiring, training
and contracting goals.
• Frame goals and data
• Facilitate Planning which makes
compliance achievable
• Prepare coordinators for the day-to-day
activities they will be performing

25. CONTRACT REQUIREMENTS
Section 3
Covered contracts are subject to the requirements of Section 3 of the
Housing and Urban Development Act of 1968, as amended, 12 U.S.C.
§1701u (Section 3) 24 CFR Part 75. Contract requirements must be passed
down to all subcontract tiers on covered projects.

26. WHAT IS M/WBE

27. M/WBE 2 CFR 200.321
• As a recipient of HUD financial assistance, the Uniform Administrative
Requirements at 2 CFR 200.321 require PRDOH to ensure that, when possible,
contracts and other economic opportunities funded in whole or in part with
federal housing and community development assistance are directed to:
• Minority Business Enterprises (MBE); and
• Women Business Enterprises (WBE).
• Additionally, Executive Orders 11625, 12138 and 12432 establish the use of M/WBE
firms.
• These requirements are referred to collectively as M/WBE.

28. PRDOH has published the M/WBE
policy and made it available in English
and Spanish.
M/WBE POLICY GUIDE

29. M/WBE PARTICIPATION GOALS
• Subrecipients and Contractors
must perform “Good Faith
Efforts” for Contracting or
Purchasing over $10,000
• Applies to professional
services, construction work or
suppliers.
• Participation requirement is
based on total amount of
each contract awarded by
PRDOH
• Goals can be met through
initial contract award or
subcontracts.
Minority Business Enterprise
Women Business Enterprise

30. THRESHOLD TRIGGERS
M/WBE
Contracts or purchasing over
$10,000 and above must
comply with the goals
It may be met either through the
initial contract award (if the
prime is a M/WBE) or the
requirement may be met
through subcontracts specified
within the prime bidder’s
proposal or bid.

31. WHO ARE CONSIDERED MINORITIES?
MBE is defined as a business which is at least 51% owned, operated and
controlled on a daily basis by one or more (in combination) American
citizens of the following ethnic minority and/or gender (e.g. woman-
owned) and/or military veteran classifications:
• African American
• Asian American
• Hispanic American
• Native American
• Hasidic Jew
• Persons with disabilities
• Other individuals who can prove social and economic disadvantage

32. WHAT IS A WBE?
• A WBE is a business concern that is at least 51% owned and controlled by
one or more women.
• Must be U.S. citizens or Legal Resident Aliens; whose business formation
and principal place of business are in the U.S. or its territories;
• And whose management and daily operation is controlled by women.

33. M/WBE UTILIZATION PLAN
M/WBE Utilization Plan:
This tool allows contractors or
subrecipients to identify MWBE
contracting goals.
• Capture upfront data
• Stimulate conversation on
compliance
• Prepare users for reporting
• Provide guidance on meeting
the goal
• Awareness of registration

34. DOCUMENTING EFFORTS FOR M/WBE
“Good Faith Efforts”
Subrecipients and
contractors must good faith
efforts to ensure MBE’s and
WBE’s are included in
procurement and
purchasing opportunities.
Failure to document efforts will result in non-compliance.
Using the PRDOH templates for Contractors or Subrecipients
will help you be successful with this task.

35. EXAMPLES OF GOOD FAITH EFFORTS
• Preparation of M/WBE solicitation list.
• Issuance of notices to solicited M/WBE firms.
• Description of how tasks were divided into smaller sub-sets.
• Description of delivery schedules that encouraged participation by
M/WBE firms.
• Copies of M/WBE firm responses to written notifications and result or
answer to them.
• Copies of any advertisement for the promotion of M/WBE
opportunities.
• Copies of meeting notes, minutes, attendance sheets of pre-bid,
pre-award or other meetings or orientations in which good faith
efforts were identified.

36. SUBRECIPIENT M/WBE AFFIRMATIVE STEPS
Affirmative efforts are different ways that HUD has identified
that MWBE businesses can be engaged.
• Place qualified M/WBE on the PRDOH M/WBE solicitation
list.
• Notify M/WBE firms of contracting opportunities in writing.
• When economically feasible, structure procurement
solicitations so that the total requirements are divided into
subsets consisting of smaller tasks or quantities for the
purpose of retaining multiple firms or to facilitate
subcontracting opportunities within the larger contract
that would be suitable for small M/WBEs.

37. SUBRECIPIENT/CONTRACTOR/PRIME BIDDER AFFIRMATIVE STEPS
• Place qualified M/WBE on the Prime Bidder’s solicitation list
for subcontracting (as applicable).
• Notify M/WBE firms of contracting opportunities in writing
(letter, e-mail, or facsimile are acceptable forms). Such
notification shall provide at least 5 business days to submit
a proposal to the Prime Bidder.
• When economically feasible, structure solicitations for
subcontracts so that the total requirements are divided
into subsets consisting of smaller tasks or quantities for the
purpose of retaining multiple firms or to facilitate sub-tier
contracting opportunities within the larger subcontract
that would be suitable for small M/WBEs.

38. SUBRECIPIENT/CONTRACTOR/PRIME BIDDER AFFIRMATIVE STEPS
• When feasible , establishing delivery schedules that
encourage participation by M/WBE firms.
• Recommend that M/WBE use the services and assistance,
as appropriate, of such organizations as the Small Business
Administration and the Minority Business Development
Agency of the Department of Commerce.

39. PROGRAM DESCRIPTION
LOCATING CERTIFIED M/WBE’S
Certified Minority or Women Owned Businesses can be those who have
filed Applications with:
• SBA 8A, WOSB, Preliminary Assessment Tool
• Puerto Rican Minority Supplier Development Council (PRMSDC)
• EPA Office of Small Business Programs (OSDBU)
• DOT Department of Transportation DBE Program
• MBDA Minority Business Development Agency PR
• WBENC Women’s Business Enterprise National Council FL- PR
• PMSDC Puerto Rican Minority Supplier Development Council PRMSDC
Businesses who have completed this process can show evidence
demonstrating that the entity is owned and/or controlled by one or more
individuals claiming disadvantaged status of such individuals.

40. M/WBE WAIVER
• The Prime Bidder—that is not a MBE and WBE—is required to
take all appropriate affirmative steps and make good faith
efforts to subcontract to M/WBE firms.
• If those steps were taken and the proposal does not meet
both parts of the 20% requirement, the Prime Bidder may
submit a waiver request.
• The request must set forth the reasons for the inability to
meet any or all M/WBE participation requirements together
with an explanation of the good faith efforts undertaken.
There is NO waiver for Section 3 Compliance.

41. CONTRACT REQUIREMENTS
M/WBE
CDBG-DR covered contracts and agreements are subject to the regulations
set forth in the C.F.R. §200.321 require the non-federal entity to take
necessary steps to ensure that all Subrecipients, Contractors, Sub-
Contractors, and/or Developers funded in whole or in part with the CDBG-DR
financial assistance ensure that, when possible, contracts and other
economic opportunities are directed to small and minority firms, women
owned business enterprises (WBEs), and labor surplus area firms. Consistent
with Executive Orders No. 11625, 12138, and 12432, the subrecipient and
contractor shall make every feasible effort to ensure that small businesses,
minority-owned business enterprises (MBEs), WBEs, (together M/WBEs), and
labor surplus area businesses participate in contracting.
Contract or SRA requirements must be passed down to all subcontract tiers
on covered projects.

42. FEDERAL REPORTING AND
RECORD KEEPING REQUIREMENTS

43. PRDOH will be required to report on
Section 3 Covered Programs and
Contracts in the HUD platform. This
includes Labor Hours for Section 3
workers, Labor hours for all workers
and efforts being taken.
FEDERAL REPORTING SECTION 3

44. PRDOH will be required to report on
all contracts of $10,000 on the HUD-
2516 Contractor/Subcontractor
Activity Report and M/WBE
Summary Report during the previous
Federal Fiscal Year (October –
September).
FEDERAL REPORTING ON M/WBE

45. Apr.
5
Jul.
5
Oct.
5
Jan.
5
JAN - MAR APR - JUN JUL - SEP OCT – DEC
QUARTERLY REPORTING
To ensure the continual monitoring and required oversight on reporting,
PRDOH requires quarterly reporting for all subrecipients and contractors
to ensure compliance.

46. PRDOH WEBSITE
Visit our multiple webpages to see and download all the
tools we have made available for subrecipients and
contractors to facilitate compliance.
https://www.cdbg-dr.pr.gov/seccion-3/

47. PROGRAM DESCRIPTION
PRDOH reserves the right to update this webinar and any program materials as is needed to ensure Compliance with federal requirements.
Thank you for completing this Level 1webinar.
Visit the PRDOH Website for Section 3 and M/WBE in English or Spanish.
Please complete our survey and share any suggestions you have for
future webinars and technical assistance sessions.
The next webinars are Level 2 Completing Compliance Documents ,
Level 3 Completing Reporting and Level 4 Best Practices and Tips. Be
sure to complete all the learning material available.
THANK YOU

48. Section 3
ACCESSIBILITY
The Puerto Rico Department of Housing offers reasonable
accommodation to ensure equal opportunity.
Persons with disabilities or accessibility specifics needs,
can contact:
Telephone
TTY 787-522-5950
Email
infoCDBG@vivienda.pr.gov
Postal Mail
PO Box 21365 San Juan PR 00928-1365

49. PROGRAM DESCRIPTION
Maria del Carmen Figueroa Correa, Esq.
Federal Compliance & Subrecipient Management
Assistant Deputy Secretary for Disaster Recovery
CDBG-DR Program
787.274.2527
Visit us: www.cdbg-dr.pr.gov
Write us: Section3CDBG@vivienda.pr.gov
MWBECDBG@vivienda.pr.gov
CONTACT INFORMATION