The District government failed to make sure that companies with city contracts hired unemployed residents as required by law and rarely penalized those who didn’t, according to an audit released Thursday.
Between 2013 and 2016, the city failed to enforce local hiring requirements, even after lawmakers tightened the rules and added penalties in 2011, according to a report by D.C. Auditor Kathleen Patterson.
The 30-year-old “First Source” program is based on a simple principle: Private companies that receive public dollars should help city residents find work.
District law says companies that win more than $300,000 in contracts , tax credits or other public subsidies must hire District residents for a majority of new jobs. It also sets targets for the number of construction jobs should be filled by residents for projects over $5 million. The city has a registry of more than 4,000 unemployed residents that is meant to be the “first source” for contractors filling new positions.
Butthe Department of Employment Services could not accurately say how many residents were hired from the registry, overlooked some contracts and issued just one fine for non-compliance between 2013 and 2016, the audit found.
“After 30 years, we are still not implementing a high priority program,” said Patterson. “We have enforcement rules, but no enforcement.”
Officials at the employment services agency say many of the findings are outdated and don’t take into account improvements since the review period, including better procedures for monitoring companies.
The Department of Employment Services also said it has beefed up enforcement, collecting $61,000 in penalties that are directed to a job training program.
“Over the past year, DOES made great strides in the development and implementation of a strategic course correction,” wrote interim director Unique Morris-Hughes in response to the audit.
In 2011, the D.C. Council strengthened the hiring requirements for the city’s private development partners who had been missing local hiring goals for years.
The law mandates companies file paperwork to verify that they are hiring local. But the audit found this wasn’t being submitted in many cases:
• None of the contractors in 27 projects reviewed by auditors submitted complete monthly reports about their labor costs.
• None of the contractors on major construction projects examined by auditors submitted documentation that would allow the city to determine if they met the goals they set when bidding for projects.
• Auditors found no evidence that the city was monitoring compliance with local hiring requirements in 30 out of 124 contracts awarded in fiscal year 2015 by the agency that oversees public property.
Some agencies that awarded contracts didn’t consistently notify the Department of Employment Services that there was a new project that needed to be monitored, auditors concluded.
“This makes the program ineffective, and allows some beneficiaries to receive government assistance without having to comply with the law requirements,” the audit said.
The Department of Employment Services says it has since held a series of training sessions with contractors and fellow agencies to educate them about the requirements under the law.