THE POTENTIAL (SECOND) DEATH OF PROJECT LABOR AGREEMENTS

The back-and-forth over project labor agreements (“PLAs”) continues during the second Trump Administration. These pre-hire collective bargaining agreements generally set the terms and conditions of employment for a specific project and have been the subject of several executive orders dating back to the early 1990s. The executive orders have varied between a complete prohibition of the PLA requirement by President George H.W. Bush in 1992 to a mandate that agencies include PLAs with labor organizations in all government construction contracts exceeding $35 million by President Biden in 2022. Although President Trump has issued several executive orders since taking office in January, he has not specifically addressed the continued tug-of-war over PLAs. However, federal agencies and courts have redrawn the lines for PLAs, leaving the construction industry waiting for further guidance.

The first domino fell when the United States Court of Federal Claims issued a ruling in MVL USA, Inc. et al. v. United States, 174 Fed. Cl. 437 (U.S. Ct. Cl. 2025). Here, 12 large construction contractors filed pre-bid award protests, challenging federal agencies’ authority to mandate that prospective bidders enter PLAs to be considered eligible for award of federal construction projects exceeding $35 million, allegedly in violation of the Competition in Contracting Act (“CICA”), as based on President Biden’s Executive Order and Federal Acquisition Regulation (“FAR”) implementing the Executive Order. In its decision, the court struck down President Biden’s executive order. The Federal Claims Court held that the PLA mandate violated the CICA’s full and open competition requirement. It further held that the mandate violated the CICA because it allows agencies to reduce competition to PLA-contracts, a limitation that has no relation to the substance of the solicitation or performance at issue. The court also that that the agencies’ decisions to proceed with PLAs as a mandate based solely on a President’s policy were “arbitrary and capricious.” Since this decision was rendered in late January, some federal agencies have begun adopting policies consistent with the court’s rationale.

In response to the MVL decision, the Department of Defense (“DoD”) issued a class deviation addressing PLAs. In this February 7, 2025 ruling, the DoD stated that contracting officers shall not use PLAs for large-scale construction projects. The DoD also required contracting officers to amend solicitations to remove PLA requirements, including any solicitation provisions and contract clauses prescribed at FAR 22.505. The DoD’s new policy effectively nullified President Biden’s Executive Order for all DoD construction projects.

Unlike the DoD’s class deviation, the General Services Administration (“GSA”) revised its approach to PLAs with a class exception. Instead of nullifying the FAR, the GSA treated the FAR as operative and implemented an exception to the PLA requirement found within the FAR. The GSA’s class exception applies only to Land Port of Entry (“LPOE”) construction projects. This exception meets the requirement of FAR 22.504(d), and states that requiring a PLA on LPOE projects would not advance the Federal Government’s interests in achieving economy and efficiency in Federal procurement. The class exception is based on the need for LPOE modernizations and is of compelling urgency, making a PLA impracticable.  

Following the two separate approached by the DoD and GSA, the United States Department of Veterans Affairs (“VA”) announced the reversal of President Biden’s policy through a class deviation. The VA’s FAR Class Deviation Memorandum released on February 20, 2025, cites the change in policy addressed in the MVL decision. In its memorandum, the VA forbade contracting officers from using PLAs for large-scale construction projects as implemented in FAR 22.5 and 36.104(c). The memorandum also struck down the notice requirement for PLAs set forth within FAR 52.222-33 and PLAs as set forth in FAR 52.222-34.

Although President Trump did not modify President Obama’s executive order and maintained the policy of encouraging agencies to consider requiring PLAs during his first term, many expected President Trump to rescind President Biden’s PLA order immediately during his second term. Instead, the rescission has come from the courts and federal agencies. Thus far, three federal agencies have specifically addressed PLAs on large-scale federal construction projects. The DoD and the VA issued class deviation memorandums, whereas the GSA issued a PLA exception waiver within President Biden’s FAR rule. All other federal agencies are still subject to President Biden’s PLA order. However, if these agencies are an indication of anything, it seems apparent that PLA requirements are set to die under this administration.

Contractors on federal projects must understand the current state of PLAs before submitting bids for these projects. With the exception of the DoD, the GSA, and the VA, contractors must continue to comply with the PLA requirements for federal projects because as they remain in full force and effect. Contractors must also recognize that the bidding process, and the project itself, may be delayed as the federal agencies work to address bid specifications requiring PLAs. Furthermore, there is no indication that these policies affect ongoing federal projects. Until additional guidance is released, contractors must be familiar with PLA requirements and adhere to President Biden’s 2022 mandate.

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Author and Editor W. Tyler Lloyd is an attorney in Stites and Harbison, PLLC's construction group in Louisville, Kentucky. Tyler represents owners, general contractors and subcontractors in all phases of construction projects, including contract negotiation and conflict resolution. Tyler can be contacted at tlloyd@stites.com.