On September 9, among other measures, President Biden issued an Executive Order that will result in a mandate that contractor employees “performing on or in connection with a Federal Government contract or contract-like instrument” be vaccinated against COVID-19. The procedural steps, culminating in the issuance of a new contract clause that must occur before that mandate is effective are outlined below, along with another mandate to be implemented by the Department of Labor’s Occupational Safety and Health Administration (OHSA) that will apply to all companies in the U.S. with more than 100 employees. While neither are immediately effective and both will almost certainly face significant legal challenges, contractors must be aware of these requirements and start preparing now for their implementation.
New Executive Order Requires Government Contractors to Be Vaccinated for COVID-19
Unlike some Executive Orders that rely on the president’s own determination to direct a change to government contract requirements, the September 9, 2021 “Executive Order on Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors” requires first that by September 24, 2021, the Safer Federal Workforce Task Force issue protocols for contractors and subcontractors to comply with workplace safety guidance. This guidance must include any exceptions that apply to contractor workplace locations and individuals.
Before the publication of the new guidance, the director of the Task Force, under a delegation of the president’s authority under the Federal Property and Administrative Services Act, must determine whether the guidance will “promote economy and efficiency in Federal contracting if adhered to by Government contractor and subcontractors.” Given that any vaccine mandate will almost certainly result in a significant number of contractor employees leaving the workforce, it is not clear whether the guidance would meet that standard.
Should the director make an affirmative determination, upon the publication of the guidance the Executive Order requires that contractors and subcontractors working on or in connection with a federal contract or contract-like instrument adhere to the requirements of that guidance although the guidance is not included in any regulation or contract provision. So it is possible that, if the Task Force sticks to the schedule outlined in the Executive Order and a court does not delay or halt implementation, contractors and subcontractors will be required to comply with the yet-to-be-issued guidance that will almost certainly mandate COVID-19 vaccines as early as September 24.
Details of Executive Order
While the Executive Order requires compliance with the guidance upon its issuance, it also requires that the Federal Acquisition Regulatory Council (FARC) amend the Federal Acquisition Regulation (FAR) to include a provision requiring contractors and subcontractors at all tiers to comply with the Task Force guidance. This suggests, perhaps, that the White House does not believe the direction that contractors comply with the guidance immediately after it is issued is sufficient. By October 8 the FARC must take initial steps to implement policy direction that agencies issue FAR deviations to allow for immediate use of the new contract provision. Agencies are also required by October 8 to take steps to ensure that contract-like instruments not subject to the FAR entered into after October 15 include the new contract clause.
For solicitations issued before the October 8 and 15 implementation dates that result in awards within 30 days of those dates, agencies are “strongly encouraged, to the extent permitted by law” to ensure the new safety protocols apply. The same is true for solicitations and contracts/contract-like instruments issued after September 9 as well as all existing agreements. That means it is possible, if not likely, that agencies will try to modify existing contracts to include the new COVID-19 provision. For commercial item contracts, in accordance with FAR 52.212-4(c) that would require a bi-lateral modification.
The Executive Order applies only to new contracts or contract-like instruments, new solicitations, extensions/renewals, and the exercise of options. It does not apply to grants, contracts or subcontracts below the Simplified Acquisition Threshold ($250,000 in most cases), subcontracts solely for products, employees who perform work outside the U.S. or its outlying areas, or agreements with Indian Tribes under the Indian Self-Determination and Education Assistance Act.
Key Takeaways for Government Contractors
In sum, for contractors and subcontractors who could potentially be subject to the yet-to-be-published guidance, even if a court challenge does not delay or halt the implementation of this order, the earliest you could be subject to the new requirements is September 24. For that reason, it would be prudent to take action now to prepare. For example, contractors should consider surveying employees to determine who is vaccinated; ensuring there are sufficient candidates in the recruiting pipeline in case the mandate results in increased attrition; and alerting subcontractors that, unless they are solely providing products, these requirements will also apply to them.
For contractors with over 100 employees, a separate COVID-19 vaccine requirement announced yesterday will apply. In addition to the contractor Executive Order and a similar mandate for most federal employees, President Biden yesterday directed OSHA to develop a temporary emergency standard applicable to companies with over 100 employees requiring that their employees either get vaccinated or be tested weekly for COVID-19. Failure to comply will be punishable by a fine of up to $14,000 per incident. This emergency standard, which would apply to more than 80 million private-sector workers, is expected to go through an expedited review process and be published in the next few weeks. Like the government contractor Executive Order and other mandates announced on September 9, this OSHA emergency standard will most certainly face significant court challenges.
COVID-19 requirements applicable to government contractors are rapidly evolving and raise complicated contractual and employment law questions.