A new executive order from President Donald Trump aims to reduce the use of project labor agreements (PLAs) on federally funded projects, though it is unlikely to eliminate them entirely, according to legal experts. The March 14 order targets several policies implemented during the Biden administration, including the promotion of PLAs on federal projects. However, the precise effect of this order remains uncertain.

The executive order notably rescinds a September 2024 decision by former President Joe Biden that prioritized federal spending on projects that supported workers' rights, including those related to collective bargaining agreements, which are a key component of PLAs. This shift could lead to fewer PLAs being used in federal construction projects, but its full implications will only become clear once the rulemaking process is completed, experts say.

Unclear Impact: The Role of Rulemaking and Public Comment

Although Trump’s executive order signals a significant policy shift, it does not immediately change federal regulations or project requirements. The order provides guidance for federal agencies and sets the stage for future rulemaking. However, Carol Sigmond, a partner at the law firm Greenspoon Marder in New York City, pointed out that the real impact will depend on the outcome of the rulemaking process and any public comments received during that time. Sigmond added that the effects of the order should become clearer once a new rule is fully implemented.

Industry Reaction: A Win, But Uncertainty Remains

Following Trump’s executive order, the Associated Builders and Contractors (ABC) issued a statement on March 17, calling the move a “win” for the industry. However, ABC acknowledged that it is still unclear whether the order will fully revoke the Biden administration’s pro-PLA stance in federal regulations. Regardless of the specific outcomes, PLAs on federal projects now face heightened challenges, particularly after recent legal decisions.

In January, U.S. Court of Federal Claims Judge Ryan Holte ruled in favor of contractors who had protested a mandate by the Biden administration requiring PLAs on larger federal jobs. Although Holte’s ruling applied only to specific contracts, it set a precedent that could lead to more legal challenges and potentially limit the government’s ability to implement additional PLAs on federal projects. One of the contractors involved, Greeley, Colorado-based Hensel Phelps, is pushing the court to permanently enjoin the government from using PLAs, according to Bloomberg Law.

Legal and Political Back-and-Forth Over PLA Mandates

In early January, ABC and 24 other construction and business groups urged Trump to eliminate the mandates and preferences for PLAs. While the Trump administration’s executive order has reversed some of Biden’s policies, it appears the Biden administration’s mandate for PLAs on federal projects valued at $35 million or more is still in effect, although its influence may be reduced.

“It appears this Trump EO does not eliminate Biden’s pro-PLA EO 14063 and related FAR rule mandating PLAs on direct federal construction projects of $35 million or more that is subject to ongoing litigation,” said Ben Brubeck, vice president of regulatory, labor, and state affairs for ABC, in a statement.

Region-Based Variations and Future Outcomes

The Trump executive order is expected to reduce the emphasis on PLAs in federal projects, but experts believe that PLAs may not be entirely eliminated, especially in areas with strong union representation. Chris Bailey, a partner at the law firm UB Greensfelder in St. Louis, noted that the upcoming federal guidance from Trump’s order will likely reduce the prevalence of PLAs but will not fully rule them out. Bailey pointed out that in regions where union involvement is more prominent, federal projects may still see the use of PLAs.

“I suspect with the current administration reversing the Biden executive order, we’re probably going back to what we had pre-Trump’s first term, which was they may be used sparingly,” Bailey told Construction Dive.

PLAs: A Political and Legal Flashpoint

PLAs, which require contractors to hire union labor for certain government projects, have long been a contentious issue in the construction industry. Proponents argue that they ensure quality work, timely project completion, and fair wages for workers. However, critics claim that PLAs drive up costs and limit competition by excluding non-union contractors. The issue has become a political flashpoint, with each administration taking different stances on their use.

With this latest executive order, Trump has made it clear that his administration is not in favor of promoting PLAs, but the full scope of its impact will only become evident once the rulemaking process is complete. In the meantime, the construction industry and federal agencies will have to navigate the uncertain terrain of shifting policies, ongoing legal challenges, and the potential for future changes depending on the administration in power.

Looking Ahead: The Future of PLAs in Federal Construction

As this legal and political battle over PLAs unfolds, the construction industry will be watching closely to see how federal guidelines evolve in the coming months. While some contractors may welcome the reduction of PLAs, others are likely to continue advocating for their use as a way to ensure fair wages and quality work on federal projects. The future of PLAs will depend on ongoing litigation, future executive orders, and the broader political climate surrounding labor relations.

Ultimately, whether PLAs will become more or less common on federal projects may depend on which side of the debate wins out in future legal rulings and political decisions. For now, the uncertainty continues, leaving contractors, unions, and government officials in a wait-and-see position.

Originally reported by Zachary Phillips in Construction Dive.