A hurdle to contractors bidding on many federal construction projects, erected by the Biden administration last year, looks to be crumbling.
A recent court ruling quickly followed by federal agency directives may have effectively ended a short-lived requirement that parties to contracts for federal projects of $35 million or more enter into project labor agreements (PLAs) at the outset.
That mandate for PLAs — binding all participating contractors to a set of rules on how work is performed, directed, and compensated — took effect in January 2024. It was instituted via a Biden executive order (EO) distilled from years of effort by advocates for labor and the leveraging of federal control over construction projects to enshrine such agreements in the federal construction contracting system.
Now, however, Biden’s order is hanging by a thread. In January, the U.S. Court of Federal Claims ruled in favor of contractors that last year filed bid protests against federal agencies that solicited bids with the PLA stipulation. The court agreed with the assertion that the government’s PLA requirement was in direct conflict with the 1984 Competition in Contracting Act that requires “full and open competition” in federal procurement.
Less than a month later, the U.S. Department of Defense, taking its cue from the ruling, became the first agency to disavow PLAs. On February 7, the agency, which had several projects challenged in the federal claims court action, announced it would no longer use PLAs for large scale construction projects.
Then, on February 12, the General Services Administration announced it, too, was stepping back from PLAs. Going forward, procurement officers would follow a strict exceptions clause written into the law. If only one of three conditions were met — requiring a PLA would not advance economy or efficiency, would reduce the number of potential offerors to a degree that prevents adequate competition, or would be inconsistent with federal statutes, regulations, EOs, or Presidential memoranda — the PLA mandate would not be invoked.
The requirement also faces another legal challenge in federal court. Associated Builders and Contractors (ABC), a group representing non-union companies that has helped spearhead the years-long battle against PLAs, sued the Biden administration in the U.S. District Court for the Middle District of Florida in March 2024. It alleges the administration exceeded its authority in issuing the order that sought to illegally steer federal construction contracts to unionized contractors that would have an inside track on securing contracts requiring PLAs.
While that lawsuit has not been resolved, the federal claims court ruling, combined with the DOD and GSA moves strongly suggest the PLA requirement is on life support. In a February 13 posting, Jacob Scott, partner in the Washington, D.C. law firm Smith Currie Oles, which represented three of seven companies that lodged protests in claims court, said the writing looks to be on the wall. “These two developments winnow the subset of federal construction projects still subject to the PLA requirement,” he said and “likely spell [its] death.”
Still, opponents remain wary and long to see a final nail driven into the PLA coffin. That would be an explicit EO from President Trump rescinding Biden’s order. Despite a flurry of executive actions since taking office, the new president has yet to issue such an order.
Just before the claims court ruling was handed down, ABC and other organizations in the Build America Local coalition, including Independent Electrical Contractors (IEC), sent a letter to Trump requesting a formal takedown of Biden’s action.
Reiterating opponent talking points focusing on the unfairness of the mandate and the propensity of PLAs to raise project costs, the letter seeks an order that would expressly kill the mandate and, in turn, save taxpayers an estimated $10 billion annually. PLA proponents have countered that such agreements, among other things, help ensure projects are done professionally and efficiently, translating to long-term savings.
With the Biden-era mandate hanging in the balance but likely to be discarded, contractors are being urged to recalibrate their approach to the federal market for construction services. Those that targeted the market because of the mandate, as well as those that avoided it for the same reason, are likely to see the tables turn and calculations change.
Echoing the likely counsel to members from other contractor groups, National Electrical Contractors Association (NECA) advises contractors in a bulletin to be alert to changes in the federal market and to not underestimate the potential for impactful repercussions.
“NECA members that have historically relied upon legislative insulation to government funded work and wish to remain in this market must prepare to rapidly evolve their business model to create a competitive advantage as soon as possible.”
