Trump Administration Affirms Federal Project Labor Agreement Rule

The Trump administration has dashed the hopes of many construction industry interests that it would finally bury requirements for project labor agreements (PLAs) on federal projects.

A June 12 memo to federal agency and department heads from Office of Management and Budget executive director Russel Vought declares that a Biden-era executive order requiring PLAs on federal projects over $35 million stands. And it pointedly clarifies when exceptions to their use contained in that order may apply — only when they clearly jeopardize competitive bidding and project budget constraints.  

The seemingly definitive memo stating that “(Biden’s) executive order 14063 remains in effect” and “the Trump administration supports the use of PLAs when those agreements are practicable and cost effective,” follows months of dueling court actions and administrative orders on federal PLAs overshadowed by bets that a blanket reversal by Trump of Biden’s executive order was likely, though not assured.

Associated Builders and Contractors (ABC), which has waged a long battle on government-mandated PLAs claiming they discriminate against non-union contractors it represents, said in a June 12 statement that failing to fully rescind Biden’s order means continued unfairness, higher project costs and more uncertainty.

“This decision cannot be reconciled with the President’s philosophies of merit, fairness, and nondiscrimination because it inhibits fair and open competition and prioritizes special interests over taxpayers and workers,” said Michael Bellaman, ABC president and CEO. “Today’s memorandum doubles down on an unfair, wasteful, anti-competitive, Biden-era policy that inflates costs and delays critical construction projects, including those important to the defense of our country.”

ABC takes issue with the memo’s reference to the value of PLAs when they’re “practicable and cost effective,” stating that contractors have always been free to enter into them voluntarily “when such an agreement makes sense for their workforce.” That might be the case for union contractors, it says, but probably not for merit shop contractors who it says are effectively excluded by the policy from participating in large-scale federal projects since they essentially incorporate union involvement and terms.

“Today’s guidance prevents many of these experienced and qualified contractors from delivering public works projects safely, on time and on budget,” ABC says. “The ongoing confusion and legal uncertainty this policy creates will result in unnecessary delays and cost increases to critical national security projects.”

ABC has been fighting the Biden order in court since last year. Joining with its Florida First Coast chapter, the group is challenging the legality of the federal PLAs, claiming Biden overstepped his authority. The order, it says, is anti-competitive and illegally steers federal construction projects to union contractors. The case is currently before the Eleventh Circuit Court of Appeals in Atlanta.

On the other side, the National Association of Building Trades Unions might be celebrating, though it has not released a statement on the OMB memo. NABTU and the Baltimore-D.C. Metro Building and Construction Trades Council took three federal agencies to court in May for allowing bidding on qualifying construction contracts to proceed without the in-place federal PLA requirement. It won a preliminary injunction from a U.S. District Court in Washington, D.C., on May 16 barring three U.S. agencies, the Departments of Defense, Veterans Affairs and General Services Administrations, from bypassing the PLA requirement.

Those agency actions followed a U.S. Court of Federal Claims ruling in January in favor of a group of construction companies that in effect challenged the legality of the Biden PLA executive order. The verdict said three government agencies that had drafted contracts the companies bid on in 2024 containing the PLA stipulation did so knowing based on market research that that was anti-competitive (grounds for an exception) and moreover relied on a Biden policy that was “arbitrary and capricious” in its design.

Within weeks of that ruling, President Trump issued an executive order that chipped away at federal PLAs. Trump’s order was to rescind a Biden executive order favoring bidders on federal infrastructure projects that agreed to prioritize the hiring of union labor and specifically participate in PLAs. PLA opponents thought that was a first step toward Trump eventually doing away with the PLA requirement on federal projects with his own executive order.

That order, combined with the federal claims court ruling, may have amounted to a cue for some federal agencies to directly challenge the PLA requirement. In January both the Defense Department and the GSA made moves to excise the PLA language from contracts, actions that may have sparked the OMB memo.

Noting that some agencies in recent months have invoked “overly broad” interpretations of permitted exceptions to PLAs that “have signaled an inconsistent Administration position relating to the use of PLAs,” Vought says “blanket deviations prohibiting the use of PLAs are precluded.”

Citing growing agency concern that the PLA mandate could pose challenges to competitive bidding and project cost containment, the memo clarifies that agencies should evaluate the possibility of PLA exceptions through the lens of achieving “adequate price competition.”

In the case of negotiated contracts two qualified offers should be sufficient to provide that sufficient price competition, it says, and for sealed bids three or more should suffice, “even if the number of offerors who indicate they will not compete because of the PLA is significantly higher than the number of sources who have expressed an intent to compete.” Agencies can, however, trigger the PLA exception if based on market research “prices are expected to be higher than the government's budget by more than 10 percent due to the PLA requirement.”

Appearing focused on getting all federal agencies to adhere to the guidelines for as long as the PLA requirement stands, the memo concludes that “independent agency interpretation for PLA use should no longer occur.”