Dive Brief:
- A U.S. Federal Claims judge has ruled in favor of a group of construction companies that filed protests against the implementation of former President Joe Biden’s December 2023 executive order that mandated project labor agreements on federal contracts over $35 million.
- In a briefing earlier this month, Judge Ryan Holte of the U.S. Court of Federal Claims said the implementation of the mandate on seven contract procedures last year ignored federal agencies’ own research indicating PLAs would be anti-competitive and relied on “arbitrary and capricious” presidential policy.
- The Jan. 21 ruling only impacts those specific bid protests filed in 2024, but construction employer groups touted it as a win for the entire industry. It opens the door for more challenges and puts the future of the rule in question, said Dirk Haire, Washington, D.C.-based partner at Philadelphia-headquartered law firm Fox Rothschild, which represented some of the plaintiffs.
Dive Insight:
The three agencies in question — the U.S. Army Corps of Engineers, General Services Administration and Naval Facilities Engineering Systems Command — had issued PLAs for solicitations in construction services following a Federal Acquisition Regulatory Council rule, effective January 2024, to implement Biden’s executive order.
Holte’s ruling indicated that the agencies had inserted the “project labor agreement requirement simply because President Biden and the FAR Council made ‘the policy judgment [that] project labor agreements are generally good.’”
The protests, which related to projects in six states, were filed by defense contractor MVL USA and consolidated plaintiffs Environmental Chemical Corp., JCCBG2 and Harper Construction Co. — which were represented by Fox Rothschild — and Hensel Phelps, represented by Atlanta-based Smith Currie Oles.
Holte ruled that the agencies responsible for each of the protested contracts must amend them by Feb. 3.
The Biden administration issued the executive order as many funds were pouring out from the Infrastructure Investment and Jobs Act, which went into effect in November 2021. It represented a double-edged sword for builders who opposed the rule, but would benefit from the federal funding.
Biden’s executive order claimed PLAs would improve projects by supporting workers, eliminating project delays related to labor and helping create a better pipeline of well-paid workers on federal contracts.
Labor groups have traditionally championed PLAs, saying they better protect workers. But many builders and employer groups claim they disadvantage contractors that don’t often work with unions.
The Associated General Contractors of America facilitated the challenge to Biden's approach of a PLA mandate, which it claimed was illegal. The organization argued that by mandating PLAs on federal construction jobs, the then-president was creating a new federal set-aside program without the required congressional approval.
Thus, AGC supported the bid protests, Jeffrey Shoaf, AGC CEO, said in the release because it was “a quicker and more effective way to challenge” the executive order.
As a result of the decision, Ben Brubeck, vice president of regulatory, labor and state affairs for Associated Builders and Contractors, encouraged organization members to file bid protests against PLA mandates and expect a similar outcome.
“This is the best solution to defeat the Biden rule on federal contracts until a court issues an injunction against the rule or the Trump administration rescinds it via executive action,” Brubeck said in a release.
Although President Donald Trump penned a flurry of executive orders as he took office, he has yet to undo Biden’s PLA mandate. But Holte’s ruling — which noted that presidential guidance “ping-ponged” from banning to merely encouraging PLAs until Biden outright mandated them — for now opens up the door to challenges against any federal agency that issues such a PLA, Haire said.
Editor’s note: This story has been updated to clarify the AGC’s role in the legal proceedings.
