COFC Holds That Federal PLA Mandate Is Unlawful; Reinterprets Blue and Gold Waiver Rule

In MVL USA, Inc. et al. v. United States, the United States Court of Federal Claims (“COFC”) held that the provisions of FAR 22.505, 52.222-33 and 52.222-34 (collectively, the “PLA mandate”), which required the use of project labor agreements (“PLAs”) on large-scale federal construction projects valued above or at a certain threshold, violated the Competition in Contracting Act (“CICA”). As we previously reported here, former-President Biden issued Executive Order 14063 in February 2022, instructing federal agencies to require construction contractors and subcontractors on projects valued at $35 million or more to “agree, for that project, to negotiate or become a party to” a PLA. A few months later, the FAR Council promulgated a final rule implementing the executive order in FAR 22.505, 52.222-33 and 52.222-34. 

In MVL USA, twelve construction companies filed various bid protests, each challenging the authority of federal agencies to mandate that they enter into PLAs. These bid protests were consolidated into one action at the COFC. The court held that the federal PLA mandate violated CICA because it inappropriately allowed federal agencies to reduce competition for these large-scale federal construction contracts to only PLA-contractors. Further, the court held that there was no statutory exception permitting what it referred to as a blanket restriction of full and open competition. The court explained that CICA's requirement for "full and open competition" meant that all responsible sources were to be allowed to compete for contracts. Including the PLA mandate in solicitations, according to the court, hindered responsible, capable contractors from bidding on these contracts because the requirement "has no bearing on whether plaintiffs can perform the contract at issue." Finally, the court held that the agencies here acted arbitrarily and capriciously by disregarding certain market research and surveys that recommended the removal of the PLA requirement for certain solicitations because a PLA would increase price and reduce competition.

 While the COFC held that the federal mandate was unlawful, contractors with PLA requirements in their existing contracts should continue to follow the PLA mandate, since it has not been formally revoked. Crowell & Moring will continue to monitor developments relating to the MVL USA decision and Executive Order 14063.

In an interesting wrinkle, the court also addressed the timeliness of one protester’s suit filed after the proposal submission deadline, but prior to award. The Government had moved to dismiss that single protest pursuant to the Federal Circuit’s Blue & Gold rule. As we have covered previously, Blue & Gold holds that “a party who has the opportunity to object to the terms of a government solicitation containing a patent error and fails to do so prior to the close of the bidding process waives its ability to raise the same objection” in a subsequent COFC protest. Closely parsing the language of Blue & Gold, the MVL court reasoned that the words “close of the bidding process” means prior to award, not the proposal submission deadline, and therefore the protest was timely. The MVL court further reasoned that finding the protest timely comported with the rationale behind the rule—to prevent an offeror from sitting on a solicitation challenge until learning whether it had won the award. This reinterpretation of the Blue & Gold rule appears ripe for appeal.