In response to the recent decision in MVL USA, Inc., et al., v. United States in which the Court of Federal Claims found that the use of project labor agreements (PLA) on large-scale construction contracts violated the full and open competition requirement of the Competition in Contracting Act, the Department of Defense (DOD) has issued a class deviation waiving the requirement for PLAs on all large-scale DOD construction projects. Smith Currie Oles represented three of seven protesters in MVL USA.

The February 7, 2025, DOD class deviation states:

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). Contracting officers shall amend solicitations to remove project labor agreement requirements, including any solicitation provisions and contract clauses prescribed at FAR 22.505.

This deviation effectively nullifies Executive Order 14063 Use of Project Labor Agreements, signed by President Biden in 2023, for all DOD construction projects.

On February 12, 2025, the General Services Administration (GSA) followed suit, but did so within the confines of the FAR. Unlike DOD’s class deviation, which takes FAR Subpart 22.5 out of the equation, GSA chose to continue treating FAR Subpart 22.5 as operative and used one of the three exceptions to the PLA requirement permitted by FAR 22.504. GSA’s class exception applies only to land port of entry (LPOE) projects. The GSA procurement protested in MVL USA is an LPOE project.

FAR 22.504(d) provides three exceptions to the use of a PLA: when the agency’s senior procurement executive determines that at least one of the following conditions exists for a particular project:

  1. Requiring a PLA would not advance economy and efficiency;
  2. Requiring a PLA would substantially reduce the number of potential offerors to a degree that prevents adequate competition; or
  3. Requiring a PLA would be inconsistent with federal statutes, regulations, executive orders, or Presidential memoranda.

Using the first exception basis, GSA determined that “The agency’s need for the project is of such an unusual and compelling urgency that a project labor agreement would be impracticable (FAR 22.504(d)(1)(i)(D)).” GSA explained that “[r]equiring 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.” In particular, GSA cited to the new administration’s immigration policy as the basis for the urgent and compelling need for new LPOE projects. Not surprisingly, “GSA has found that including a PLA requirement for projects in remote rural locations, without strong existing union presence, causes delays such as the need for additional outreach and industry communication to explain PLAs (e.g., extensive bidder conferences and FAQs on PLAs, tri-agency PLA informational sessions, GSA senior and political leader engagements in various forums, matchmaking sessions).”

GSA went on to use the second basis of exception to further justify the class exception, finding that “[m]arket research for recent LPOE projects indicates a high probability for substantial reduction in the number of potential offers and a substantial increase in price for future projects along the Northern and Southern borders due to the very limited labor pool and even lower unionization rates in these geographic areas.” GSA cited a recent multiple award IDIQ construction contract in which GSA received only one proposal for an order, and that proposal was significantly higher than GSA’s own estimate. That procurement was delayed by extensive negotiations.

It is worth noting that GSA issued the class exception for all LPOEs, but used the mechanism for PLA exceptions that, by regulation, are required to be project-specific. The likelihood that a potential offeror will challenge that procedural glitch seems low.

These two developments winnow the subset of federal construction projects still subject to the PLA requirement to those for a civilian agency that are not GSA LPOEs. In reality, DOD’s class deviation and GSA’s class exception likely spell the death of the PLA requirement.

The construction industry largely expected that the incoming administration would rescind EO 14063 promptly, but so far that has not come to pass. The stopgaps instituted by DOD and GSA have a similar effect, but contractors must still be vigilant about reviewing solicitations for the PLA requirements implemented by FAR Subpart 22.5, FAR 36.104(c), and FAR 52.222-33 and -34 when dealing with civilian agencies. A suit filed by the Associated Builders and Contractors challenging the PLA requirement and seeking a nationwide injunction remains pending in the U.S. District Court in Florida.

Watch this space for updates. In the meantime, contact your Smith Currie Oles attorney with any questions.