Biden EO for Federal Contractor COVID-19 Safety Leaves Vaccination Mandates (and Other Requirements) TBD | Arent Fox

All Part of the Plan

As Arent Fox previously reported in an earlier alert, President Biden on September 9, 2021, laid out his “Path Out of the Pandemic” plan, which included a series of executive orders designed to implement a six-pronged, comprehensive national strategy to combat COVID-19 and its variants. One of the key components of the plan was “Requiring Vaccinations for all Federal Workers and for Millions of Contractors that Do Business with the Federal Government.” Thus, in E.O. 14042, President Biden prescribed the insertion of a yet-to-be-created contract clause in new and extended contracts that would require federal employees and contractors to adhere to forthcoming safety standards to be promulgated by the Safer Federal Workforce Task Force.

The Safer Federal Workforce Task Force was established by an earlier Biden executive order (E.O. 13991, Protecting the Federal Workforce and Requiring Mask Wearing) with the express purpose of providing ongoing guidance to heads of agencies on the operation of the Federal Government, the safety of its employees, and the continuity of Government functions during the COVID-19 pandemic.

E.O. 14042 seeks to expand the applicability of the task force guidance to cover select federal contractors. Of course, the federal contractors to which E.O. 14042 applies also may be subject to other components of the “Path Out of the Pandemic” plan, such as the anticipated Emergency Temporary Standard of the Department of Labor’s Occupational Safety and Health Administration, which is expected to require that all employers with 100 or more employees ensure their workforce is fully vaccinated or require any workers who remain unvaccinated to produce a negative test result on at least a weekly basis before coming to work.

Forthcoming Contract Clauses Will Set Forth the Actual Requirements

The EO does not itself require contractors to do anything. It instead directs federal agencies to incorporate a contract clause (to be developed by October 8, 2021) – that will itself incorporate guidance developed by the Safer Federal Workforce Task Force (to be completed by September 24, 2021) – into contracts entered into or extended after October 15, 2021. As the requirements are implemented through a contract clause, contractors ostensibly have a choice whether the guidance will apply by them by electing to opt out of the contract or modification. As a practical matter, however, many contractors will acquiesce to the contractual requirements if at all possible to avoid losing the contract and the considerable revenue resulting therefrom.

Conspicuously absent from the EO is any discussion of a vaccination mandate. While some form of vaccination mandate is presumed likely given Biden’s comments on the topic, the particular contours of what safety guidance contractors must adhere to are governed by the forthcoming task force guidance and resultant contract clause.

Note, however, that under existing task force guidance agencies are already required to demand proof of vaccination or a negative COVID test from contractor employees that work on-site at government facilities and from visitors to those same facilities. Absent proof of vaccination or a timely negative COVID test (taken within 3 days of the visit), the contractor employee or visitor will be subject to unvaccinated protocols. Such individuals must generally wear masks regardless of community transmission level, physically distance, and comply with travel requirements for not fully vaccinated individuals.

Where the Clause Applies

While the forthcoming clause that is the subject of the executive order extends beyond merely contracts subject to the Federal Acquisition Regulation (FAR), the clause only applies to new contracts or modifications, extensions, or option exercises of existing contracts where:

1. it is a procurement contract or contract-like instrument for services, construction, or a leasehold interest in real property;
2. it is a contract or contract-like instrument for services covered by the Service Contract Act, 41 U.S.C. 6701 et seq.;
3. it is a contract or contract-like instrument for concessions, including any concessions contract excluded by Department of Labor regulations at 29 C.F.R. 4.133(b); or
4. it is a contract or contract-like instrument entered into with the Federal Government in connection with Federal property or lands and related to offering services for Federal employees, their dependents, or the general public;

See E.O. 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors at § 5(a) (Sept. 9, 2021).

The term “contract or contract-like instrument” is defined broadly to mean “an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law.” Id. at § 2(e) (referring to an earlier proposed rule set forth at 86 Fed. Reg. 38816, 38887 (July 22, 2021)). The term includes “all contracts and any subcontracts of any tier thereunder, whether negotiated or advertised, including any procurement actions, lease agreements, cooperative agreements, provider agreements, intergovernmental service agreements, service agreements, licenses, permits, or any other type of agreement, regardless of nomenclature, type, or particular form, and whether entered into verbally or in writing.” 86 Fed. Reg. 38816, 38887 (July 22, 2021). The term includes, among other types of agreements, FAR contracts as well as any contract that may be covered under any Federal procurement statute.

The safety requirements mandated by the clause will only apply to workplace locations (to be specified in the task force guidance) in which an individual is working on or in connection with a Federal Government contract or contract-like instrument.

Where the clause applies, it is a mandatory flow-down for subcontracts.

Where the Clause Does Not Apply

Despite its broad applicability, the clause will not apply to, among other things:

• grants
• contracts or subcontracts below the simplified acquisition threshold (currently $250,000)
• employees who perform work outside the United States
• subcontracts solely for the provision of products

As the clause only applies to new contracts or extensions to existing contracts (e.g., through option exercise or modification), it also does not apply to existing contracts with time remaining under a current performance period. Agencies, however, are “strongly encouraged, to the extent permitted by law” to ensure the safety protocols are nonetheless followed, raising the specter that an Agency may seek to insert the anticipated contract clause via unilateral modification to existing contracts under the auspices of the “Changes” clause. If the Government were to be successful in unilaterally forcing the clause into existing contracts, under a likely-to-be-controversial theory that compliance with the safety requirements constitutes a change “in the method or manner of performance of the work” for example, the contractor could potentially submit a request for equitable adjustment to account for any increased expenses of compliance.

More generally, the EO does not appear to apply to “supply” contracts either. While the EO clearly states it applies to contracts for “services” it makes no reference to applying to the separate category of “supply” contracts. Service contracts are specifically differentiated from supply contracts under federal regulations. The apparently different treatment of supply contracts versus service contracts makes conceptual sense, as the government has a greater interest in employees who directly perform work for and interact with the government than those that merely manufacture products sold to the government. The specific exemption of “subcontracts solely for the provision of products” appears to bolster the argument, by exempting such subcontracts even if they support a prime contract that qualifies as a services contract.

Timing Considerations

Given the short turnaround dates for implementation, the FAR Council will need to work unusually quickly to develop a new contract clause to be released under an interim rule before the prescribed October 8, 2021 deadline. As a result, contractors are likely to see some form of class deviation appear until such time as the FAR Council can proceed with its standard rulemaking process. Contractors with new services contracts or contract extensions after October 15, 2021 should expect to see such a clause.