The U.S. Court of Federal Claims has ruled in favor of contractors who challenged former President Joe Biden’s policy requiring labor agreements for all federal construction projects of $35 million or more, with few exceptions.
Judge Ryan T. Holte’s Jan. 19 ruling responds to 12 bid protests filed by contractors against three federal agencies: the US General Services Administration. US Army Corps of Engineers and US Naval Facilities Engineering Systems Command, which mandated agreements in construction services solicitations based on a Federal Acquisition Regulation Board rule which implemented Biden’s Executive Order 14063 in 2022.
The plaintiff contractors included MVL USA, JCCBG2, Harper Construction Co., Environmental Chemical Corp. and Hensel Phelps Construction Co. Inc.
Workplace-specific collective bargaining agreements used in construction typically require companies to agree to recognize unions as the representatives of their employees, use the union bargaining hall to obtain most or all of the handout construction site, hire apprentices from union-affiliated apprenticeship programs, follow union work. rules and enter into union and multiemployer benefit pension plans that non-union employees cannot access.
The contractors argued that the executive order, as the sole support for the rule, was arbitrary and capricious and, when applied to individual federal contracts, stifled competition and violated the Administrative Procedure Act, which requires agencies to promote “full and open competition” at the federal level. recruitments unless some other legal justification is invoked.
When filing its members’ bid protests in July, the Associated General Contractors of America said the deal’s mandate in federal solicitations “unlawfully resembles a socioeconomic reservation that Congress has never authorized. In other words, the president does not have the authority to create a reserve program that disqualifies contractors who have not negotiated or failed to negotiate a project labor agreement.”
AGC said at the time that it supports a contractor’s right to voluntarily negotiate such an agreement, but strongly opposes government mandates that require it, such as the executive order and subsequent rule. AGC and its attorneys at Fox Rothschild LLP created the legal theory that challenged the validity of the settlement mandate by filing bid protests that ultimately allowed the rule to be adjudicated in the federal court of claims.
AGC’s legal action was then joined by the Associated Builders and Contractors, which has a majority of non-union companies, and the construction industry roundtable, the National Association of Prepared Contractors, the US Chamber of Commerce and other construction groups under the Build. American Local Coalition. He also wrote a letter to President Donald Trump in early January urging an end to any federal project labor agreement requirements.
“At oral argument in the case on Jan. 16, damning evidence obtained through market studies conducted by various federal agencies was presented and corroborated the plaintiffs’ complaints and ABC’s longstanding concerns,” he said. ABC Vice President of Regulatory, Labor and Government Affairs, Ben Brubeck. “ABC members were harmed by former President Biden’s costly executive overreach, which violates federal law and rewards special interests at the expense of fair and open competition.”
In his ruling, Judge Holte cited a clause in a Corps of Engineers contract for a consolidated communications center at Patrick Air Force Base in Brevard County, Florida. The agency concluded in the contract addendum that this arrangement would contribute neither to the project’s economics nor to the project’s economics. efficiency, but amended the project plan to include one because of the government mandate.
The requirement “precludes full and open competition by effectively excluding [a non-agreement] the offeror to win an award, both in the function of the mandatory rule itself and in the apparent policy of denying exceptions even when the same agency commissions data indicating that an exception should be made,” Holte wrote .
The decision required the parties to file briefs by Feb. 25 to decide on an injunction, but the current administration has already said it will not require the agreements on major federal projects, and the decision could prevent any future administration from either the parties do it through the executive. order
The U.S. Department of Justice, which represented the agencies, could not be reached for comment during the transition.
Jacob Scott, a partner at the Washington, D.C.-based construction-focused law firm Smith Curry Oles, who represented Hensel Phelps in the matter, said after the ruling in a statement, “The mandate of the PLA has not been rescinded and remains in effect for any other large-scale construction procurement that was not part of this consolidated protest If a contractor wishes to object to the PLA requirement in an ongoing solicitation, it generally must do before the proposal deadline. If and when the new administration rescinds the requirement, the need to protest will be removed, but for now, this remains a live issue for many contractors.”
Construction unions of North America declined to comment on the ruling, but president Sean McGarvey also released a separate statement on Trump’s inauguration, saying its members and leaders are ready to work with the new administration.
