Bid protests lead to judge’s rule against federal project labor

A federal court ruled on the side of contractors who protested an executive order for project labor agreements (PLAs) on large federal contracts.

The United States Court of Federal Claims on Jan. 19 ruled in favor of a group of construction companies that staged bid protests for an executive order signed by former President Joe Biden that required labor agreements on federal projects worth more than $35 million. The former president signed the rule in February 2022, months after signing the trillion-dollar infrastructure act.

The rule is still in place. However, Judge Ryan T. Holte ruled the Federal Acquisition Regulatory’s rule that led to project labor mandates was illegal.

“It is an open question about whether the judge will strike down the whole rule on Feb. 3 if the U.S. Department of Justice and federal agencies do not cooperate,” said Ben Brubeck, vice president of regulatory, labor and state affairs at the Associated Builders and Contractors.

Both the Associated General Contractors and the Associated Builders and Contractors supported revoking the executive order and officials from both organizations said member firms staged bid protests.

There were 12 federal contractors who protested three federal agencies that ordered labor agreements. The agencies were the U.S. Army Corps of Engineers, Naval Facilities Engineering Systems Command and the General Services Administration.

“The agencies’ 2024 implementation of the mandate—ignoring the agencies’ own market research concluding project labor agreements would be anticompetitive—relying solely on executive order presidential policy is arbitrary and capricious,” wrote Judge Ryan T. Holte in his ruling. “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,” he added.

“ABC and its federal members are ecstatic that the judicial system has delivered justice for American taxpayers and the 90% of the U.S. construction industry workforce that is nonunion,” said Ben Brubeck, ABC vice president of regulatory, labor and state affairs, in a statement. “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,” he added.

Contractors credit “novel strategy” to bring down PLA rule

The idea to use a bid protest goes back to one year ago when contractors at the Mississippi Valley AGC met in Memphis, Tenn. after losing administrative procedure act challenges, said Dirk Haire, a partner at Fox Rothschild, who argued the case for AGC. AGC officials went to district course to argue against PLAs and lost, he added. A challenge from ABC is still pending in Jacksonville, Fla.

“Even though we’re challenging each specific procurement, there’s a broader based common allegation of illegality we’re making against the government,” Haire said, noting bid protests usually challenge individual awards and solicitations. “Here we’re alleging a common error across every solicitation,” he added.

In the ruling, the Federal Acquisition Regulatory Council in 2024 implemented the mandate despite market research showing project labor mandates were “not recommended” and showed the agreement wouldn’t contribute to the economy or efficiency of a specific project.

Government agencies have a deadline until Feb. 3 to advise how 12 solicitations will be corrected and follow the judge’s decision, Haire said. It’s likely the agencies will remove project labor agreements under the solicitations and rebid them, he added.

“Last night’s decision is a significant victory that will allow all construction workers and their employers to compete fairly and without government-mandated coercion for large federal construction projects,” said Jeffrey Shoaf, the chief executive officer of AGC. “Contractors have every right to voluntarily enter into a project labor agreement if they and their labor partners deem it appropriate,” he added.

Officials from both AGC and ABC said they were interested in working with President Donald Trump to fully eliminate the executive order.

In the Milwaukee area, there are several large projects under project labor agreements between private owners, signatory contractors and local unions. That includes the $240 million Milwaukee Public Museum, the nearly $70 million FPC Live venue and the $500 million renovation of Northwestern Mutual’s North Office. Utilities proposing hundreds of clean energy projects across Wisconsin are signed onto similar deals with construction unions.