Introduction to Procurement for Public Housing Authorities Alternatives to Procurement: Force Account Labor Unit 9

Learning Objectives Define Force Account Labor Understand when to use Force Account Labor Understand how to implement and monitor a Force Account Labor initiative 2

Force Account Labor (FAL) is… Labor employed directly by the PHA on either a permanent or temporary basis (24 CFR ). ▫The workforce can be external (employees hired in the private market) or internal (currently employed maintenance or other staff at the PHA). In essence, the PHA obtains the materials and equipment needed and directly employs workers to undertake the improvement acting as its own general contractor. 3

Basic Requirements Skillful workforce Proper supervision Management control system Capacity of the PHA to serve as its own general contractor If the basic requirements are not met, the outcome could be poor construction that may require additional maintenance and early replacement!!! 4

Deciding to Use FAL Typically, use of FAL yields significant savings—no need to finance related administrative costs and overhead and profit of a private contractor. Can the PHA meet the basic requirements? Can the nature, scope and type of work items planned be better accomplished by hiring dedicated labor staff rather than contracting in the open market? ▫Determine by using a Cost Benefit Analysis 5

Cost Benefit Analysis Used to determine the overall benefits of hiring and administering a local labor force vs. contracting the entire task in the open market. The extent and nature of the assessment should be commensurate with the scope of planned improvements. ▫For basic work items, keep it simple! Consider using capable maintenance and procurement staff. ▫For larger, more complicated rehabilitation improvements, consider hiring the services of an A/E firm. Only after the PHA can prove that it would yield considerable savings should it proceed with using FAL. Otherwise, it must issue bid requests in the open market. 6

Choosing an Internal Workforce Workforce can be made up of either privately-hired employees or internal PHA employees, or a combination Current PHA employees may become force account workers provided that: ▫ their regular duties are either suspended or reassigned, ▫maintenance of the properties is not compromised, and ▫employees’ regular work assignments are not adversely affected. Additionally, the PHA has to comply with applicable Federal and state labor standards. 7

Choosing an External Workforce Employees hired in the open market may be either on a temporary or permanent basis. ▫Follow established Personnel Policy in-place when hiring employees. Where to find qualified workers… ▫Employee service agency ▫Classified ads of local newspapers  For specialized trades or licensed classification of employees, consider placing ads in local newspapers or nationally recognized housing associations. ▫Related websites The hiring of permanent employees in the open market must be supported with additional budgetary resources after completion of the specific FAL task. ▫ Established policies and procedures at the PHA will determine the nature of the employee benefits to be awarded to temporary/permanent employees 8

It is a Conflict of Interest to hire or enter into a contract, subcontract or any arrangement with: ▫Present or former members or officers of the PHA’s governing body or their immediate family members ▫Employees of the PHA who formulate policy or influence decisions with respect to the project(s), or their immediate family members or business partner(s), and ▫Any public official, member of the local governing body, or State or local legislator, or their immediate family, who exercise functions or responsibilities with respect to the project(s) or the PHA. Unacceptable Labor Workforce 9

Labor Skills Regardless of the type of workforce used (i.e., external or internal, temporary or permanent) the PHA must ensure force account employees have the necessary skills to perform the assigned duties. A sample of force account staff may include a combination of the following employee classifications: ▫foreman, ▫journeyman licensed electrician, ▫electrician’s helpers, ▫journeyman licensed plumber, ▫plumber’s helpers, painters, ▫lead carpenter and laborer, and ▫carpenters and laborers. The employees’ contracts should outline the labor skills required, licensing requirements, duration of the assignment, wages earned, fringe benefits, etc. 10

Management and Supervision The Executive Director or the Maintenance Director will be responsible for planning and implementation ▫For large work improvements of a long duration and complexity with multiple trades, it may be prudent to hire a construction manager or Clerk of the Works. The HA must have a management control system in place ▫To plan the purchase of materials and equipment, hire skillful workers, process all related payments and properly supervise all employees. When planning, the PHA must outline the timeframes for completion based on the nature and scope of work and related labor skills involved. 11

Equipment & Materials All construction work accomplished outside FAL must be procured per applicable regulations at 24 CFR The acquisition of support equipment (e.g., vehicles, dump trucks, etc.) must comply with § and be fully justified in relation to the scope of work ▫May be purchased or leased depending on the specific need ▫Any dedicated or specialized equipment must be disposed of in accordance with 24 CFR once initiative is complete if no longer needed for HA’s general operation or maintenance The cost and administration of all related equipment and materials must be clearly identified in the Cost Benefit Analysis. 12

HUD approval For all PHAs provided Capital Funds, 24 CFR requires HUD approval for use of an FAL initiative in an approved budget before the PHA undertakes activities. ▫Exception: No prior HUD approval if PHA designated both as an Overall High Performer and a Modernization High Performer The Field Office shall only approve use of an FAL initiative where: ▫ (1) it is cost-effective and appropriate to the physical improvements being undertaken, and ▫(2) the PHA has the capacity to serve as its own contractor. Otherwise, the PHA shall be required to fully contract the specified work improvement in the open market. 13

Wage Decisions Davis-Bacon wage rates may be required for FAL initiatives depending on the type of improvements planned by the PHA. Once the work improvements to be undertaken have been finalized, the PHA must contact the Labor Department to obtain the applicable wage decisions based on the labor skills for the specific improvement(s). 14

Program Accounts Typically, work improvements using the force account work shall be charged to the following eligible Capital Fund program accounts: ▫1410, Administration; ▫1430, Fees and Costs; ▫1450, Site Improvement; ▫1460, Dwelling Structures; ▫1465.1, Dwelling Equipment; ▫1470, Non-Dwelling Structures; and ▫1475, Non-Dwelling Equipment. 15

Obligation of Funds For FAL, obligation means the initiation and continuation of the planned improvements in their entirety, ▫i.e., their full estimate, including all related administrative costs. All funds for a group of sequentially-related work items are considered obligated when the first work item is started and the PHA continues to obligate and expend the funds at a reasonable rate on all additional, related work improvements. For a single force account work item, obligation is defined as the initiation of the one work item. 16

Expenditure of Funds The PHA must show reasonable progress through increased fund expenditures at a rate which would allow completion within the time-frame set forth in the Progress Schedule for the specific work improvement(s) ▫Whether a single task or a group of sequentially-related work improvements Once funds are drawn via the Line of Credit Control System (LOCCS), PHAs should properly disburse the funds for eligible improvements related to the FAL initiative within the recommended three days. 17

Remember… PHA must meet basic requirements Perform a Cost Benefit Analysis May need to obtain HUD approval Workforce can be internal or external; permanent or temporary Davis-Bacon wage rates may apply Obligation and Expenditure of funds must occur at a reasonable rate after the work activity commences 18

References 24 CFR and Annual Contributions Contract HUD-53012A (7/95): Attachment V, Section 3 19