The Walsh Construction Protest and the Removal of Project Labor Agreement Requirements

The Government Accountability Office (GAO) recently issued a decision in the case of Walsh Construction Company II, LLC (B-423075.2), which involved a protest challenging the removal of a Project Labor Agreement (PLA) requirement from a solicitation by the U.S. Army Corps of Engineers. This case highlights the intersection of federal procurement regulations, executive orders, and agency discretion in corrective actions. The decision, authored by Edda Emmanuelli Perez, General Counsel of the GAO, underscores the legal and regulatory framework surrounding PLAs and their applicability to federal task orders under existing indefinite-delivery, indefinite-quantity (IDIQ) contracts.

The dispute arose from a task order solicitation for a construction project at Naval Hospital Bremerton in Jackson Park, Washington. Initially, the Army Corps of Engineers required offerors to submit a fully executed PLA with their proposals. A PLA is a collective bargaining agreement with labor organizations that applies to specific construction projects and is meant to ensure labor stability and efficiency. This requirement was rooted in Executive Order 14063, issued in 2022, which mandates the use of PLAs for large-scale federal construction projects exceeding $35 million unless an authorized exception is granted. The Federal Acquisition Regulation (FAR) was amended in 2024 to reflect this directive, integrating new clauses that govern PLA requirements in federal contracts.

Walsh Construction Company II, LLC, a competing contractor, initially protested the award of the task order, alleging that the winning bidder, StructSure Projects, Inc., had failed to submit a valid PLA. In response, the Army Corps of Engineers took corrective action, rescinded the award, and amended the solicitation—but instead of re-evaluating proposals with the PLA requirement in place, the agency removed the PLA requirement entirely. This change prompted a second protest from Walsh, which argued that eliminating the PLA requirement violated the law and unfairly benefited competitors who would no longer be bound by a PLA.

GAO’s decision denied Walsh’s protest, concluding that the Army Corps of Engineers acted within its discretion in amending the solicitation. The agency’s justification for removing the PLA requirement was based on the fact that the underlying IDIQ contracts, awarded in 2023, did not include the relevant FAR clauses requiring PLAs. Since the FAR changes were implemented in 2024, the Army Corps of Engineers lacked the contractual authority to impose the PLA requirement retroactively unless the IDIQ contracts were modified to include the new FAR provisions. GAO agreed with this assessment, emphasizing that the agency had correctly interpreted procurement regulations and had not violated any laws by amending the solicitation to align with the contractual framework of the IDIQ.

This decision carries several key implications for federal contractors and procurement professionals. First, it underscores the importance of timing in regulatory changes. While the Executive Order and subsequent FAR amendments mandated PLAs for qualifying construction projects, they could not be retroactively imposed on task orders issued under IDIQ contracts that did not originally include the relevant FAR clauses. This distinction demonstrates how federal procurement rules must align with existing contract structures and how agencies must carefully implement new regulations without overstepping contractual boundaries.

Second, the decision reinforces the broad discretion agencies have in corrective actions. The GAO has consistently held that agencies can take corrective measures to ensure fair competition, and in this case, the removal of the PLA requirement was deemed an appropriate correction to a procurement error. Contractors should be aware that agencies have significant flexibility to amend solicitations when they identify inconsistencies or legal concerns.

Third, this case highlights the potential disadvantages for contractors who preemptively comply with requirements that may later be rescinded. Walsh Construction had already entered into a PLA, assuming it was a binding requirement, while its competitors, now free from the obligation, were no longer subject to the same labor conditions. This scenario illustrates how regulatory uncertainty can create competitive imbalances, making it essential for contractors to stay informed about evolving procurement policies and their potential implications.

Additionally, the broader legal context surrounding PLAs is evolving. Notably, on February 7, 2025, the Department of Defense issued a class deviation that waived the PLA requirements for large-scale construction projects, directing contracting officers to remove PLA clauses from solicitations and contracts. Furthermore, a ruling by the U.S. Court of Federal Claims in January 2025 found that Executive Order 14063 violated the Competition in Contracting Act, stating that it restricted competition and violated statutory principles of full and open competition. These developments suggest that PLA mandates may face further legal challenges and modifications, making it even more critical for federal contractors to monitor policy shifts.

Ultimately, GAO’s decision in the Walsh Construction case serves as a reminder that procurement regulations must be harmonized with existing contractual frameworks and that agencies must exercise discretion in a legally defensible manner. Contractors should approach solicitations with a clear understanding of how regulatory updates interact with established contracts and be prepared to adapt to evolving procurement landscapes. As the debate over PLAs continues, the interplay between executive orders, FAR updates, and legal challenges will remain a critical area for government contractors navigating federal construction projects.

Disclaimer:
This blog post provides a summary of a GAO decision and is intended for informational purposes only. It does not constitute legal advice, and the accuracy of the information is not guaranteed. Contractors should consult with legal professionals for guidance on specific procurement matters.