The GSA Acknowledges Cost Inflation of Government-Mandated PLAs
New federal guidance lets a PLA cost up to $15 million more, with no added benefit, and still be considered “reasonable.”
Read the guidance here: Acquisition Letter MV-2026-03: GSA Project Labor Agreement Procedures
The U.S. General Services Administration (GSA) just made a major admission: Government-MandatedProject Labor Agreements (PLAs) cost more. Though, this won’t come as a surprise to contractors in Virginia who have long noted the inflationary impact of PLAs.
On June 18, 2026, the GSA issued new procurement guidance governing how PLAs are handled on large-scale federal construction projects due to the 2022 Executive Order 14063 – Use of Project Labor Agreements for Federal Construction Projects. The EO requires federal agencies to require PLAs on construction projects over $35 million. Agencies, however, have repeatedly sidestepped the EO by finding that a PLA would not promote economy and efficiency in Federal procurement.
GSA’s latest guidance determines how federal agencies are to determine whether a PLA will impede economy and efficiency in construction procurements. Going forward, contractors are to submit two cost proposals, one with a PLA and one without a PLA. The PLA bid will be granted a 10% or $15 million (whichever is less) cost cushion before the PLA requirement and still be considered “reasonable.” Only if the PLA premium climbs past that cushion can a contracting officer reject the requirement as unreasonable.
The GSA isn't hiding the reasoning. Its own guidance admits PLAs come with "higher costs and limited competition." It points to federal budget officials conceding that PLA-related costs can push a project past its budget by more than 10%. And it leans directly on the federal court rulings we've been tracking all year – decisions in which the Court of Federal Claims found that mandating PLAs can violate the Competition in Contracting Act by shutting out qualified contractors who won't sign a union deal. Those courts told federal agencies they could no longer ignore what PLAs cost. MV-2026-03 is seemingly the government's answer.
The obvious question: if a PLA project needs a $15 million cost cushion, how much are these mandates really costing the taxpayers footing the bill?
Virginia's local governments are being pressured to adopt these very same mandates on schools, roads, and public buildings – all paid for with Virginians' tax dollars. Supporters routinely allege that PLAs don’t add to costs despite all independent, peer-reviewed studies showing otherwise. We can now add the largest procurer of construction services in the world – the U.S. Government – to the list of those stating the obvious – PLAs add unnecessary costs to projects. Will Virginia’s local politicians listen?