On January 21, 2025, the Court of Federal Claims issued an order that, in effect, invalidates President Joe Biden’s February 4, 2022 Executive Order (14063) and 48 C.F.R. Subpart 22.5, Use of Project Labor Agreements for Federal Construction Projects, mandating use of project labor agreements (PLA) on all federal construction projects expected to cost over $35 million.

Between July 2024 and September 2024, twelve large construction companies filed bid protests on numerous federal construction projects across the United States, all of which required a proposing contractor to enter into a PLA with a labor union.[1] The PLA requirement for these respective projects came after the Federal Acquisition Regulation (FAR) Council promulgated a rule—as required by President Biden’s Executive Order—mandating “every contractor and subcontractor engaged in construction on the project agree, for that project, to negotiate or become a party to a PLA with one or more labor organizations.”

The bid protests were consolidated into a single action before Judge Ryan Holte of the Court of Federal Claims. The Court found in favor of the contractor plaintiffs, finding that the Biden Administration’s attempt to force federal contractors to enter into PLA agreements on certain contracts was not permitted by statute. In agreeing with the contractor plaintiff’s, the Court made three key findings:

• • First, the Court determined that the government’s “decision to disregard market survey results indicating that a PLA would be anticompetitive and to include a PLA requirement against the recommendations of the agency’s hired outside industry specialist ‘runs counter to the evidence before the agency,’ makes a PLA effectively mandatory, and is arbitrary and capricious.”

The Court noted at the outset of the opinion that Biden’s Executive Order had been a significant change from even President’s Obama’s 2009 Executive Order, which only encouraged agency’s to utilize PLAs on projects over $25 million. “In fundamental operation, the Biden EO flipped the status quo from giving agencies broad discretion to apply PLAs on a case-by-case basis, to mandating PLAs as the new default requirement subject to exceptions.”

• • Second, the Court determined that the mandatory PLA requirement violated the Competition in Contracting Act’s (“CICA”) “full and open competition” procedure by disqualifying otherwise responsible contractors who do not enter into a PLA with a labor union, even though those contractors may otherwise offer the government the best value. To this end, the Court stated that “[t]he record evidence for these solicitations clarify agencies will exclude an otherwise responsible offeror under the PLA mandate regardless of that offeror’s capability to perform the contract.”

The Court acknowledged that “[t]he government boils this case down to choice: ‘the inability or unwillingness of a particular contractor to comply with a FAR clause incorporated into a solicitation does not mean that the solicitation provides for less than full and open competition.’” Yet, the Court found that “a responsible offeror that [declines to enter a PLA] is not given the same opportunity to win an award as other offerors that submitted awardable proposals…The record teems with examples of how the Biden EO PLA mandate excludes non-PLA offerors on that basis alone… [and] have no substantive performance relation to the substance of the solicitations at issue and violate CICA’s requirement that procuring agencies ‘obtain full and open competition through the use of competitive procures.’”

• • Finally, the Court determined that there are no exceptions that would allow the anticompetitive mandate to avoid CICA’s full and open competition requirements. ‎The Court held that “[i]f an agency seeks to violate CICA’s full and open competition requirement, the ‎government must demonstrate express statutory authority to do so.”

One of the statutory exceptions to CICA’s full and open competition requirement are ‘procurement procedures otherwise expressly authorized by statute.’” ‎‎The government tried to argue that because the FAR’s mandatory PLA provisions were “properly promulgated, substantive agency regulations,” that meant agencies were “authorized by law” to implement contractual specifications based on agency needs. The Court rejected this argument, noting that the government’s argument would require the “Court to take a red pen to [CICA] and add a caret to read as ‘expressly authorized by statute or Federal Acquisition Regulation’” and “[w]ithout invoking any other statutory authority, the government’s argument [that] the PLA mandate is ‘authorized by law’ falls short of the express statutory authorization mandated by Congress” under CICA.”

The Court concluded by ordering that “the government, in consultation with the agencies, SHALL FILE a joint status report within on or before 3 February 2025 detailing the agencies’ proposed timeframe required to properly address each contract,” inferring that the mandatory PLA provisions of the solicitations must be removed from the contract requirements.

Some states are attempting to implement their own PLA requirements. As previously reported, on December 19, 2024, Oregon Governor Tina Kotek publicly announced Executive Order No. 24-31, requiring Project Labor Agreements (PLAs) on nearly all state construction projects in Oregon. Less than a month later, Kotek provided additional guidance on her executive order mandating PLAs by publishing a set of “Frequently Asked Questions” that address the implementation and scope of the order.

This article summarizes aspects of the law and opinions that are solely those of the authors. This article does not constitute legal advice. For legal advice regarding your situation, you should contact an attorney.

[1] The bid protests came after Associated General Contractors of America had unsuccessfully challenged President Biden’s authority to implement the PLA mandate in Louisiana District Court.