Construction Firms Triumph in Challenge to Union Contract Rule

By: Philip Giorlando and Fred Preis

In a significant legal victory for the construction industry, the US Court of Federal Claims recently ruled in favor of several construction companies challenging the Federal Government’s inclusion of a project labor agreement (PLA) requirement in federal contract solicitations. This decision marks a pivotal moment in the ongoing debate over the use of PLAs in federal projects.

Background

The PLA requirement, which originated from an executive order by former President Joe Biden, was implemented by the Federal Acquisition Regulation (FAR) Council. The mandate required contractors to enter into agreements with labor unions as a condition for bidding on certain federal construction projects. Proponents argued that PLAs ensure labor harmony and timely project completion, while opponents contended that they inflate costs and limit competition.

The Court’s Decision

The court found that the PLA requirement violated the statutory directive for full and open competition in federal procurements. The ruling highlighted that the mandate unnecessarily increased costs, deeming it arbitrary and capricious. This decision underscores the importance of maintaining competitive bidding processes in federal contracts.

Implications for the Industry

The ruling has significant implications for the construction industry. By removing the PLA requirement, the court has opened the door for more contractors to compete for federal projects, potentially leading to cost savings for taxpayers. The decision was celebrated by the Associated Builders and Contractors, who argued that the PLA requirement unfairly favored unionized firms.

Next Steps

The government has until February 3 to advise the court on how it plans to implement the decision. This may involve removing the PLA requirements from the protested solicitations, thereby aligning federal procurement practices with the court’s directive for full and open competition.

Conclusion

This ruling represents a major win for construction firms advocating for fair competition in federal contracting. As the industry awaits the government’s response, the decision sets a precedent for future challenges to similar mandates. It remains to be seen how this will impact the broader landscape of federal procurement and labor relations.

Trump's Executive Order Ends Diversity and Affirmative Action Programs

By Kayla M. Jacob and Fred Preis

In one of his latest actions, President Trump issued an Executive Order abolishing diversity, equity, and inclusion (DEI) initiatives and affirmative action programs for Federal government contractors and subcontractors and is encouraging private sector employers to follow suit. The Executive Order, entitled “Ending Illegal Discrimination and Restoring Merit-Based Opportunity" classifies such programs as “illegal.”

Since 1965, Federal government contractors and subcontractors have been governed by Executive Order 11246, which has been enforced by the Office of Federal Contractor Compliance Programs (OFCCP). Executive Order 11246 required Federal government contractors and subcontractors to develop affirmative action programs to promote employment of and recruit underrepresented groups, like women and minorities (two other groups that were later added were certain military veterans and individuals with disabilities). Those affirmative action requirements have been audited for compliance by the OFCCP. However, Executive Order 11246 has now been rescinded by President Trump, effective January 20, 2025. President Trump’s Order permits contractors to continue with status quo for 90 days after January 20th, but does not specify any penalty for complying with the now defunct Executive Order 11246 after that time.

Similarly, Executive Order 13672, which since 2014 prohibited discrimination by Federal contractors based on sexual orientation and gender identity, has been rescinded. However, Title VII of the Civil Rights Act of 1964, as interpreted by the U.S. Supreme Court, still protects workers from such discrimination.

Under President Trump’s Executive Order, OFCCP shall no longer make references to DEI or similar policies and must terminate all “diversity,” “equity,” “equitable decision-making,” “equitable deployment of financial and technical assistance,” “advancing equity,” and like mandates, requirements, programs, or activities, as appropriate. Contractors are now required to certify that they are not carrying out these initiatives. Private sector employees are “encouraged” to do the same.

DEI initiatives, which are not legally mandated, may be discontinued at any time. However, while employers may be eager to swiftly discontinue affirmative action programs, they should proceed cautiously and await further developments, as the executive order is likely to face legal challenges.

Trump's Executive Order on Birthright Citizenship Spawns Far-Reaching Effects

By: Rachael Jeanfreau

On the first day of President Trump’s second term in office, he issued an Executive Order seeking to end birthright citizenship for children born on U.S. soil after February 19, 2025, who do not have at least one parent who is either an American citizen or lawful permanent resident.

The practical effects of the Order, entitled “Protecting the Meaning and Value of American Citizenship,” are far-reaching, because the Order impacts foreign nationals who are present lawfully in the U.S., as well as those who are present unlawfully. Under the Order, children born to mothers who are present lawfully in the U.S. on temporary visas, such as student or employment visas, may not automatically be American citizens. To further complicate matters, depending on the rules of the parents’ home countries, such children could be considered stateless.

The Order is a sharp departure from U.S. Supreme Court precedent dating back to 1898, when the Court ruled in United States v. Wong Kim Ark that the Fourteenth Amendment to the Constitution guarantees citizenship to any child born on American soil, with narrow exceptions for those born to foreign diplomats or invading forces.

Several lawsuits have been filed challenging the constitutionality of the Order and seeking to block its implementation.

Employers should consult with their labor & employment and immigration attorneys for the latest updates as these legal developments rapidly unfold.