Dive Brief:
- The Department of Defense has ordered its contracting officers to halt the use of project labor agreements on “large-scale construction projects,” according to a memo obtained by Construction Dive.
- The notice, dated Feb. 7, says contracting officers shall remove PLA requirements created by former President Joe Biden that apply to projects receiving $35 million or more in federal funds.
- As part of the memo — signed by John M. Tenaglia, principal director of defense pricing, contracting and acquisition policy for the DOD — contracting officers were ordered to amend solicitations for federal contracts to remove PLA requirements.
Dive Insight:
AGC CEO Jeffrey Shoaf said in a statement that it had anticipated a move like the DOD’s and it proved the AGC’s past assertions that the PLA mandate was not legal.
“We expect all federal agencies involved in procuring construction services to follow suit and drop what is clearly an unlawful mandate from their construction solicitations,” Shoaf said.
The Defense Department did not respond to Construction Dive's request for more information.
The memo comes a few weeks after a U.S. Federal Claims judge hamstrung the order by ruling in favor of a group of construction companies that filed protests against the implementation of the mandate on specific projects. Judge Ryan Holte said in his Jan. 21 ruling that the implementation of the mandate on seven contract procedures in 2024 ignored federal agencies’ own research indicating PLAs would be anti-competitive and relied on “arbitrary and capricious” policy.
The Associated General Contractors of America helped facilitate the legal challenge to Biden’s approach of a PLA mandate.
Holte’s decision, however, only directly impacted bid protests filed in six states over projects solicited by the U.S. Army Corps of Engineers, General Services Administration and Naval Facilities Engineering Systems Command. Both USACE and NAVFAC are part of the DOD.
The ruling cut off the mandate at the knees, and opened the door for other bid protest challenges, Dirk Haire, Washington, D.C.-based partner at Philadelphia-headquartered law firm Fox Rothschild said at the time. He represented some of the plaintiffs in the bid protest case.
The DOD contracts out billions of dollars worth of construction work each year. For example, in November, the agency awarded roughly $2.3 billion worth of design, engineering and construction work, according to the Construction Broadsheet.
