The labor surplus designation is used by federal procurement offices in targeting contracts into areas of high unemployment. In addition to the reference period unemployment criteria, the Labor Department on the basis of exceptional circumstances can also classify areas as labor surplus areas. Such a determination can be made when natural disasters, plant closures, contract cancellations, and other events not of a temporary or seasonal nature cause sudden and unanticipated rises in unemployment. Authorization for the labor surplus lists falls under Defense Manpower Policy No. 4, Executive Orders 12073 and 10582, and Public Law 96-302. The basic purpose of the program is to guide a portion of the government s procurement dollars into areas of severe economic need, which have been defined as areas of high unemployment.
Employers located in an eligible area can receive preference in bidding on federal contracts.