Component 23 – 2
Search Newsline

On Jan. 20, ABC celebrated a decision from the U.S. Court of Federal Claims that rules in favor of ABC members that filed bid protests challenging former President Joe Biden’s controversial policy requiring anti-competitive, inflationary, union-favoring project labor agreements on federal construction projects of $35 million or more. 

Judge Ryan T. Holte’s Jan. 19 ruling responds to 12 bid protests filed by experienced ABC member federal contractors against three federal agencies that mandated PLAs in solicitations for construction services as a result of a Federal Acquisition Regulatory Council rule effective Jan. 22, 2024, implementing Biden’s Executive Order 14063.

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

“ABC and its federal contractor 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 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.

“As a result of this decision, ABC federal contractors should continue to file bid protests against individual federal agency PLA mandates on a case-by-case basis and expect similar outcomes,” said Brubeck. “This is the best solution to defeat the Biden rule on federal contracts until a court issues an injunction against the rule or the Trump administration rescinds it via executive action.

“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 Brubeck. “The findings of federal agencies illustrate how Biden’s controversial policy mandating union-favoring project labor agreements stifles competition and raises costs on federal construction contracts nationwide.

“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 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.

“ABC will continue to advocate for inclusive solutions that result in cost savings, more jobs and more opportunities for all qualified small, minority- and women-owned businesses and all American workers in the construction industry,” said Brubeck. “This lawsuit did not address additional Biden policies pushing PLAs on federally assisted infrastructure projects procured by local and state governments and private developers, so the fight will go on.”

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 restore fair and open competition on federal and federally assisted construction projects that would save taxpayers an estimated $10 billion annually.

On March 28, 2024, ABC and its Florida First Coast chapter filed suit in federal court to block Biden’s PLA final rule on construction contracts procured by federal agencies, asserting it is beyond the scope of executive authority and violates the U.S. Constitution, the First Amendment and the Administrative Procedure Act, among others. 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.

ABC members won 54% of the $205.56 billion in federal contracts worth $35 million or more during fiscal years 2009-2023 and built award-winning projects safely, on time and on budget, without unnecessary government-mandated PLAs. Prior to the Biden final rule, when given the option, the federal government decided to mandate PLAs just 12 times out of 3,222 federal construction contracts of $25 million or more.

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

Dirk Haire with Fox Rothschild LLP and Jake Scott with Smith Currie Oles LLP represented federal contractor bid protestor plaintiffs in the U.S. Court of Federal Claims case, MVL USA Inc., et al., v. United States, Case No. 24-1057.

ABC Analysis of the Decision

Notable language in the decision supports ABC’s arguments against government-mandated project labor agreements and Biden’s pro-PLA policies.

According to Judge Holte’s ruling, the Biden FAR Council rule mandating PLAs violates congressional requirements for full and open competition:

“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. 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.” [See page 2.]

As outlined in Judge Holte’s decision, the court examined strong evidence presented by plaintiffs from federal agencies that PLAs increase costs and reduce competition, despite the FAR Council’s presumption that PLAs are beneficial. On page 2, the judge wrote:

“Following the 2024 FAR Council implementation of the [Biden PLA] mandate, agencies reversed course and required all solicitations to contain a project labor agreement. By way of example, the 2023 initial market research for one solicitation determined ‘project labor agreements were not recommended’ because ‘there was a shortage of skilled labor in the region of the project,’ and project labor agreements would ‘not contribute to the economy or efficiency of the project’—the agency nevertheless issued the solicitation in 2024 with a project labor agreement requirement. See infra Section VI.A.” [see pages 28-33.]

“Another agency ‘increased the price’ of the contract ‘based on the [project labor agreement] requirement being included’ despite previously concluding a project labor agreement would negatively affect both competition and price. See infra Section VI.A.” Specifically, the GSA hired an outside specialist to conduct a market survey related to whether a PLA was appropriate for the project. After conducting research, the paid consultant said that removing the PLA requirement would result in more contractor interest, and […] a more competitive bid environment. The consultant’s recommendations were ignored and the project did not receive a PLA exception. [See page 32.] In fact, the GSA increased the price of the contract based on the PLA requirements being included.

“Similarly, in another solicitation, initial 2023 market research found project labor agreements ‘not suitable for the project, but the agency ultimately determined in 2024 ‘no exception’ applied and project labor agreements would be required. See infra Section I.E.” [See page 9.]

“Most illustrative, however, was an agency’s decision to ‘delete’ prior 2023 market data indicating a project labor agreement ‘would reduce competition, increase costs, and create inefficiencies for contractors and procurement officials,’ and ‘insert’ a 2024 project labor agreement requirement simply because President Biden and the FAR Council made ‘the policy judgment [that] project labor agreements are generally good.’ See infra Section VI.A.”

“Despite market research consistently showing project labor agreements would ‘reduce adequate competition at a fair and reasonable price’ for the solicitations, the agencies’ only support to justify reversal is the ‘policy determination that’s been made by the President and the FAR.’ See infra Section VI.B.” [See pages 33-37.]

Finally, the court found the U.S. Department of Justice over-redacted market research evidence that showed PLAs increase costs and reduce competition. The judge corrected this error. Had that information been redacted, the public would not have seen this evidence, which is damaging to the heart of the Biden rule. [See pages 3-4].

In short, the decision exposed the Biden PLA rule on federal contracts as a scheme to help unions and union contractors at the expense of competition, cost and timely delivery of taxpayer-funded construction projects.

Evidence before the court illustrates how the FAR rule’s alleged PLA exception process is a dead letter designed to ensure mandatory PLAs on all projects.

The decision gives the three federal agencies (USACE, NAVFAC and GSA) until Feb. 3 “to reassess their PLA decision on an individual basis” and file a “join status report explaining the agencies plan for each solicitation moving forward.”

If the judge is not satisfied with the agency response to the decision, “there remains the question of the scope of the injunctive relief Judge Holte is going to order,” according to Haire in a Jan. 21 Bloomberg article.

ABC expects the U.S. COFC to be flooded with additional PLA bid protests from injured federal contractors as a result of this ruling.

Additional bid protests will result in more project delays and cost overruns and injury to federal contractors and agency contracting officers as a whole until this is fully resolved with a nationwide legal injunction or a Trump policy change.

Archives