The Trump administration will continue to enforce a Biden-era rule that requires project labor agreements (PLAs) for federal construction projects valued at $35 million or more, according to new guidance from the Office of Management and Budget (OMB). The move, announced last week, has intensified debate across the construction industry, with nonunion contractor groups decrying the decision as anti-competitive and labor unions hailing it as a win for workers.
The OMB memorandum clarifies that federal agencies must use PLAs on major construction projects unless they can demonstrate — through market research — that such agreements would significantly reduce competition or drive up costs beyond government budgets. The guidance, which amends previous instructions under Biden, further instructs agencies to rescind any earlier deviations from the PLA mandate and to coordinate future exceptions with the Office of Federal Procurement Policy.
“Agencies should use PLAs when practicable and cost-effective,” the OMB memo states. “Agencies should rescind any deviations related to PLAs that were issued prior to the date of this guidance.” The memo details that agencies may invoke exceptions only if market research shows a PLA would inhibit competition to the point where fair and reasonable pricing is not possible — generally defined as fewer than two qualified offers for negotiated contracts, or three for sealed bids according to OMB Memorandum M-24-06.
Industry Response: Contractor Groups Warn of Higher Costs, Legal Battles
The Associated Builders and Contractors (ABC), a leading voice for nonunion contractors, condemned the decision, asserting it “inhibits fair and open competition and prioritizes special interests over taxpayers and workers.” Michael Bellaman, ABC’s president and CEO, called the policy “unfair, wasteful, and anti-competitive,” arguing it could increase costs and delay projects critical to national security.
Industry groups such as the Associated General Contractors of America have also expressed concern, warning that mandated PLAs can inflate labor costs and reduce the pool of bidders, potentially leading to less competitive pricing and less efficient project delivery. Some research cited by ABC suggests that nonunion employees on PLA projects see an estimated 20% reduction in compensation while contractors pay up to 25% more in benefits costs.
The legal landscape has been turbulent. Early this year, the U.S. Court of Federal Claims ruled that Biden’s PLA mandate violated federal procurement law in certain respects, but subsequent guidance and preliminary injunctions have kept the requirements in effect while appeals and further litigation continue.
Union Response: Praise and Calls to Go Further
Organized labor, by contrast, has welcomed the administration’s move. Michael Coleman, General President of the International Association of Sheet Metal, Air, Rail and Transportation Workers (SMART), called the guidance “a step in the right direction,” noting that PLAs “create jobs for SMART members and working people across our country.” Coleman encouraged the administration to go further, urging an expansion of PLA use on all federally funded projects. “We will continue to do everything we can to keep creating jobs for SMART members and Americans nationwide, and we encourage all agencies to support the use of PLAs on all federally funded projects,” Coleman said.
North America’s Building Trades Unions (NABTU) have also advocated for robust enforcement of PLA mandates and have intervened in court to defend the rule against industry challenges. Union leaders argue that PLAs help ensure wage standards, worker safety, and training investments, while also providing stability on large-scale federal projects.
Broader Political and Economic Context
The Trump administration’s decision to maintain the Biden-era policy surprised many, as it came amidst expectations that the PLA requirement would be rescinded or significantly weakened. The memo’s language — emphasizing “practicable and cost-effective” use of PLAs, while clarifying exceptions—appears designed to strike a middle ground, but has satisfied few on either side of the debate.
The OMB guidance references Executive Order 14063, first issued under Biden, which remains in effect. The order was intended to promote efficiency and harmony on major federal construction projects, but has become a flashpoint in the battle over labor policy. The guidance also removes references to rescinded executive actions on diversity and inclusion, aligning with the current administration’s stated priorities, according to the White House OMB.
Federal Court Reinstates PLA Mandate for Department of Defense Projects
The ongoing legal dispute over PLAs reached a new milestone on May 16, 2025, when U.S. District Judge Rudolph Contreras ordered the Department of Defense (DoD) to reinstate project labor agreements on major construction projects. This decision reversed DoD guidance from February that had instructed contracting officers to halt use of PLAs on large-scale projects—a move widely viewed as contradicting the Biden-era executive order still in effect.
Judge Contreras’s ruling sided with North America’s Building Trades Unions (NABTU) and the Baltimore-D.C. Metro Building and Construction Trades Council, who argued the DoD was failing to comply with Executive Order 14063, which requires PLAs on federal projects valued at $35 million or more. The judge directed the DoD to set aside its PLA-avoidant guidance, not just for projects named in the lawsuit but across the department’s federal contracting operations.
Union leaders hailed the decision as a validation of PLAs as essential tools. NABTU President Sean McGarvey stated, “PLAs aren’t political gimmicks or special-interest carveouts. They are proven workforce development tools that undergird strong economic growth in communities across the country.”
From the non-union contractor side, the response remains sharply critical. Kristen Swearingen, vice president of government affairs for the Associated Builders and Contractors, called the court’s decision “a loss for taxpayers and the nonunion construction industry,” warning that mandated PLAs could cost taxpayers up to $10 billion annually and lead to less competition for federal bids. “All government-mandated PLAs should be entirely rescinded by the Trump administration to prioritize efficient use of taxpayer dollars.”
Industry stakeholders such as Stan Kolbe, Executive Director of Government and Political Affairs at the Sheet Metal and Air Conditioning Contractors’ National Association (SMACNA), have advocated for a flexible, owner-driven approach. Kolbe told SNIPS NEWS in March, “We do not believe the new administration’s DoD should be mandated to use PLAs. Especially where inappropriate, but DoD should consider and use them where clearly in their best interests — especially where unique job site employee and contractor security and workforce quality factors dominate.”
The ruling means the Pentagon must return to its previous practice of considering PLAs for eligible projects. With ongoing litigation and shifting executive guidance, the future of PLAs on federal construction projects remains unsettled. For now, both court orders and administration policy continue to shape a contentious and evolving landscape for federal contractors, unions, and public agencies alike.
Looking Ahead
With billions in federal infrastructure spending at stake, the fight over PLAs is likely to continue in Congress and the courts. ABC has pledged to keep challenging the mandate in court and is urging the administration to rescind the executive order entirely. Meanwhile, union leaders are preparing to use the current policy as a floor, not a ceiling, for future labor standards on federal projects.
Federal agencies are now required to submit detailed reports on their use of PLAs and exceptions, and must coordinate with OMB before issuing any further policy deviations. For now, the Biden-era mandate remains, enforced by the Trump administration, with both sides gearing up for the next round in a long-running battle over the future of federal construction contracting.
Read the full OMB memorandum here.