Matthew DeVries | Best Practices Construction Law
I am sure that my kiddos would understand that title, so shoot me an email if you get it!
In a major win for open competition in federal contracting, the United States Court of Federal Claims ruled against the government’s mandate requiring Project Labor Agreements (PLAs) on large-scale federal construction projects. The decision, issued in MVL USA, Inc. et al. v. United States, (January 21, 2025) (pdf), found that the Biden Administration’s executive order forcing contractors to sign PLAs with labor unions violated the statutory principles of full and open competition under the Competition in Contracting Act (CICA).
Background: The PLA Mandate
PLAs have long been a contentious issue in federal construction. Over the last 30 years, executive orders have swung between prohibiting, encouraging, and now mandating their use on federal projects. President Biden’s Executive Order 14063 implemented in 2022 marked an unprecedented shift, requiring PLAs on all federal construction projects exceeding $35 million. This mandate was formally implemented in 2024 by the Federal Acquisition Regulation (FAR) Council, which directed agencies to include PLA requirements in all relevant solicitations—regardless of whether market research supported their use.
The Legal Challenge
A coalition of twelve major construction firms challenged the legality of the PLA mandate, arguing that it stifled competition, increased costs, and lacked statutory authorization. The plaintiffs cited multiple instances where agencies’ own market research had determined that PLAs would be counterproductive—leading to higher prices and reduced contractor interest—yet agencies were still forced to include the PLA requirement due solely to the executive order.
For example:
- In one project solicitation, initial research found that a PLA would deter contractor participation due to a local skilled labor shortage. Despite this, the agency reversed course and mandated a PLA.
- In another case, an agency acknowledged that including a PLA requirement would increase project costs, yet moved forward with the requirement anyway.
- Most strikingly, an agency deleted prior market research concluding that a PLA would reduce competition and inserted a PLA requirement simply because “the policy judgment [that] project labor agreements are generally good” had been made by the administration.
The Court’s Ruling: A Blow to PLA Mandates
The court ruled in favor of the contractors, declaring that the PLA mandate violated the requirement for “full and open competition” under CICA. Judge Holte found that federal agencies had arbitrarily and capriciously imposed PLAs, disregarding their own market analysis in favor of a blanket executive order policy.
So What? Here are some key takeaways from the decision:
- Agencies cannot ignore market realities. The decision reaffirmed that procurement regulations require agencies to promote competition and justify any limitations on bidding. The government failed to provide statutory justification for overriding market research that found PLAs would be harmful.
- Presidential policy cannot substitute for statutory authority. The ruling emphasized that the President’s executive order alone is not sufficient authority to override competitive bidding laws. If Congress had intended for PLAs to be required, it would have explicitly authorized them in procurement statutes.
- The FAR Council’s implementation of the mandate was arbitrary and capricious. By mandating PLAs in all large-scale projects without regard to actual procurement conditions, the government violated administrative law principles.
Implications for Federal Contractors
This decision is a significant victory for general contractors, subcontractors, and open-shop firms that would have been excluded from federal projects due to their unwillingness or inability to enter into union PLAs. It reinforces the importance of open competition and prevents agencies from using executive orders as a blanket justification for anti-competitive procurement policies.
The ruling could lead to further legal challenges against similar executive orders and procurement regulations that limit competition without clear statutory authority. For now, federal agencies will have to reconsider their approach to PLAs. And, as my kids would say, “No cap! … It is likely that we will see further litigation or legislative efforts on this issue.”
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