Can a Virginia city require contractors to hire local residents for city construction projects?

Plain-English summary

In April 2013, Attorney General Kenneth Cuccinelli told the Hampton City Attorney that the city could not lawfully use its construction bidding process to favor contractors who would hire Hampton residents. The Hampton City Council had been asked, in response to high local unemployment, to adopt either a bid preference for contractors committing to local hires or a contract clause requiring local-hire preference. Both were off the table under Virginia law.

The reasoning rested on two pillars. First, the Virginia Public Procurement Act tells localities to award contracts in a fair and impartial manner that promotes competition, and any alternative local procedures must be "based on competitive principles." Prior opinions of the office had already concluded that conditioning a public contract on factors unrelated to the goods or services being procured conflicts with the Procurement Act. A local-hire preference falls in the same category: it is about labor force composition, not the construction work itself.

Second, where the General Assembly wants to allow a preference, it says so. § 2.2-4328 authorizes governing bodies in a tie-bid situation to favor goods, services, or construction "produced in such locality or provided by persons, firms or corporations having principal places of business in the locality." Nothing in the Act gives localities power to prefer contractors based on whom they hire. And the General Assembly had recently declined, in the 2010 and 2011 sessions, to enact legislation that would have explicitly authorized such a preference.

Under Virginia's Dillon Rule, local governments have only those powers expressly granted, necessarily implied, or essential and indispensable. The express grants were absent, the implied case was undercut by the legislature's repeated refusal to enact one, and indispensability did not apply. The opinion therefore concluded both the preference and the contract requirement were beyond the city's authority.

Currency note

This opinion was issued in 2013. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here.

Background and statutory framework

The Virginia Public Procurement Act sets the rules for public contracting in Virginia. The opinion describes its purpose as ensuring that solicitations by governmental units are presented and awarded in a fair and impartial manner to promote competition. Localities have some flexibility to adopt alternative procedures, but only if those procedures are "based on competitive principles."

The opinion points to § 2.2-4328 as an example of a narrow preference the legislature did authorize: in a tie-bid situation, a governing body may favor goods, services, or construction produced in the locality or provided by firms with their principal places of business there. Outside that tie-breaking rule, the Act does not allow localities to weight bids on local-residence grounds.

The opinion restated the Dillon Rule: a locality has only those powers expressly conferred, necessarily or fairly implied from expressly granted powers, or essential and indispensable.

Common questions

Q: Could a Virginia city give a bid preference to local contractors?
A: According to this opinion, only in tie-bid situations. § 2.2-4328 permits a local tie-bid preference for goods, services, or construction provided by firms with their principal places of business in the locality, but it does not authorize a general thumb on the scale during normal bid evaluation.

Q: Could a city require contractors to hire a percentage of local residents?
A: Per the opinion, no. That was treated as a condition unrelated to the goods or services being procured, and it ran into the same Dillon Rule problem as a bid preference: nothing in the Procurement Act authorized it.

Q: What about workforce diversity, prevailing wage, or apprenticeship requirements?
A: The AG did not address those specifically. The opinion relied on prior opinions of the office concluding that conditioning a public contract on factors unrelated to the goods or services being procured is inconsistent with the Procurement Act. Any condition not tied to the goods or services themselves was treated as suspect.

Q: Did the General Assembly's refusal to pass local-hire legislation matter to the analysis?
A: Yes. The AG used the legislature's declining, in the 2010 and 2011 sessions, to enact legislation authorizing local-hire preferences as evidence that the power had not been granted, even by implication. Under the Dillon Rule, that absence of authority is dispositive.

Q: What is the Dillon Rule?
A: Virginia's restrictive approach to local government power. Virginia localities have only those powers (1) expressly conferred, (2) necessarily or fairly implied from expressly granted powers, or (3) essential and indispensable. The opinion applied that rule to find Hampton lacked the authority in question.

Source

• Landing page: https://www.oag.state.va.us/annual-reports-opinions/official-opinions
• Original PDF: https://www.oag.state.va.us/files/Opinions/2013/11-104r_Hudson.pdf

Original opinion text

COMMONWEALTH of VIRGINIA
Office of the Attorney General
Kenneth T. Cuccinelli, II
Attorney General

April 12, 2013

Cynthia E. Hudson, Esquire
City Attorney for the City of Hampton
City Attorney's Office, City Hall
22 Lincoln Street
Hampton, Virginia 23669

900 East Main Street
Richmond, Virginia 23219
804-786-2071
FAX 804-786-1991
Virginia Relay Services
800-828-1120
7-1-1

Dear Ms. Hudson:

I am responding to your request for an official advisory opinion in accordance with § 2.2-505 of the Code of Virginia.

Issue Presented

You ask whether the City of Hampton (the "City"), in the award of construction contracts procured by competitive sealed bidding, may grant preference to contractors who employ, or agree to grant hiring preference to, Hampton residents for work to be performed under the contract or, alternatively, whether the City may impose a requirement in its construction contracts that the contractors give a preference for hiring Hampton residents for such work.

Response

It is my opinion that the City of Hampton does not have the authority to grant a preference in the award of construction contracts procured by competitive sealed bidding to contractors who employ, or agree to grant hiring preference to, Hampton residents for work to be performed under the contract. It is my further opinion that the City may not impose a requirement in its construction contracts that the contractors give a preference for hiring Hampton residents for such work.

Background

You report that, based on citizen concerns regarding the high levels of unemployment among skilled and unskilled laborers in the City, the Hampton City Council was asked to adopt a requirement in City construction contracting that successful bidders agree to grant preference in hiring to local residents to perform the work procured.

Applicable Law and Discussion

By enacting the Virginia Public Procurement Act (the "Procurement Act"), the General Assembly has established explicit statutory provisions governing the public procurement of goods and services. The purpose of the Procurement Act is to ensure that solicitation by governmental units are presented and awarded in a fair and impartial manner to promote competition. Although localities are given some flexibility in devising the details of their procurement through the adoption of alternative procedures, those alternative procedures must be "based on competitive principles." Prior opinions of this Office have concluded that it is inconsistent with the principles of the Procurement Act to condition the award of a public contract on factors that are unrelated to the goods or services being procured.

The General Assembly in certain limited circumstances has authorized conditional preferences in the award of public contracts based on specifically enumerated factors. For example, § 2.2-4328 authorizes the governing body of a county, city or town, in the case of a tie bid, to "give preference to goods, services and construction produced in such locality or provided by persons, firms or corporations having principal places of business in the locality." No provision of the Procurement Act, however, authorizes localities in the award of construction contracts to give preference to bidders who commit to employing local residents. Indeed, as recently as the 2010 and 2011 sessions, the General Assembly has declined to enact legislation that would have authorized localities to give a preference in the award of contracts to construction contractors who hire residents of the locality or the commonwealth.

In Virginia, local governing bodies have only those powers that are expressly conferred upon them, those which may be necessarily or fairly implied from expressly granted powers, and those that are essential and indispensable. Given that the Procurement Act sets forth no express authority for localities to give a preference to contractors who hire local residents, and that the General Assembly has rejected legislation that would have conferred such authority, Dillon Rule principles do not permit a finding that localities are vested with the power to conduct procurements in such a manner.

Conclusion

Accordingly, it is my opinion that the City of Hampton does not have the authority to grant a preference in the award of construction contracts procured by competitive sealed bidding to contractors who employ, or agree to grant hiring preference to, Hampton residents for work to be performed under the contract. It is my further opinion that the City may not impose a requirement in its construction contracts that the contractors give a preference for hiring Hampton residents for such work.

With kindest regards, I am

Very truly yours,

Kenneth T. Cuccinelli, II
Attorney General