First Source Hiring Agreement

A First Source Hiring Agreement is a local procurement requirement, most prominently in the District of Columbia, that obligates contractors receiving public contracts above specified thresholds to prioritize hiring D.C. residents before seeking workers from outside the jurisdiction.

What is a First Source Hiring Agreement?

The First Source Employment Agreement Act (D.C. Official Code § 2-219.01 et seq.) requires all contractors and beneficiaries of government-assisted projects in Washington, D.C. with contracts or assistance valued at $300,000 or more, or any contract resulting in the creation of 25 or more jobs, to enter into a First Source Employment Agreement with D.C.'s Department of Employment Services (DOES).

Under the agreement, contractors must:

• Make their best efforts to fill at least 51 percent of new jobs created on the contract with D.C. residents.
• Use D.C. DOES as their first source for recruitment of new employees for the contract.
• Submit quarterly reports documenting compliance with the hiring commitment.
• Allow D.C. DOES to audit their workforce to verify resident hiring percentages.

Penalties for non-compliance can include fines of up to $5,000 per violation plus 5 percent of the direct labor costs for each under-hired position. In practice, D.C. DOES works with contractors to develop realistic hiring plans that account for skill availability and timeline constraints before imposing penalties.

While First Source is primarily a D.C. requirement, several other jurisdictions have adopted similar local hire preferences, particularly for publicly-funded construction projects. Federal contractors working on projects in D.C. or other localities with First Source requirements face both the federal FAR compliance regime and local first-source obligations.

Why First Source Hiring Agreements matter for government contractors

Contractors performing construction, facilities management, IT, or professional services work in Washington, D.C. on contracts above the threshold must budget for D.C. DOES outreach, recruitment partnership costs, and quarterly reporting. Failure to engage with the First Source process early - before the contract begins - creates compliance gaps that are difficult to remedy after a workforce is already in place.

Example

A construction contractor wins a $15 million renovation contract at a federal building in Washington, D.C. The D.C. government's participation in the project triggers the First Source Employment Agreement requirement. Before mobilizing the workforce, the contractor registers with D.C. DOES, posts open positions through DOES's referral network, and holds a hiring event at a D.C. workforce development center. The contractor achieves 54 percent D.C. resident hiring in the first quarter and submits the required quarterly compliance report to DOES.

Frequently Asked Questions

Does First Source apply to federal contractors working in D.C.?

Yes, when the project involves a D.C. government contract, grant, or tax benefit (such as a tax increment financing arrangement). Projects funded entirely by federal appropriations without D.C. government involvement may not trigger D.C.'s First Source Act. Contractors must carefully analyze the funding structure of each D.C.-based project to determine applicability.

What counts as a "new job" under the First Source requirement?

A new job is a position created as a direct result of the contract that did not previously exist within the contractor's workforce. Positions filled by existing employees transferred to the contract from other assignments generally do not count as new jobs for First Source purposes, though D.C. DOES guidance should be consulted for specific situations.

Can a contractor get an exemption from First Source hiring requirements?

Contractors may request a waiver from D.C. DOES if they can demonstrate that qualified D.C. residents are not available for specific skilled positions. The waiver process requires documented recruitment efforts through DOES and a showing that available D.C. residents do not meet the required qualifications. General labor cost or recruitment preference reasons are insufficient for a waiver.

Are there similar requirements in other cities?

Yes. Several cities and counties have adopted local hire ordinances for publicly-assisted projects. Los Angeles, Chicago, Philadelphia, and Boston have local hire preferences of varying strength. Contractors active in multiple urban markets must track each jurisdiction's requirements separately, as thresholds, percentages, and enforcement mechanisms vary significantly.