Federal Contractors Vaccine Mandate: What Government Contractors Need to Know
The implementation of President Biden’s September 9, 2021 Executive Order regarding COVID-19 vaccine and safe workplace requirements for federal contractors has caused confusion and prompted numerous questions from federal contractors and their employees. The FAR Council and the Safer Federal Workforce Task Force continues to roll out additional guidance on the new vaccine mandate and related class deviations, which government contractors and subcontractors must follow closely so they can prepare their own workplace procedures to ensure timely and ongoing compliance. These compliance requirements include, but are not limited to, the current requirement to have all covered contractor employees fully vaccinated by January 18, 2022.
Background and Recent Guidance
On September 9, 2021, President Biden issued Executive Order 14042, “Ensuring Adequate COVID Safety Protocols for Federal Contractors” (the “E.O. 14042”), which directs federal agencies to ensure that certain government contracts and contract-like instruments include a clause requiring that contractors and certain subcontractors, regardless of tier, comply with guidance issued by the Safer Federal Workforce Task Force (the “Task Force”). President Biden created the Task Force in January 2021 to address COVID-19.
To implement E.O. 14042, on September 24, 2021, the Task Force issued its initial COVID-19 Workplace Safety Guidance for federal contractors. On September 30, 2021, the FAR Council then issued a memorandum, titled Issuance of Agency Deviations to Implement E.O. 14042, which stated that it was intended “to provide agencies that award contracts under the [FAR] with initial direction for the incorporation of a clause into their solicitations and contracts to implement guidance issued by the [Task Force] pursuant to [E.O. 14042].”
The September 30th memorandum also published FAR Deviation Clause 52.223-99 - Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors, which applies to solicitations and contracts for services, including construction. The memorandum also provided instructions to federal agencies to prepare and then issue their own FAR deviations in accordance with the authority given under FAR 1.4 and using the FAR Council guidance provided in FAR 52.223-99. The most significant language included in the FAR Deviation Clause is the following, which just generally requires contractors to comply with “all guidance” included on the Task Force’s website, which includes often changing Frequently Asked Questions (“FAQs”):
(c) Compliance. The Contractor shall comply with all guidance, including guidance conveyed through [FAQs], as amended during the performance of this contract, for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force (Task Force Guidance) at https://www.saferfederalworkforce.gov/contractors/.
Notably, FAR Deviation Clause 52.223-99 confirms that the relevant FAQs may be amended during the performance of the contract, which has been proven true in practice as the guidance has frequently changed. This, of course, places a burden on contractors and subcontractors to frequently and consistently review the website during contract performance to determine whether any guidance has changed and whether new guidance has been issued. Essentially, so long as this clause is in place, contractors and subcontractors will need to frequently review the Task Force’s website to confirm ongoing changes in guidance.
In accordance with the September 30th memorandum discussed above, various federal agencies have since issued their own agency acquisition regulation deviations to implement the Task Force’s guidance. For example, also on September 30, 2021, the Civilian Agency Acquisition Council (“CAAC”) issued CAAC Letter 2021-03, which included FAR Deviation Clause 52.223-99 and encouraged “agencies to apply the requirements of the Task Force Guidance broadly. . . .” On October 1, 2021, the Department of Defense (“DOD”) issued a memorandum publishing Class Deviation 252.223-7999 to the Defense Federal Acquisition Regulation Supplement (“DFARS”), which includes the same operative language as FAR Deviation Clause 52.223-99. Similarly, on October 7, 2021, the Department of Health & Human Services (“HHS”) issued a Memorandum for Heads of Contracting Activity, which announced HHS’s own Class Deviation (2021-03) and also directed HHS’s contracting officers to incorporate FAR Deviation Clause 52.223-99 into various HHS contracts and solicitations. As a final example, on October 12, 2021, the Department of Energy (“DOE”) issued Contractor Requirements Document ("CRD") Order DOE O 350.5, COVID Safety Protocols for Federal Contractors, which requires that the CRD or FAR Class Deviation 52.223-99 be included in most DOE contracts.
Various federal agencies beyond those above have also issued their own class deviations. While there are some slight differences between the guidance and implementation instructions issued by the different agencies, generally all of them require contractors and subcontractors at every tier to comply with “all guidance” issued by the Task Force.
Therefore, as a result of E.O. 14042 and the various Class Deviations being issued by federal agencies, federal government contractors and subcontractors must closely and consistently review the Task Force Guidance, which changes frequently. For example, on November 4, 2021, the Biden Administration issued a Fact Sheet with new guidance regarding several pending vaccine mandates, and the Task Force then published its own corresponding updated Covid-19 Workplace Safety Guidance for federal contractors on November 10. Significantly, this November 10th guidance extended the deadline for covered contractor compliance with the COVID-19 vaccine mandate from December 8, 2021 to January 18, 2022. In addition to the formal published guidance, there have also been several changes to the FAQs and likely will be several more changes in the near future. To assist contractors and subcontractors with compliance as of the date of this alert, we have addressed several common questions below.
What type of workplace safety protocols does the Guidance mandate?
The Guidance requires conformance with three general workplace safety protocols, including:
Complete COVID-19 vaccination of covered contractor employees by January 18, 2022, except in limited circumstances where an employee is legally entitled to an accommodation/exemption (meaning that covered employees will need to have their final vaccination dose – either their second dose of Pfizer or Moderna, or a single dose of Johnson & Johnson – by January 4, 2022);
Compliance by individuals, including covered contractor employees and visitors, with published Centers for Disease Control and Prevention (“CDC”) guidance related to masking and physical distancing while in covered contractor workplaces; and
Designation by covered contractors of a person or persons to coordinate COVID-19 workplace safety efforts at covered contractor workplaces.
What types of federal contracts are subject to the vaccination mandate?
The new COVID safety protocol contract clauses on vaccination, masking, and social distancing will apply to all government contracts and contract-like instruments for services above the simplified acquisition threshold, generally $250,000. Notably, the contract clauses are not currently required to be included in contracts or subcontracts for supplies, as the class deviations issued by the CAAC and DOD, as well as the FAR clause, limit the vaccination requirement to contracts and subcontracts “for services, including construction.” The Executive Order also notably excludes from the mandate (i) federal grants, (ii) contracts with Indian Tribes, (iii) contracts equal or less than the SAT, (iv) employees who perform work outside of the United States, and (v) subcontracts solely for the provision of products.
That being said, the Task Force Guidance also importantly notes that federal agencies are “strongly encouraged” to incorporate a clause requiring compliance with the Task Force Guidance into contracts that are not expressly covered, which could include contracts for supplies and manufactured products or those below the acquisition threshold.
Which federal contractors and contractor employees are covered by the Task Force Guidance?
A “covered contractor” is defined as any prime contractor or subcontractor at any tier who is a party to a covered contract, and there is no carve out or applicable exception for small businesses. A “covered contractor employee” means any full-time or part-time employee of a covered contractor working on or in connection with a covered contract or working at a covered contractor workplace. This includes employees of covered contractors who are not themselves working on or in connection with a covered contract.
A “covered contractor workplace” is described as a location controlled by a covered contractor at which any employee of a covered contractor working on or in connection with a covered contract is likely to be present during the period of performance for a covered contract. If any employee of a covered contractor working on or in connection with a covered contract is likely to be present during the period of performance for a covered contract at a workplace controlled by a corporate affiliate of that covered contractor, that workplace is also considered a “covered contractor workplace.” A covered contractor workplace does not include a covered contractor employee’s residence - however, even fully remote workers who perform work on covered federal contracts from home remain subject to the vaccination mandate.
As far as exemptions go, a covered contractor may be required to provide an accommodation to covered contractor employees who communicate to the covered contractor that they are not vaccinated against COVID-19 because of a disability (which would include medical conditions) or because of a sincerely held religious belief, practice, or observance. However, the Task Force Guidance is not clear on what is required to actually meet one of these exemptions.
When will the vaccination mandate and COVID-19 Safety Protocol contract clause requirements go into effect?
Federal agencies are required to include the COVID-19 safety protocol implementing clause in solicitations and contracts for services, including construction, as follows:
New contracts awarded on or after November 14, 2021 from solicitations issued before October 15, 2021 (including new orders awarded on or after November 14 from solicitations issued before October 15 under existing indefinite-delivery contracts);
New solicitations issued on or after October 15, 2021 and contracts awarded pursuant to those solicitations (this includes new solicitations issued on or after October 15 for orders awarded pursuant to those solicitations under existing indefinite-delivery contracts);
Extensions or renewals of existing contracts and orders awarded on or after October 15, 2021; and
Options on existing contracts and orders exercised on or after October 15, 2021.
As noted above, the Task Force Guidance requires covered contractor employees to be fully vaccinated by January 18, 2022. After January 18, 2022, all covered contractor employees must be fully vaccinated by the first day of the period of performance on a newly awarded covered contract, and by the first day of the period of performance on a covered exercised option, or covered extended/renewed contract (unless an applicable exemption/accommodation applies).
Conflicting Mandates, Exemptions, and Court Challenges
Adding to the complexity of the implementation of the federal contractor vaccine mandate and the changing guidance are issues such as (i) conflicting state mandates related to vaccination requirements, (ii) the proper interpretation of accommodation-based exemptions to the vaccine mandate; (iii) the results of any pending or upcoming legal challenges to E.O. 14042 and the vaccine mandate’s implementation; and (iv) the general contract interpretation and negotiation issues related to FAR Deviation Clause 52.223-99.
Despite the fact that the Task Force Guidance expressly states that the updated requirements and vaccine mandates “supersede” any contrary State or local law or ordinance, businesses in some states, including Texas, face conflicting mandates at the state and local level. For example, a recent Texas Executive Order banned COVID-19 vaccine mandates for all entities in the state – putting federal contractors and subcontractors in Texas in a difficult position of choosing between compliance with federal law while potentially violating Texas law, or complying with local mandates while rendering themselves ineligible for contracting with the federal government.
Determining which covered contractor employees may qualify for an accommodation to the vaccine mandate also has proven difficult. The Task Force Guidance provides for certain exemptions based on an employee’s “sincerely held religious belief, practice, or observance” or disability, but provides very little direction on how to meet those standards. Further, the guidance currently places the responsibility for determining the application of such exemptions squarely on the federal contractor or subcontractor. These vague descriptions place employers in a difficult position of making significant decisions balancing their employees’ concerns about the potential available exemptions and the risk that the government will later disagree and hold the employer responsible for noncompliance with the contract.
Open questions about whether the rulemaking and public comment laws were properly followed in the creation of these requirements, lack of clarity on the applicability of the exemptions, and employees’ constitutional rights related to the vaccine mandate present unique and nuanced legal issues that are sure to be challenged in courts around the country. In fact, several lawsuits have already been filed that challenge the constitutionality of E.O. 14042 and related federal contractor COVID-19 vaccine mandates, including several federal district court challenges from at least nineteen different states that could at any time result in these requirements being, at least temporarily, enjoined. See, e.g., State of Florida v. Nelson et al., Case No. 8:21-cv-02524; State of Georgia et al. v. Biden et al., Case No. 1:21-CV-00163; State of Missouri et al. v. Biden et al., Case No. 4:21-cv-01300; State of Texas v. Biden et al., Case No. 3:21-cv-00309; Commonwealth of Kentucky, et al. v. Joseph R. Biden, Case No. 3:21-cv-00055. There is also at least one lawsuit filed in District Court in Washington D.C. by a group of federal employees, service members, and contractors. See Costin et al. v. Biden et al., Case No. 1:21-cv-02484.
The strength of these various lawsuits remains to be seen and one or more of them may likely end up in the Circuit Court of Appeals. However, the federal government has broad discretion to impose requirements and policies associated with the federal contracts it issues, and U.S. companies are not required to seek federal government work if they so choose. In this respect, the arguments challenging the federal contractor vaccination mandate may not be as strong as those associated with currently pending lawsuits challenging recent U.S. Occupational Safety and Health Administration (“OSHA”) vaccination rules that apply more broadly to private-sector companies with more than 100 employees.
Even beyond the constitutionality and enforceability of E.O. 14042, there are also general government contract interpretation and modification questions that cause issues for federal government contractors. For example, we have learned from clients that several federal agencies have proposed the vaccine mandate deviation clauses to contractors as requests for bilateral contract modifications, which would require the approval of both the contractor and the government. While most contractors have concerns about not accepting this modification based on the current guidance, significantly, the Department of Justice has recently argued in a public pleading filed in federal court that if a contractor refuses a proposed bilateral modification related to the vaccine mandate, “its contract will not be subject to the ‘federal contractor vaccine mandate’. . . .” Govt.’s Opposition to Plaintiffs’ Motion for a Preliminary Injunction, at p. 6-7, Commonwealth of Kentucky, et. al. v. Joseph R. Biden, et. al. Case No. 3:21-cv-00055 (E.D.K.Y. Nov. 16, 2021). This would certainly be a good point to reference in any discussions with the government about FAR Deviation Clause 52.223-99. However, it remains to be seen if the government would still maintain this position outside of litigation during normal contract negotiations.
While it will be important to monitor these cases and similar injunctive challenges to E.O. 14042 as they wind their way through the judicial system, in the short term, all federal contractors and subcontractors should be prepared to maintain full compliance with the Task Force Guidance.
Next Steps and Practical Advice
Despite the uncertainty surrounding the implementation of E.O. 14042, government contractors and subcontractors should review the Task Force Guidance and be prepared to comply with it. This includes preparing to impose and enforce internal employee compliance with the COVID-19 vaccine mandate by January 18, 2022.
To help with this effort, we recommend that federal contractors and subcontractors take the following actions as soon as possible:
Review closely the Task Force Guidance and determine whether any “covered contracts” exist to which the guidance applies.
By the terms of the guidance, FAR Deviation Clause 52.223-99 should apply only to solicitations and contracts for services, including construction, which are above the simplified acquisition threshold of $250,000. Therefore, if the government contract involves only manufactured products, the clause should not apply. Similarly, if the contract is below $250,000, the clause should not apply. If the government attempts to include this clause in a contract where it is not mandated, a contractor has good grounds to object to its inclusion during negotiations.
Prepare to negotiate with the contracting officer when he or she makes contact about FAR Deviation Clause 52.223-99.
For example, when negotiating contract modifications to include these requirements, contractors should review the proposed modifications carefully to avoid any language that would release the government from future incurred costs. Further, if compliance with E.O. 14042 will cause the contractor to have increased costs related to the implementation of the Task Force Guidance generally, this should be communicated to the contracting officer in writing to build a case for an eventual Request for Equitable Adjustment (“REA”).
Additionally, if the contractor has locations in Texas or any other State that has banned employers from imposing vaccine mandates on employees, the contractor should communicate this to the contracting officer in writing so that it can begin building a case for a future REA in the event that the contractor incurs extra costs associated with addressing the noncompliance with the state requirements based on the conflicting federal requirements.
To the extent that a contractor has any active “covered contracts,” it needs to closely review the Task Force Guidance, and then continue reviewing it on an ongoing basis to ensure ongoing compliance. As noted above, the Task Force Guidance’s FAQs have already changed several times and will likely continue to do so in the future.
Finally, pursuant to the Taskforce Guidance referenced above, contractors should also take the following actions immediately:
Designate an employee to be the COVID-19 workplace safety protocol coordinator who is responsible for the implementation of and compliance with the Task Force Guidance;
Develop written policies and procedures to implement the Task Force Guidance, including the handling of accommodation and exemption requests;
Educate covered contractor employees on Task Force Guidance compliance, vaccination status and accommodation/exemption rules, and related information such as CDC masking and physical distancing guidelines (including Guidance requirements for covered employees furnishing medical documentation to evidence vaccination status);
Educate subcontractors about “flow-down” requirements and compliance under the Task Force Guidance and make sure that subcontracts are modified to correspond to any similar modifications required by the federal government in the prime contract; and
Maintain all documentation of expenses incurred and any other time delays resulting from the implementation of E.O. 14042 so that the contractor can prepare for the eventual submission of a REA or even a claim.
E.O. 14042 and the Safer Federal Workforce Task Force Guidance imposes several significant requirements that should be closely reviewed by all government contractors and subcontractors.