On January 19, 2025, the Court of Federal Claims issued its decision in MVL USA, Inc. et al. v. United States, holding the project labor agreement (“PLA”) requirement initiated in Executive Order (“EO”) 14063 and implemented by FAR Subpart 22.5 violates the Competition in Contracting Act (“CICA”). Before discussing the holding of MVL, we must note the specific decision is likely to have little to no direct effect on any NYECA contractors (as will be explained below), though it may be an indication as to how PLAs will be administered and/or contested going forward.
EO 14063, signed by former President Biden, mandated PLAs be used on all federal construction projects worth more than $35,000,000, subject to narrow exceptions for the following conditions: (1) when requiring a PLA on the project would not advance the Federal Government’s interests in achieving economy and efficiency in Federal procurement; (2) when a market analysis determines a PLA would substantially reduce the number of potential bidders so as to frustrate full and open competition; and (3) when a PLA would otherwise be inconsistent with statutes, regulations, EOs, or Presidential Memoranda. Prior to former President Biden signing EO 14063 in February 2022, both the Obama and Trump administrations left it to the discretion of the contracting agency to determine whether PLAs should be used on these construction contracts.
It must also be noted EO 14063 does not apply to federally assisted construction projects. Rather, it only applies to federal procurements issued directly by agencies (e.g., US General Services Administration, US Army Corps of Engineers, and US Veterans Affairs). Thus, if a NYECA member has a federally assisted contract (e.g., an MTA or NYC DOT contract with FTA funding), it is not governed by either EO 14063 or this case. The various plaintiffs in MVL successfully challenged multiple aspects of the federal government’s PLA mandate.
Initially, the Court found FAR Subpart 22.5’s implementation of EO 14063 violated the CICA. CICA requires “full and open competition” amongst all responsible sources for federal government construction contract procurements. The government argued the fact that certain plaintiffs could not meet the PLA requirements necessary to bid on the project did not hinder “full and open competition.”
Rather, the government insisted it was an indication that those prospective bidders were not “responsible sources” for the purposes of the procurement. The Court noted these prospective bidders’ inability to fulfill the PLA requirements was an indication as to whether the bidders were capable of performing the construction work. Therefore, the Court held that, absent a specific statute stating the government may reduce competition to create a class of bidders limited to PLA contractors, the PLAs violate CICA by excluding those potential bidders.
In addition, the market analysis for each of the procurements identified in the lawsuit determined requiring a PLA would neither reduce price nor promote competition. The evidence, instead, found the decision to use PLAs on each of these projects was driven solely by EO 14063’s “mandatory” PLA language. As a result, the federal agencies ignored the market analysis findings which should have formed the basis for an exception to utilizing a PLA. Thus, the Court determined the decisions to proceed with PLAs on these projects were arbitrary and capricious.
Despite the Court’s findings in favor of the various Plaintiffs, it declined to issue an injunction in its decision and instead required each agency to provide a status report to the Court detailing their plans moving forward for the Court to consider before acting.
In New York, Labor Law 222 (2)(a) statutorily permits (but does not mandate) PLAs in certain situations where the public agency seeking to utilize the PLA “determines that its interest in obtaining the best work at the lowest possible price, preventing favoritism, fraud and corruption, and other considerations such as the impact of delay, the possibility of cost savings advantages, and any local history of labor unrest, are best met by requiring a project labor agreement.” As such, the various public agencies in New York should be prepared with sufficient evidence in favor of utilizing a PLA in the event non-union contractors challenge PLAs in New York.
Andrew J. Mundo, Esq.
MURTAGH, COHEN, BYRNE & MURDY
amundo@MCB50Law.com