MBE/WBE and Section 3 requirements apply to ALL projects funded all or in-part from federal grants or loans (including CDBG and HOME programs, among others). Broadly, they require that affirmative outreach be made before construction or procurement contracting AND recording and reporting of ALL construction and procurement contracts  on an annual  basis.  

MBE/WBE Compliance: 

Any non-Federal entity engaged in contracting activities (a project receiving HOME, CDBG, or other federal funds) “must conform to the procurement standards identified in §§ 200.317 through 200.327". Please note that contractors “must take all necessary affirmative steps to assure that minority businesses, women’s business enterprises, and labor surplus area firms are used when possible.  


Affirmative steps must include 

(1) Placing qualified small and minority businesses and women's business enterprises on solicitation lists;  

(2) Assuring that small and minority businesses, and women's business enterprises are solicited whenever they are potential sources;  

(3) Dividing total requirements, when economically feasible, into smaller tasks or quantities to permit maximum participation by small and minority businesses, and women's business enterprises;  

(4) Establishing delivery schedules, where the requirement permits, which encourage participation by small and minority businesses, and women's business enterprises;  

(5) Using 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; and  

(6) Requiring the prime contractor, if subcontracts are to be let, to take the affirmative steps listed in paragraphs (b)(1) through (5) of this section. 

2 CFR Section 200.321 


In order to demonstrate compliance with the above requirement, report in CDS (HUD Form 2516) must be completed by grantees, developers, builders, agencies, and/or project owners for reporting contract and subcontract activities of $10,000 or more under the Community Development Block Grant (CDBG) and HOME funds. 


Section 3 Compliance:  

Under Section 3 of HUD Act of 1968, federal funds invested in housing and community development shall provide contracts, employment, training, and other economic opportunity to low- and very low- income person in the local jurisdiction, referred to as “Section 3 Workers;” and to businesses that employ such person, referred to as “Section 3 Business Concerns.” 

Section 3 requires that “to the greatest extent feasible,” businesses working on projects that receive certain financial assistance from HUD must make a good faith effort to train and hire Section 3 Workers, and contract with Section 3 Business Concerns. 

The program is described in a new HUD Final Rule implemented and regulated by  Part 75 of Title 24 of the Code of Federal Regulations  

For questions, contact (650) 802-5050 or email Dylan Sweeney: dsweeney@smcgov.org or Gina Russell: grussell@smcgov.org