The Truth About Project Labor Agreements

The U.S. Dept. of Veterans Affairs announced the reversal of a controversial Biden administration policy mandating project labor agreements on solicitations for construction contracts of $35 million or more. The policy change is expected to restore merit-based competition for taxpayer-funded construction contracts to build Veterans Affairs hospitals, outpatient facilities, office buildings, national cemeteries and other VA facilities.

According to reporting by ENR (Veterans Affairs Dept. Issues Strongest Ban Yet of Biden-Era Project Labor Agreement Mandate, 2/21/25):

The court’s ruling is seen by the groups as a major victory for contractors who have long argued that the agreements are anti-competitive.

“Inviting all federal contractors to bid on and build critical hospitals and infrastructure for our veterans is the right move. It’s good to see the department follow the lead of other agencies by eliminating inflationary PLA mandate schemes,” said Ben Brubeck, ABC vice president, in a statement. “ABC will continue to push to make this policy a reality government-wide.”

The VA’s FAR Class Deviation Memo (pdf)–released to the public on Feb. 20–cites the change in policy on account of a January decision by the U.S. Court of Federal Claims that ruled in favor of experienced ABC members and other federal contractors that filed 12 bid protests against three federal agencies that mandated PLAs in solicitations for construction services:

The Court found that the agencies’ 2024 implementation of E.O. 14063, specifically, “the functionality of the mandate as applied to the individual contracts in this case stifles competition and violates the statutory directive that agencies must promote “full and open competition” in federal procurements unless a statutory justification is properly invoked.” No injunction relief was included in the order.

Due to the Court of Federal Claims decision, effective immediately, contracting officers shall not use project labor agreements for large-scale construction projects, implemented at Federal Acquisition Regulation (FAR) subpart 22.5 and 36.104(c). The FAR clauses at FAR 52.222-33, Notice of Requirement for Project Labor Agreement, and FAR 52.222-34, Project Labor Agreement, shall not be enforced in any solicitation.

UPDATE 2/26/25: The VA has suddenly reversed course and rescinded their Feb. 13 PLA deviation memo.

UPDATE 3/4/25: The VA has reinstated a PLA in the solicitation for the Sepulveda Ambulatory Care Center in California. Learn more here.

On Feb. 19, ABC celebrated a policy shift (pdf) by the U.S. General Services Administration that will restore merit-based competition for contracts to build land port of entry projects procured by the GSA (ABC Applauds GSA Decision to End Union-Only Contracting Schemes on Land Port of Entry Construction, 2/19/25).

“The GSA’s new policy eliminates former President Joe Biden’s controversial rule requiring anti-competitive, inflationary, union-favoring project labor agreements on federal construction projects of $35 million or more––but only for GSA solicitations to build critical land port of entry projects,” said Brubeck in an ENR article (GSA Won’t Require Project Labor Agreements for Land Port of Entry Projects, 2/19/25).

“Requiring a PLA on LPOE projects would not advance the Federal Government’s interests in achieving economy and efficiency in Federal procurement because the need for LPOE modernizations is of an unusual and compelling urgency and requiring a PLA would be impracticable,” wrote GSA Senior Procurement Executive Chair Jeff Koses in the PLA exception memo. “A current administration priority is to remedy the emergency on the United States borders.”

Koses is a member of the Federal Acquisition Regulatory Council that issued a rule effective Jan. 22, 2024, implementing Biden’s Executive Order 14063 mandating PLAs on large-scale federal construction projects of $35 million or more.

The GSA and VA’s policy change follows a class deviation memo (pdf)––celebrated by ABC––announcing that the U.S. Department of Defense has halted PLA mandates on all military construction projects.

Of note, the DoD and VA issued class deviation memos. In contrast, the GSA issued a PLA exception waiver from its Senior Procurement Executive consistent with the Biden FAR rule. This appears to be the first PLA exception waiver ever granted by a federal agency under the Biden administration’s PLA mandate policy.

All other federal civilian agencies, including the remainder of GSA’s portfolio, are still subject to Biden’s harmful pro-PLA rule.

Almost 80% of all federal construction contracts of $35 million or more was awarded by the DoD, VA and GSA’s LPOE program in FY 2024, according to an ABC analysis of USAspending.gov federal agency contract awards.

“ABC will continue to use successful litigation and advocacy strategies to restore merit-based fair and open competition in federal contracting so all Americans and all qualified construction firms can compete on a level playing field to build and rebuild America,” said Brubeck. “While we are pleased with the recent policy changes at the DOD, GSA and VA, ABC will continue to urge adoption of pro-taxpayer policies governmentwide permanently.”

On Jan. 9, ABC and 24 other construction and business groups in the Build America Local coalition sent a letter to President Donald Trump requesting an executive order that would eliminate the Biden PLA mandate and restore fair and open competition on federal and federally assisted construction projects, which would save taxpayers an estimated $10 billion annually.

The Biden government-mandated PLA policy has been widely criticized by the construction industry, taxpayer watchdogs and lawmakers for needlessly inflating construction costs, delaying projects and effectively steering contracts to unionized firms and union labor at the expense of taxpayers and federal laws requiring fair and open competition.

“ABC has testified before Congress that, when mandated by government, PLAs increase construction costs by an estimated 12% to 20%, reduce competition from qualified contractors and their employees, steal money from the paychecks of token nonunion workers permitted on PLA projects and exacerbate the construction industry’s worker shortage,” said Brubeck. “Typical PLA mandates discourage competition from some of the best bidders and 9 out of 10 U.S. construction workers by forcing contractors to sign special union collective bargaining agreements, hire workers from union halls and apprenticeship programs and accept compulsory union representation on behalf of any members of their existing workforces. This exposes those workers to union wage theft of up to 34% of their compensation unless they join a union and vest in union benefits plans.”

On March 28, 2024, ABC and its Florida First Coast chapter filed suit in federal court to block Biden’s PLA final rule. The case is fully briefed and plaintiffs are awaiting a decision on the overall case and a ruling on the motion for preliminary injunction filed in April.

A PLA requirement on a $50 million VA research office building in Pittsburgh was removed in Dec. 2010, after an ABC member federal contractor filed an ABC-supported bid protest against the VA’s PLA mandate.

During the course of the GAO protest, the VA revealed that its own PLA impact study found imposing a PLA on the project would increase costs by millions of dollars, would reduce the number of bidders and subcontractors, and would decrease the pool of skilled labor. In spite of this evidence, the VA claimed a PLA was supported by President Obama’s Executive Order 13502, which “encourages” federal agencies to impose PLAs on large construction projects of $25 million or more if “consistent with law.”

After reviewing the facts of the case, the GAO strongly indicated it would sustain the protest of ABC’s member contractor under the federal Competition in Contracting Act (CICA), absent corrective action by the VA. In direct response to GAO’s action, on Dec. 21, 2010, the VA announced its withdrawal of the PLA mandate from the Pittsburgh solicitation. On January 5, 2011, the VA confirmed that adoption of a PLA would be completely “optional” for submitting offerors. According to the VA, “No additional points or weight will be assigned to proposals submitted with a PLA.”

Federal agencies mandated PLAs just 12 times out of 3,222 opportunities from FY09-FY23 under the Obama administration pro-PLA policy, until it was rescinded by the Biden blanket PLA mandate policy in January 2024.

Learn more at abc.org/bidenplafaqs and BuildAmericaLocal.com.