A U.S. federal appeals court has upheld an executive order by President Bush that bans favoritism for union bids in federal contract awards.

"We conclude that the president acted within his constitutional authority in issuing Executive Order No. 13,202 and that the executive order expresses a proprietary policy that is not subject to pre-emption by the [National Labor Relations Act]," wrote a three-judge panel from the U.S. Court of Appeals for the District of Columbia.

The decision overturned a November 2001 lower court ruling that said the ban on union-only contracts, or project labor agreements, defied labor laws enacted by Congress.

Edward C. Sullivan, president of the The Building and Construction Trades Department of the national AFL-CIO, the primary plaintiff in the case, called the decision a major setback for "hundreds of thousands" of unionized workers across the country and another example of Bush using his authority to advance his political agenda at the expense of working people.

"The court's decision grants the president permission to promote his own labor agenda by overriding state and local decisions about how to conduct their construction projects," said Sullivan.

"The decision, moreover, minimizes the rights of hundreds of thousands of construction workers by giving the president license to disregard the labor laws on federally financed projects," he added.

But a number of independent labor groups, the U.S. Chamber of Commerce and the National Right to Work Foundation were quick to champion the decision on Friday.

"President Bush's common sense executive order helps to ensure open competition in the U.S. construction industry," said Ken Adams, chairman of the American Builder's Association, which claims that one in five U.S. construction workers do not belong to a union.

"It's just a travesty — it's racketeering, the whole thing, and it's time it ended," said John Upshaw, executive director of the Independent Roofing Contractors Association, which had filed a brief in support of the Bush administration's case. Upshaw's group represents about 80 commercial contractors in California, where the unions have a lot of political sway, but where only 15 percent of construction workers belong to a union.

President Clinton originally signed the executive order that required union-only contracts in federally funded construction project bids. Bush repealed that order in February 2001, reinstating an order signed by his father, President George H.W. Bush, over a decade earlier.

Proponents of union-only contracts have long held that union agreements ensure higher wages, benefits and safety for workers. On the contrary, opponents say that unions don't necessarily pay or protect workers more, they just drive up the cost of projects by holding a monopoly on bids and keeping the majority of available contractors out of the process.

"It just wasn't fair," said Craig Silvertooth, federal affairs director for the National Roofing Contractors Association, which represents about 5,000 roofing companies and manufacturers, about 80 percent of which are non-union.

Sullivan said the AFL-CIO plans to appeal Friday's decision.

"The Building Trades are bitterly disappointed by this decision and we are considering our legal options, including the possibility of appealing to the Supreme Court of the United States," he said.