The U.S. Court of Federal Claims has ruled in favor of contractors that challenged former President Joe Biden’s policy requiring project labor agreements on all federal construction projects of $35 million or more, with few exceptions. 

Judge Ryan T. Holte’s Jan.19 ruling responds to 12 bid protests filed by contractors against three federal agencies, the U.S. General Services Administration. U.S. Army Corps of Engineers and U.S. Naval Facilities Engineering Systems Command, which mandated the agreements in solicitations for construction services based on a Federal Acquisition Regulatory Council rule that implemented Biden’s Executive Order 14063 in 2022. 

The plaintiff contractors included MVL USA, JCCBG2, Harper Construction Co., Environmental Chemical Corp. and Hensel Phelps Construction Co. Inc. 

The jobsite-specific collective bargaining agreements used in construction typically require companies to agree to recognize unions as the representatives of their employees, use the union hiring hall to obtain most or all construction labor, hire apprentices from union-affiliated apprenticeship programs, follow union work rules and pay into union benefit and multi-employer pension plans that non-union employees cannot access.

The contractors argued that the executive order, as the sole backing of the rule, was arbitrary and capricious and when applied to individual federal contracts, stifles competition and violates the Administrative Procedure Act that mandates agencies to promote “full and open competition” in federal procurements unless some other statutory justification is invoked.

When filing their members’ bid protests in July, the Associated General Contractors of America said the agreement mandate in the federal solicitations “unlawfully amounts to a socio-economic set aside that Congress never authorized. In other words, the president does not have the authority to create a set-aside program that disqualifies contractors that have not negotiated or have been unable to negotiate a project labor agreement.”

AGC said, at the time, that it supports a contractor’s right to voluntarily negotiate such an agreement but adamantly opposes government mandates that require one, such as under the executive order and subsequent rule. AGC and its attorneys from Fox Rothschild LLP, created the legal theory that challenged the validity of the agreement mandate through their filing of bid protests that eventually allowed the rule to be adjudicated in the federal claims court.

The Associated Builders and Contractors, which has a majority of non-union member companies then lead a coalition of construction groups that includes the Construction Industry Round Table, National Ready-Mix Contractors Association, U.S. Chamber of Commerce and other  groups under the name the Build American Local Coalition. It also wrote a letter to President Donald Trump in early January urging an end to any federal project labor agreement requirement. 

“Damning evidence procured through market research conducted by several federal agencies was raised in the case’s Jan. 16 oral argument and corroborated plaintiffs’ complaints and ABC’s long-standing concerns,” said ABC Vice President of Regulatory, Labor and State Affairs Ben Brubeck. “ABC members were harmed by former President Biden’s costly executive overreach, which violates federal laws and rewards special interests at the expense of fair and open competition.” 

In his ruling, Judge Holte cited a clause in a Corps of Engineers contract for a consolidated communications center at Patrick Space Force Base in Cocoa Beach, Fla. The agency concluded in the contract addendum that such an agreement would not contribute to either project economy or efficiency, but it amended the project plan to include one because of the government mandate.

The requirement “precludes full and open competition by effectively excluding [a non-agreement] offeror from winning an award’—both in the function of the mandatory rule itself and in the apparent policy to deny exceptions even when the agency itself commissions data indicating an exception should be made,” Holte wrote. 

The decision required the parties to file briefs by Feb. 25 to decide injunctive relief, but the current administration has already said it will not require the agreements on large federal projects and the decision could bar any future administration of either party from doing so via executive order.

The U.S. Justice Dept., which represented the agencies, could not be reached for comment during the transition.

Jacob Scott, a partner at Washington-based and construction-focused law firm Smith Curry Oles that represented Hensel Phelps in the matter said after the ruling, in a statement, “the PLA mandate has not been rescinded and remains in effect for any other large-scale, construction procurement that was not part of this consolidated protest. If a contractor wishes to object to the PLA requirement in an ongoing solicitation, it generally must do so before the deadline for proposal submission. If and when the new administration rescinds the requirement, the need to protest will be eliminated, but for the time being, this remains a live issue for many contractors.”

North America’s Building Trades Unions declined comment on the ruling, but President Sean McGarvey also released a statement, separately, on Trump’s inauguration, signaling that its members and leaders are ready to work with the new administration.