Project Labor Agreements Face Uncertainty as Federal Lawsuits Threaten Major Changes

On January 21, 2025, the United States Court of Federal Claims issued a ruling in MVL USA, Inc. et al. v. The United States, finding project labor agreements (“PLAs”) violate the Competition in Contracting Act (“CICA”). The Court of Federal Claims consolidated multiple bid protests that challenged the legality of mandatory PLAs in construction contracts, as required by Executive Order 14063 (Biden) and the Federal Acquisition Regulations.

On February 4, 2022, President Biden issued Executive Order 14063, requiring contractors and subcontractors engaged in federal construction projects of $35 million or more to execute a PLA. Pursuant to Section 8 of Executive Order 14063, the Federal Acquisition Regulations Council promulgated a final rule implementing Executive Order 14063 through FAR 22.505, 52.222-34 (the “PLA Rule”).

In MVL USA, Inc., the Court of Federal Claims agreed with the arguments of the protesters that PLAs foster less competition and discriminate against non-union contractors in violation of the CICA. The Court of Federal Claims determined that PLAs “disqualify otherwise responsible offerors who do not enter into a PLA with a labor union” and that PLAs unlawfully restrict full and open competition in contracting.

Further, in finding FAR 52.222-33 violated the CICA, the Court of Federal Claims found that the CICA’s “full and open competition” requirement means that all responsible sources must be allowed to compete for contracts and that the PLA Rule has no bearing on whether the bidder can perform the contract. As such, in the opinion of the Court of Federal Claims, the inclusion of a PLA in all such procurements violated the CICAs full and open competition requirements.

Following this ruling, on February 11, 2025, U.S. Secretary of Defense Pete Hegseth instructed the Department of Defense to remove all language requiring PLAs in all contracts of more than $35 million and to update and revise all existing contracts to reflect these requirements. In response Undersecretary of Defense John Tenaglia issued a memorandum instructing all Department of Defense agencies to no longer use PLAs for large-scale construction projects.

It should be noted that on March 28, 2024, the Associated Builders and Contractors and its Florida First Chapter filed suit in the U.S. District Court for the Middle District of Florida to stop the enforcement of Executive Order 14063 (Biden). As part of this litigation, the Associated Builders and Contractors argued Executive Order 14063 violated the CICA, among other federal laws.

On April 26, 2024, the Associated Builders and Contractors and its Florida First Chapter filed a Motion for Preliminary Injunction in the U.S. District Court for the Middle District of Florida seeking to halt the implementation of Executive Order 14063 (Biden). This matter was fully briefed before the U.S. District Court and was awaiting a decision. However, on March 4, 2025, in light of the MVL USA, Inc. decision, the U.S. District Court required the parties to submit supplemental briefing. In its supplemental brief, the Associated Builders and Contractors have adopted the findings of the Court of Federal Claims in MVL USA, Inc.

The U.S. District Court for the Middle District of Florida will likely release its decision in the near future. It is believed that the MVL USA, Inc. decision will be a major factor of consideration. If the U.S. District Court for the Middle District of Florida follows the MVL USA, Inc. decision, it is likely that the District Court will expand the decision to all federal contracts requiring all federal agencies to remove all PLA language and revise existing agreements, similar to the directive from U.S. Secretary of Defense Pete Hegseth. Contractors should be aware of these multiple lawsuits and impending changes to the PLA requirements. Contractors should begin to work with their counsel to review existing and future contracts for federal construction projects.