The Trump administration has indicated it will not rescind a Biden-era rule mandating the use of project labor agreements on large publicly funded jobs.
After months of court cases and federal agencies announcing deviations from Federal Acquisition Regulation rules regarding PLA use, a Thursday Office of Management and Budget memo to federal agencies and department heads sought to unmuddy the waters.
“For clarity, the Trump Administration supports the use of PLAs when those agreements are practicable and cost effective, and blanket deviations prohibiting the use of PLAs are precluded,” read the memo signed by Russell Vought, OMB director.
The memo acknowledged concerns from federal agencies that award large-scale construction projects regarding the ability to create competition for fair and reasonable pricing on contracts.
As such, the OMB memo said it has added an amended rule that allows agencies to evaluate the anticipated impact of a PLA on its ability to conduct a competitive search for a contractor. The exception indicates “two qualified offers should generally be sufficient to provide adequate price competition for negotiated contracts (FAR 15.403-l(c)(l)) and three or more qualified bids is sufficient to provide adequate price competition for sealed bids.”
In other words, two offers may be enough for the exception not to apply. If two or more offerers express interest in a contract but prices are expected to be higher than the federal government's budget by over 10% due to the PLA mandate, the agency can also seek exemption.
“Agencies should use PLAs when practicable and cost-effective,” the memo reads. “Agencies should rescind any deviations related to PLAs that were issued prior to the date of this guidance. Independent agency interpretation for PLA use should no longer occur.”
The memo indicates a continuation of policy from previous administrations, which opponents have decried as anti-competitive.
“It is hard to see how this is not a return to the conditions that were in place prior to President Biden’s unlawful executive order,” Brian Turmail, vice president of public affairs and strategic initiatives at Associated General Contractors of America, told Construction Dive.
Confusion and clarity
The memo provides some clarity after confusion over whether the rule would remain and if all agencies had to follow it.
In January, a judge ruled against PLA use on seven federal contracts, saying it would be anti-competitive and relied on “arbitrary and capricious” policy. That decision, however, applied only to those contracts, laying the groundwork for other challenges.
Then, in March, President Donald Trump issued an executive order directing rulemaking that rescinded Biden-era guidance promoting the use of project labor agreements, but did not remove former President Joe Biden’s executive order, implemented in January 2024.
In May, after the Department of Defense had signaled it would no longer follow the PLA mandate, a federal judge issued a preliminary injunction, forcing the agency to resume the mandate.
Looking ahead
Associated Builders and Contractors has long fought the Biden PLA rule and called on the president to rescind the order in the name of fairness and competition.
“[Thursday’s] decision cannot be reconciled with the president’s philosophies of merit, fairness and nondiscrimination because it inhibits fair and open competition and prioritizes special interests over taxpayers and workers,” said Michael Bellaman, president and CEO of ABC.
Bellaman noted that the government can still use PLAs without the executive order and said the use of PLAs effectively excludes non-union builders and workers.
Turmail said the change isn’t what AGC had hoped for — which was for Trump to remove the executive order — but it would still be better than “what was in place with the Biden administration.”
There is still a path to challenge PLA use and potentially receive exceptions, he said.
“In addition, given the recent court decisions, it is hard to see how the administration will be able to impose a mandated PLA without facing a successful bid protest,” Turmail said.
