By Brandon Wilsey, Associate (McLean, VA)
In a decision published on January 21, 2025, the U.S. Court of Federal Claims struck down the Biden administration’s policy requiring Project Labor Agreements (PLAs) on large-scale construction projects. Signed by President Biden in February 2022, Executive Order (EO) 14063 mandates PLAs on all federal construction projects exceeding $35 million. In the consolidated bid protest of MVL USA, Inc., et al. v. United States, Case No. 24-1057, the Court held that federal agencies’ implementation of the EO violated the Competition in Contracting Act (CICA) by restricting open competition, rendering the requirement “arbitrary and capricious.”
Although this decision is a significant victory for the protestors, its direct impact is limited for the moment. The PLA mandate has not been rescinded and remains in effect for large-scale construction procurements that were not part of this consolidated protest. The decision, however, likely precedes the mandate’s imminent demise. Many industry insiders, including the Build America Local Coalition, have urged the new Trump administration to scrap the mandate. The Trump administration has signaled that it is sympathetic to these requests, and the President, of course, can rescind the mandate with the stroke of his pen. But unless or until President Trump issues a new EO, the Court’s decision signals that PLA mandates will face heightened scrutiny and will require agencies to carefully justify mandates to avoid similar legal challenges.
What are Project Labor Agreements and Why are they Mandated?
PLAs are pre-hire collective bargaining agreements, unique to the construction industry, which are applied to specific projects. These agreements typically require contractors to adhere to union rules, use union hiring halls, and contribute to union benefit plans. Proponents argue that PLAs ensure labor harmony, standardize work conditions, and prevent delays. Critics contend that PLAs limit competition by excluding nonunion contractors, which represent the vast majority of the construction workforce, and inflate project costs.
The federal government’s approach to PLAs has shifted with changing administrations. In 1992, President George H.W. Bush’s Executive Order 12818 prohibited government-mandated PLAs. In 2009, President Obama issued Executive Order 13502, which encouraged – but did not require – PLAs on projects exceeding $25 million. This approach shifted dramatically in 2022 when President Biden issued Executive Order 14063, making PLAs mandatory for federal construction projects over $35 million. The Biden administration justified this mandate by claiming it would enhance project efficiency and worker protections.
Rolling Back the Mandate
The court’s ruling in MVL USA, Inc. arose from consolidated bid protests filed by twelve construction companies, challenging the mandatory use of PLAs on large-scale federal projects. The plaintiffs argued that the PLA mandate contravened CICA by excluding nonunion contractors and limiting fair competition. CICA generally requires procuring agencies to “obtain full and open competition through the use of competitive procedures,” meaning that “all responsible sources are permitted to submit sealed bids or competitive proposals on the procurement.”
The government argued that PLA mandates do not stifle competition because an entity is not a responsible source for a procurement if it is unable or unwilling to comply with the PLA requirements. The Court rejected the government’s argument and agreed with the protestors. Central to the court’s analysis was the failure of the federal agencies to reconcile the PLA requirement with their own market research, which often showed that PLAs could increase project costs and discourage contractor participation. The court emphasized that the agencies’ blanket reliance on EO 14063, without addressing this evidence, rendered the rule “arbitrary and capricious.”
The Court’s reasoning focused on the procedural and substantive shortcomings of the mandate. While the Biden administration justified the PLA policy as promoting efficiency and ensuring labor harmony, the Court noted that these claims were unsupported by the administrative record. The agencies failed to show how the mandate furthered these objectives on a project-by-project basis, as required by CICA. Instead, the broad application of PLAs effectively disregarded the statutory requirement for full and open competition in federal contracting.
The Future of PLA Mandates
The MVL USA, Inc. decision will likely restore opportunities for nonunion contractors to compete for large federal projects, leading to increased competition, lower costs, and broader workforce access. Nonunion contractors now have a roadmap to challenge PLA mandates.
The future of PLA mandates remains uncertain with the change of presidential administrations. Republican administrations have traditionally opposed government-mandated PLAs, and President Trump’s previous term saw the reinstatement of policies promoting open competition. In a January 2025 letter, the Build America Local Coalition urged the incoming administration to rescind Biden’s executive order and adopt policies that encourage open competition. Given historical precedent, the Trump administration may revoke Executive Order 14063 and issue a new directive emphasizing fair and open competition.
Meanwhile, the Court’s ruling against the PLA mandate signals a victory for construction companies seeking to avoid them. Given the decision’s significant, yet narrow impact on the PLA landscape, contractors should seek the advice of qualified legal counsel to determine how to navigate PLA mandates.