WASHINGTON — A U.S. Federal Claims court recently sided with a group of construction companies challenging a directive from former President Joe Biden that required project labor agreements (PLAs) on federal contracts exceeding $35 million. The ruling by Judge Ryan Holte targeted the enforcement of these mandates on seven contracts in 2023, stating that they were both anti-competitive and based on presidential policy deemed “arbitrary and capricious.”
The decision, delivered on Jan. 21, currently impacts only those specific cases filed in 2024, though it represents a broader victory for the construction industry. Industry representatives, particularly the Associated Builders and Contractors (ABC), have celebrated the judgment as a potential catalyst for additional legal challenges against similar mandates, which could further unsettle the standing rule.
The contested federal requirement was initiated through an executive order by Biden in December 2023, aimed at enhancing the quality of federal construction projects by ensuring timely completion and creating a robust skilled workforce through PLAs. These agreements, often backed by labor groups, require contractors on federal projects to negotiate with unions, an approach argued to benefit workers substantially.
However, the imposition of PLAs has been contentious. Detractors, like the plaintiffs including defense contractor MVL USA and the combined efforts of Environmental Chemical Corp., JCCBG2, and Harper Construction Co., supported by Fox Rothschild, argue that the mandates put non-unionized contractors at a disadvantage. Another prominent construction firm, Hensel Phelps, represented by the Atlanta-based law firm Smith Currie Oles, also joined the fray of opposition.
Amidst the push from Biden’s office, which paralleled the rollout of vast sums from the Infrastructure Investment and Jobs Act of November 2021, the inclusion of PLAs was viewed as even more critical. The administration reasoned that these agreements could prevent project delays due to labor disputes, thus fostering better job stability and quality on federal contracts.
Yet, the ruling from Holte has raised substantial questions about the future enactment of PLAs in federal contracting. He directed the agencies involved, including the U.S. Army Corps of Engineers, General Services Administration, and Naval Facilities Engineering Systems Command, to revise the contested contracts by early February.
The implications of this ruling extend beyond these individual contracts. The guidance under Biden’s tenure had reversed a previous absence of obligatory PLAs under the Trump administration, which opted to encourage rather than enforce such agreements. Now, according to Dirk Haire of Fox Rothschild, the decision hands federal contractors a template to challenge PLA stipulations in projects on a case-by-case basis, further amplifying the legal contest to Biden’s order.
Given this context, Ben Brubeck, vice president of regulatory, labor, and state affairs for ABC, advises contractors encountering similar mandates to persistently lodge bid protests. The efforts aim to either result in a sweeping legal injunction against Biden’s rule or hope for a reversal through future executive actions.
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