We're seeing a clear divide. Republican-controlled states have existing legislation that restricts government-mandated PLAs on state projects and state-assisted and local projects. On the other hand, blue states are promoting or requiring PLAs more frequently. There are 25 states that have policies restricting government-mandated PLAs on state, state-assisted and local projects to some degree, but they allow firms to voluntarily use PLAs, if appropriate.

Whereas some of the biggest proponents include New York and Illinois – they've got lots of pro-PLA language in legislation, executive orders and pilot programs. New Jersey is another example. Recently, Maryland is looking at PLAs for potentially $20 billion worth of work, and Oregon's governor just issued an executive order pushing PLAs on certain projects.

The most recent states to enact pro-PLA policies (in 2023 and 2024) have been Pennsylvania, Massachusetts, Hawaii, Washington, D.C., Maryland and Delaware,

What's the immediate impact of the Court of Federal Claims ruling?

The judge limited the effect of the ruling against the Biden administration’s unlawful PLA mandate policy to the federal projects that were subject to bid protests in the U.S. Court of Federal Claims. The judge didn't strike down the entire rule. Going forward, federal prime contractors will need to file bid protests on PLA projects until there's an injunction issued by this judge, or the judge in ABC’s case against the Biden order in federal court in Jacksonville issues an injunction, or there's a change in federal PLA policy by the Trump administration.

How has the Biden administration's approach affected federally assisted projects?

The Biden administration pushed PLAs through grant programs for federally assisted construction projects. In the grant applications, applicants had to indicate whether they would use a PLA, and they'd be more likely to get funding if they required one. This led to state and local governments calling us asking, 'Do I have to require it? What about my state laws that prohibit PLA requirements?'

States without anti-PLA policies often went along with it, and blue states absolutely embraced it. The Biden policy was effective in influencing federally assisted construction projects, which represent a much larger universe of construction spending than just direct federal contracts.

What's happening with clean energy projects and labor requirements?

The Inflation Reduction Act requires 15% of all labor hours on a project to be done with apprentices from government-registered apprenticeship programs, plus prevailing wage requirements – even for privately developed clean energy projects. Developers can get 30% tax credits if they hit these labor requirements versus 6% if they don't. But the requirements are confusing, and the regulations weren't particularly clear to start but have improved over time.

What's interesting is that in the regulations for the clean energy tax credits, if developers require a PLA and fail to comply with prevailing wage and apprenticeship requirements, they won't be penalized by new monetary fines as severely. A lot of developers have asked if the Biden administration can do this since it wasn't in the statute. The Trump administration has an opportunity to fix this regulation. Congress will need to make any changes to the IRA’s apprenticeship and prevailing wage requirements, although clarity can be achieved through regulatory guidance on remaining issues of confusion.

What evidence influenced the court's recent ruling?

Federal agencies were requesting exceptions to PLA requirements, but none were being granted, or the exception process was so onerous that they didn't even bother. The judge saw evidence from federal agencies that explained how PLAs increase costs and reduce competition, yet the FAR’s rule prevented them from using their own judgment. That violates federal statute requiring full and open competition. The evidence came from the agencies' own words, not ours. The judge understood the implications of how government-mandated PLAs through the Biden rule injuries the economy and efficiency in government contracting and undermines the federal Competition in Contracting Act policies.

What's next for contractors facing PLA requirements?

I've already gotten calls from federal contractors looking at projects not yet in the full solicitation phase, and others with live solicitation with upcoming bid deadlines who now see a pathway to challenge the Biden administration’s PLA requirements. You'll likely see more protests flood the Court of Federal Claims, but it's on a case-by-case basis depending on the contractors pursuing contracts. Unfortunately, it costs money to challenge each PLA and the bid protests delay the contract award and start of construction.

This leads to needless delays, waste and inefficiency. It would make much more sense for contractors, all of America’s construction workforce, federal agencies, federal contracting officers and taxpayers for the Biden policy to be completely struck down from a practical perspective. If firms want to voluntarily use a PLA to fix conflicting collective bargaining agreements and union problems and deliver a project to government projects, they should be able to do that. However, it shouldn’t be required by the government or done via government coercion. Fair and open competition is the best way to ensure taxpayer dollars are spent wisely, build quality infrastructure and address the construction industry’s skilled labor shortage. Learn more at the BuildAmericaLocal.com coalition website.