What's up with Project Labor Agreements (today)?
This is yet another blog about the Biden Administration’s Executive Order 14063 (EO) that mandated the use of Project Labor Agreements (PLA) for large federal construction projects in excess of $35 million. The FAR Council implemented the EO in a final rule issued this past December.. See Use of PLAs for Federal Construction Projects, 88 Fed. Reg. 88708, 88723 (Dec. 22, 2024) (in pertinent part adding FAR Subpart 22.5 and corresponding contract clauses, notably FAR 52.222-33 and FAR 52.222-34).
In the six months that have passed since the new FAR provisions went into effect, there has been considerable litigation over the implementation of the mandate and whether the mandate should even exist. In January, I wrote about a bid protest decision denying the protest of an offeror that failed to submit a properly executed PLA in accordance with solicitation’s requirements. In February, I discussed then-recent developments that suggested that EO 14063 was on life support as the result of the Court of Federal Claims’s decision in MVL USA, Inc. v. United States, 174 Fed. Cl. 437 (2025). That decision held that the PLA mandate was anticompetive; that the record was replete with examples of offerors that had been exluded solely because they didn’t enter into a PLA; and that the EO violated the statutory requirement for full and open competition.
While that opinion was limited to the solicitation and offerors involved in that case, there just didn’t seem to be a high likelihood for the mandate to survive further legal challenge. Indeed, various agencies seemingly saw the writing on the wall. The Departments of Defense and Veterans Affairs issued class deviations waiving the requirement to require PLAs on any of their agencies’ solicitations and further directing that the requirement be removed from any existing procurements. The General Services Administration issued a class “exception” waiving the PLA requirement for Land Port of Entry projects under the purview of the Public Building Service. In other words, the dominoes were falling.
These agency decisions then were challenged by the Building Trades union at the U.S. District Court for the District of Columbia. That court issued a preliminary injunction rejecting the deviations on the ground that the agencies lacked the discretion to issue class deviations that contradicted EO 14063, notwithstanding the EO’s apparent frailty at the COFC, remained on the books.
That brings us to the most recent, and frankly surprising, development. The Director of the Office of Management and Budget issued Memorandum M-25-29. That memorandum, issued to the heads of executive departments and agencies, observed that “some agencies have issued overly broad Federal Acquisition Regulation (FAR) deviations related to Project Labor Agreement (PLAs) and the use of those agreements.” This, according to the Memorandum, “signaled an inconsistent Administration position relating to the use of PLAs [and directed agencies to] coordinate with OMB and the Office of Federal Procurement Policy (OFPP) before issuing deviations that can affect the Federal Government at an enterprise level.”
Here's the punchline:
[T]he Trump Administration supports the use of PLAs when those agreements are practicable and cost effective, and blanket deviations prohibiting the use of PLAs are precluded. Executive Order (E.O.) 14063 remains in effect with further explanation provided to the exceptions in E.O. 14063, OMB Memorandum M-24-06, and subpart 22.5 of the FAR.
The Memorandum, however, recognized that agencies were concerned about the impact that the PLA requirement would have on competition and future costs. While it didn’t say so, I suspect that OMB also recognized that the vitality of the mandate remained in doubt because of the COFC’s rejection of the PLA requirement in the MVL case. Accordingly, the Memorandum offered some specific guidance on the conduct of market research to ascertain whether an agency should apply an exception if there was a lack of sufficient competition. Essentially, if an agency determines that two or more offerors (three in the case of sealed bid procurements) would submit proposals even though a PLA would be required, then the PLA requirement cannot be waived unless its inclusion would increase the government’s cost by more than 10 percent.
This surely will not be the final word. There likely will be more protests over the mandate. There may even be a split between the COFC and the Government Accountability Office over the legality of the EO. And, who knows, maybe the White House will rescind the EO.