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Small contractors urge Council to close $300,000 First Source loophole, cite subcontractor practices
Summary
Small-business witnesses told the committee the $300,000 threshold and alternative-plan practices let some firms avoid First Source oversight by classifying work as materials/supervision and passing labor to lower-tier subs — practices they say enable wage theft and undercut certified local firms.
Cindy Athey, president of Ward 8-based Precision Walltech, told the committee that the $300,000 contract threshold creates an enforcement gap contractors exploit by breaking scopes into smaller packages or classifying work as materials and supervision to avoid First Source coverage. "The $300,000 contract threshold has created a loophole that is being actively exploited in the construction industry," Athey said.
Athey said the result is labor pushed down to second-tier subcontractors whose contracts fall below the threshold, leaving workers out of DOES oversight and opening the door to wage theft and cash payments. Small certified business enterprises (CBEs) that meet apprenticeship, reporting and payroll regulations said they lose competitive advantage when others bypass those obligations. Industry witnesses supported calls for clearer alternative-plan rules, closer monitoring of subcontractor-level labor and closing the threshold gap.
