[Code of Federal Regulations]
[Title 24, Volume 1]
[Revised as of April 1, 2004]
From the U.S. Government Printing Office via GPO Access
[CITE: 24CFR135.36]

[Page 717-718]
 
                 TITLE 24--HOUSING AND URBAN DEVELOPMENT
 
    CHAPTER I--OFFICE OF ASSISTANT SECRETARY FOR EQUAL OPPORTUNITY, 
               DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
 
PART 135_ECONOMIC OPPORTUNITIES FOR LOW- AND VERY LOW-INCOME PERSONS
--Table of Contents
 
 Subpart B_Economic Opportunities for Section 3 Residents and Section 3 
                            Business Concerns
 
Sec. 135.36  Preference for section 3 business concerns in contracting 
opportunities.

    (a) Order of providing preference. Recipients, contractors and 
subcontractors shall direct their efforts to award section 3 covered 
contracts, to the greatest extent feasible, to section 3 business 
concerns in the order of priority provided in paragraph (a) of this 
section.
    (1) Public and Indian housing programs. In public and Indian housing 
programs, efforts shall be directed to award contracts to section 3 
business concerns in the following order of priority:
    (i) Business concerns that are 51 percent or more owned by residents 
of the housing development or developments for which the section 3 
covered assistance is expended, or whose full-time, permanent workforce 
includes 30 percent of these persons as employees (category 1 
businesses);
    (ii) Business concerns that are 51 percent or more owned by 
residents of other housing developments or developments managed by the 
HA that is expending the section 3 covered assistance, or whose full-
time, permanent workforce includes 30 percent of these persons as 
employees (category 2 businesses); or
    (iii) HUD Youthbuild programs being carried out in the metropolitan 
area (or nonmetropolitan county) in which the section 3 covered 
assistance is expended (category 3 businesses).
    (iv) Business concerns that are 51 percent or more owned by section 
3 residents, or whose permanent, full-time workforce includes no less 
than 30 percent section 3 residents (category 4 businesses), or that 
subcontract in excess of 25 percent of the total amount of subcontracts 
to business concerns identified in paragraphs (a)(1)(i) and (a)(1)(ii) 
of this section.
    (2) Housing and community development programs. In housing and 
community development programs, priority consideration shall be given, 
where feasible, to:
    (i) Section 3 business concerns that provide economic opportunities 
for section 3 residents in the service area or neighborhood in which the 
section 3 covered project is located (category 1 businesses); and
    (ii) Applicants (as this term is defined in 42 U.S.C. 12899) 
selected to carry out HUD Youthbuild programs (category 2 businesses);
    (iii) Other section 3 business concerns.
    (b) Eligibility for preference. A business concern seeking to 
qualify for a section 3 contracting preference shall certify or submit 
evidence, if requested, that the business concern is a section 3 
business concern as defined in Sec. 135.5.
    (c) Ability to complete contract. A section 3 business concern 
seeking a contract or a subcontract shall submit evidence to the 
recipient, contractor, or subcontractor (as applicable), if requested, 
sufficient to demonstrate to the satisfaction of the party awarding the 
contract that the business concern is responsible and has the ability to

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perform successfully under the terms and conditions of the proposed 
contract. (The ability to perform successfully under the terms and 
conditions of the proposed contract is required of all contractors and 
subcontractors subject to the procurement standards of 24 CFR 85.36 (see 
24 CFR 85.36(b)(8)).) This regulation requires consideration of, among 
other factors, the potential contractor's record in complying with 
public policy requirements. Section 3 compliance is a matter properly 
considered as part of this determination.