Untangling the Vaccine Mandate – Updates and Answers to Frequently Asked Questions

Since our October 14, 2021 webinar, much has developed in the rapidly evolving compliance world of Executive Order 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors (“EO” or “EO 14042”). In case you missed it, we issued two prior alerts on some of these developments (please see our New Task Force blog post and our Federal Court client alert), the latest of which discusses the Occupational Health and Safety Administration (OSHA) November 4, 2021 emergency temporary standards (ETS) currently stayed by the U.S. Court of Appeals for the Fifth Circuit. These standards impose similar—but separate—COVID-19 vaccination and testing requirements for companies with 100 or more employees, regardless of whether or not the companies are federal contractors.

To date, nearly 40 agencies have issued class deviations implementing the EO’s requirements, most agencies have issued supplemental letters, guidance, or other memoranda, and the Safer Federal Workforce Task Force (Task Force) has updated its FAQs on several occasions.  In fact, the Task Force most recently updated its Contractor FAQs and guidance this week, on November 10, 2021, to reflect the new January 18, 2022 vaccination deadline directed by the White House, to remove the FAQs formerly included in the guidance and instead provide a link to the Task Force FAQs on its website, and to add a new FAQ providing sample signage that covered contractors can post at entrances to covered contractor workplaces. In addition, over 20 states have filed lawsuits in various federal district courts challenging the legality of EO 14042, and at least one contractor has filed a pre-award protest with the U.S. Court of Federal Claims (COFC) based on, inter alia, the U.S. Department of Veterans Affairs’ (VA) inconsistent positions when it comes to allowing contractors to recover compliance costs resulting from EO 14042.

Although answers to many questions stemming from the EO require situation-specific analyses, to help contractors, subcontractors, and vendors jumpstart this process, the Government Contracts and Labor and Employment Law Practice Groups at Morrison & Foerster LLP have put together a brief background summary on EO 14042, answers to a variety of frequently asked questions, including those received during the webinar, and a brief overview of pending lawsuits. Much like the Task Force and agency guidance affecting and interpreting this EO, we will continue to provide updates as developments unfold.

EXECUTIVE ORDER 14042

As previously discussed in our articles (please see our Federal Mandate client alert and our Task Force Guidance client alert), on September 9, 2021, President Biden issued EO 14042, requiring federal contractors and subcontractors at all tiers to “provide adequate COVID-19 safeguards to their workers performing on or in connection with a Federal Government contract or contract-like instrument.” Unlike past executive orders affecting federal contractors, EO 14042 does not provide exemptions for commercial item contracts and otherwise allows only limited exemptions, including, but not limited to, contracts or subcontracts valued at or below the simplified acquisition threshold (SAT) (currently $250,000), subcontracts solely for the provision of products, contracts or subcontracts performed outside the United States and its outlying areas, and grants. Although the EO does not expressly say so, the implementing guidance implicitly recognizes that the EO’s mandatory requirements do not apply to prime contracts solely for products.  There is no exemption for small business concerns.

Among other directives, EO 14042 instructed the Task Force to publish guidance interpreting the EO, subject to approval by the Director of the Office of Management and Budget. The first set of guidance was issued by the Task Force on September 24, 2021, and was most recently revised on November 10, 2021 (collectively, the “Guidance”). The Guidance requires prime contractors to flow down all applicable requirements to their first-tier subcontractors, which in turn “must flow the clause down” to their lower-tier subcontractors “in similar fashion so that accountability for compliance is fully established throughout the Federal contract supply chain for covered subcontractor employees and workplaces at all tiers through application of the clause.” On September 30, 2021, the Task Force launched a landing page for federal contractors as well as FAQs for Federal Contractors. Other notable FAQ sections cover Testing, Vaccinations, and Visitors. 

The EO also directed the FAR Council to develop a new FAR clause requiring contractor compliance with EO 14042 and related guidance for use in federal procurement solicitations, contracts, and subcontracts subject to EO 14042, and to provide “policy direction to acquisition offices for use of the clause by recommending that agencies exercise their authority under subpart 1.4 of the [FAR].” On September 30, 2021, the FAR Council published a memorandum providing the text of the newly drafted FAR Deviation Clause, FAR 52.223-99 (Ensuring Adequate COVID‑19 Safety Protocols for Federal Contractors) (OCT 2021) (Deviation) (the “FAR Clause”), and issuing instructions to agencies on the execution of FAR class deviations. Nearly 40 agencies have since issued class deviations with clauses implementing the requirements of EO 14042.

Once an implementing clause is included in a contract, prime contractors and subcontractors at all tiers, unless otherwise exempted, must comply with all requirements of the Guidance, including the following key requirements: (1) ensuring covered employees and employees who work in covered workplaces are fully vaccinated in accordance with the new January 18, 2022 vaccination deadline (subject to accommodations and limited exceptions); (2) immediately complying with masking and physical distancing requirements while in covered contractor workplaces; and (3) designating a person or persons to coordinate COVID-19 workplace safety efforts at covered contractor workplaces. Importantly, the FAR Clause further stipulates that contractors have to comply with Task Force “guidance conveyed through [FAQs], as amended during performance of” the contract, imposing real‑time compliance obligations on federal contractors and subcontractors.

FREQUENTLY ASKED QUESTIONS

Where can I access the recording and materials from Morrison & Foerster’s October 14, 2021 webinar?

Please see our Vaccine Mandate webinar page.

How do I know if EO 14042 is applicable to my company?

The requirements of EO 14042, including the Task Force Guidance, apply to federal contracts, subcontracts, and contract-like instruments that are valued in excess of the SAT and that otherwise do not qualify for an exemption. The Guidance broadly defines “contract-like instruments” and encourages agencies to incorporate an implementing clause into contracts and subcontracts that are otherwise exempt.

Contractors are deemed covered when an incorporating clause is integrated into a prime contract or subcontract. EO 14042, the Task Force Guidance, and the FAR Council’s implementing guidance require the clause to be included in a prime contract or subcontract (at any tier) that exceeds the SAT and satisfies one or more of the following conditions:

• Provides services;
• Provides services covered by the Service Contract Act;
• Covered by the Davis-Bacon Act;
• Is for construction or a leasehold interest in real property;
• Is for concessions; and/or
• Was 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.

Note that at least three agencies, the General Services Administration (GSA), the U.S. Department of Housing and Urban Development (HUD), and the National Aeronautics and Space Administration (NASA) have instituted a lower threshold for coverage—the micro-purchase threshold, as opposed to the SAT. The Guidance also states that “agencies are strongly encouraged to incorporate a clause requiring compliance with this Guidance into contracts that are not covered or directly addressed by the order because the contract is under the [SAT] . . . or is a contract or subcontract for the manufacturing of products” (emphasis added).

For prime contractors, requirements can be incorporated through execution of a bilateral modification, extension, or renewal, exercise of an option, or issuance of a new award, including a new task order or purchase order award under an existing indefinite‑delivery, indefinite‑quantity contract. If a contractor resists a bilateral contract action, incorporation instead could come in the form of a unilateral modification. For subcontractors and vendors, requirements can be integrated through an amendment to the subcontract or underlying agreement or through the issuance of a new award. As such, subcontractors and vendors should be attuned to whether they can resist inclusion of an implementing clause.

For prime contractors, subcontractors, and even vendors, it is important to be mindful of the potential cross-contract impacts, where requirements can be imposed on a company’s worksite through, for example, a separate prime contract or subcontract at that worksite. We recommend carefully reviewing all new contract actions, dating back to October 1, 2021.

Is my company responsible for complying with the Task Force FAQs, and how are we supposed to know when the FAQs are updated?

If you have a covered contract or subcontract that incorporates the requirements of EO 14042, such as FAR 52.223-99 or an agency’s class deviation, then yes, you will need to comply with all Task Force guidance, including the FAQs. Though a notification system has not been established, the Task Force identifies general updates, revisions, and additions to the Guidance and its FAQs on this “What’s New?” landing page on its website. As of the date of this publication, both the Guidance and FAQs were most recently updated on November 10, 2021.

Does my company need to comply with guidance issued by GSA?

Though GSA is one of the leading agencies on the Task Force, contractors need not comply with guidance or other directives issued by GSA unless their contract was awarded or otherwise funded by GSA. This equally applies to subcontractors.

Importantly, however, GSA is requiring all Federal Supply Schedule (FSS) contractors to accept the contract modification incorporating the requirements of EO 14042, the status of which GSA is publicly tracking and live-updating here. Per Attachment B of its class deviation memorandum, GSA explains, in relevant part, these requirements as follows (emphases in original):

If you hold a GSA contract for services, construction, or a leasehold interest in property that exceeds the simplified acquisition threshold (SAT) or the simplified lease acquisition threshold (SLAT), GSA strongly encourages you to accept this contract modification at this time. The modification is mandatory before GSA will renew, extend the period of performance of your contract, or exercise an option.

Acceptance of the contract modification is also mandatory for all Federal Supply Schedule contractors.

Are small business concerns exempt from EO 14042 coverage?

Small business concerns are not automatically exempt from coverage. Instead, the small business concern, in the capacity of either a prime contractor or subcontractor, will need to qualify for one of the exemptions provided in EO 14042 if it does not want to comply with the requirements of the EO.

Should I expect the requirements of EO 14042 to apply to my company, even if our federal contracts or subcontracts are valued below the SAT or otherwise qualify for an exemption?

Agencies appear to be incorporating the EO requirements left and right, regardless of whether a prime contract is exempt.  This comports with the Task Force Guidance, which states that “agencies are strongly encouraged to incorporate a clause requiring compliance with this Guidance into contracts that are not covered or directly addressed by the order because the contract is under the [SAT] . . . or is a contract or subcontract for the manufacturing of products.” The Guidance further provides that “[a]gencies are also strongly encouraged to incorporate a clause requiring compliance with this Guidance into existing contracts and contract-like instruments prior to the date upon which the order requires inclusion of the clause,” which explains why agencies have been requesting compliance earlier than might have been expected.

Agencies can also strongly recommend to a prime contractor that it flow the requirements down to its subcontractors at all tiers, regardless of whether the subcontractors are exempt. This can create difficult situations between prime contractors and their subcontractors and vendors, particularly where the latter two provide only products. To help balance what could become a delicate situation, it is important for prime contractors and higher-tier subcontractors to be aware of their flowdown obligations. 

Additionally, this EO is facing serious legal challenges on multiple fronts, pursuant to which a judicial injunction or invalidation of the EO could render much of this advice moot.

As a prime contractor or higher-tier subcontractor, what exactly are my flowdown obligations?

Although a contracting officer may strongly recommend that a prime contractor and higher-tier subcontractors flow the requirements of EO 14042 down to all lower-tier subcontractors, a prime contractor and higher-tier subcontractor is only required to comply with the directives in the EO and Guidance. The former explicitly states that “subcontracts solely for the provision of products” are exempt, providing prime contractors and higher-tier subcontractors greater flexibility and discretion. Moreover, the Task Force provides the following FAQs that pointedly address flowdown requirements:

Q: Must the requirements of Executive Order 14042 be flowed down to all lower-tier subcontractors and, if so, who is responsible for flowing the clause down?

A: Yes. The requirements in the order apply to subcontractors at all tiers, except for subcontracts solely for the provision of products. The prime contractor must flow the clause down to first-tier subcontractors; higher-tier subcontractors must flow the clause down to the next lower-tier subcontractor, to the point at which subcontract requirements are solely for the provision of products.

Q: What is the prime contractor’s responsibility for verifying that subcontractors are adhering to the mandate?

A: The prime contractor is responsible for ensuring that the required clause is incorporated into its first-tier subcontracts in accordance with the implementation schedule set forth in section 6 of Executive Order 14042. When the clause is incorporated into a subcontract, a subcontractor is required to comply with the Task Force Guidance for Federal Contractors and Subcontractors and the workplace safety protocols detailed herein. Additionally, first-tier subcontractors are expected to flow the clause down to their lower-tier subcontractors in similar fashion so that accountability for compliance is fully established throughout the Federal contract supply chain for covered subcontractor employees and workplaces at all tiers through application of the clause.

Where a lower-tier subcontractor is plainly exempt, the prime contractor or higher-tier subcontractor can therefore either elect not to flow down the requirements or, in a subcontract award or amendment, to include flowdown language that integrates “as-applicable” language, allowing lower‑tier subcontractors to either push back or treat the clause as self-deleting when truly inapplicable.

Prime contractors and higher-tier subcontractors are also not compliance enforcement officers. Provided they themselves comply with the requirements of the EO and Guidance, they need not report potential violations unless and until they have “credible evidence” to believe a lower-tier subcontractor is not in compliance, as directed in the following Task Force FAQ:

Q: May the prime contractor assume the subcontractor is complying with the clause?

A: Yes, unless the prime contractor has credible evidence otherwise.

How does EO 14042 coverage work in the context of products?

Neither EO 14042, the Guidance, nor the FAQs define “products.”  Further muddying the waters, EO 14042 exempts from coverage only “subcontracts solely for the provision of products” (emphasis added). Thus, whether the subject contract for the provision of products is a prime contract or a subcontract can determine whether—and how—to push back on accepting the implementing clause, the efforts of which may or may not be successful.

What we do know for certain, however, is that the Task Force Guidance strongly encourages incorporation of the FAR Clause “into contracts that are not covered or directly addressed by the order because the contract is under the Simplified Acquisition Threshold as defined in section 2.101 of the FAR or is a contract or subcontract for the manufacturing of products.”  The Guidance also includes the following FAQ, noted above:

Q: Must the requirements of Executive Order 14042 be flowed down to all lower-tier subcontractors and, if so, who is responsible for flowing the clause down?

A: Yes. The requirements in the order apply to subcontractors at all tiers, except for subcontracts solely for the provision of products. The prime contractor must flow the clause down to first-tier subcontractors; higher-tier subcontractors must flow the clause down to the next lower-tier subcontractor, to the point at which subcontract requirements are solely for the provision of products.

When the mix of the contract is therefore in doubt, it appears that the coverage decision is left to the discretion of the contracting officer, the prime contractor, or the higher-tier subcontractor. Once a lower-tier subcontractor provides only products, that subcontractor arguably need not further flow down the implementing clause, even if its subcontract contains the implementing clause; however, this will depend on the specific language in the subcontract and/or relevant subcontract amendment (e.g., whether it includes language that might allow the clause to self‑delete if not applicable).

GSA takes this one step further in its class deviation memorandum, stipulating as follows (emphasis added):

FAS COs shall incorporate the clause at FAR 52.223-99, in all new and existing FSS contracts above the micro-purchase threshold, including contracts that are solely for products. The Safer Federal Workforce Task Force guidance strongly encourages agencies to incorporate the clause into contracts that are solely for products. It is not administratively feasible to distinguish FSS contracts that are solely for products from FSS contracts that are primarily for products but also include ancillary-type services (e.g., installation, maintenance, training, ancillary services acquired via the Order-Level Materials SIN, etc.). Requiring the clause in all FSS contracts will simplify compliance tracking, vendor communication, and customer messaging efforts.

This sentiment is echoed in the directives applicable to Government-wide Acquisition Contracts (GWACs), Multi-Agency Contracts (MACs), and “Agency-specific IDV/IDIQs,” where the memorandum states that the Federal Acquisition Service (FAS) contracting officers “shall incorporate FAR 52.223‑99, in all new and existing GWACs, MACs, and IDV/IDIQ contracts, including contracts that are solely for products, except” for a very limited number of categories identified therein.

Again, note that compliance obligations can also arise through a separate prime contract or subcontract.

My prime contract is solely for the provision of products. Is my company therefore exempt?

Probably, although an agency could still choose to incorporate an implementing clause into the contract. EO 14042 does not explicitly exempt from coverage prime contracts solely for the provision of products; only “subcontracts solely for the provision of products” are exempt. However, the EO also does not state that it does apply to prime contracts for products.  Instead, the EO provides that it applies only to contracts that are above the SAT and are for services, construction, a leasehold interest in real property, or concessions, or that involve services in connection with federal property or lands. As a result, prime contracts solely for products are implicitly excluded from the EO’s coverage. For its part, the Task Force recognizes in its FAQs that, although an agency can choose to impose the clause more broadly, the EO’s requirements do not automatically apply to “a contract or subcontract for the manufacturing of products.”

It is important to recognize, however, that “services” are not defined in the Guidance, Task Force FAQs, or the FAR Clause, and that there is no identified minimum threshold for the services component of a contract. As a result, and because of the considerable discretion afforded to contracting officers to decide whether to include the clause, contracts in excess of the SAT that involve any services are potentially covered by EO 14042, even if those services constitute a minor portion of the total work; at the very least, EO 14042 does make clear that it applies to contracts covered by either the Service Contract Act or the Davis-Bacon Act. Taking this one step further, GSA has stated that all FSS contracts will be covered, even if they are solely for the provision of products.

Again, note that compliance obligations can also arise through a separate prime contract or subcontract performed at the same worksite as a contract that is not otherwise covered.

My prime contract is for mixed products and services valued below the SAT or otherwise provides only ancillary services. Is my company therefore exempt?

Possibly, but note the discussion immediately above. Contractors have a valid basis to resist inclusion of the clause in a contract valued at or below the SAT, as strictly provided for in the text of EO 14042. However, contracting officers still have considerable discretion and have been strongly encouraged to incorporate the clause even when the contract is otherwise exempt. As noted above, GSA, NASA, and HUD, for example, have decided to include the clause in contracts valued above the micro-purchase threshold rather than the SAT.

Again, note that compliance obligations can arise through a separate prime contract or subcontract at the same worksite.

My subcontract is solely for the provision of products. Is my company therefore exempt?

There is a strong argument to resist coverage given that EO 14042 explicitly exempts “subcontracts solely for the provision of products.” That said, it is critical to assess whether the subcontract provides any services.

Keep in mind, however, that agencies and prime contractors are “strongly encouraged” to expand coverage beyond the strict limits of EO 14042. And also note that compliance obligations can arise through a separate prime contract or subcontract at the same worksite.

Is there any way to know if other contractors are accepting or rejecting the requirements of EO 14042?

As noted above, GSA is publicly tracking and live updating which contractors have accepted the bilateral modification (please see the live tracking tool). There are various filters to sort through this data, including to see all contractors/contracts that are “Closed/Cancelled.”

If I have multiple worksites and only some of those worksites are covered, how does that impact my coverage analysis?

The Guidance makes clear that “workplace safety protocols will apply to all covered contractor employees, including contractor or subcontractor employees in covered contractor workplaces who are not working on a Federal Government contract or contract-like instrument” (emphasis added). Covered contractor workplace “means 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.  A covered contractor workplace does not include a covered contractor employee’s residence” (emphasis added). Thus, if a covered employee is “likely to be present” at one or more of the company’s worksites, then each of those worksites is deemed covered and requires compliance with the requirements in EO 14042 and all Task Force guidance.

The Task Force further illustrates the breadth and implications of these requirements through the following FAQs:

Q: If a covered contractor employee is likely to be present during the period of performance for a covered contract on only one floor or a separate area of a building, site, or facility controlled by a covered contractor, do other areas of the building, site, or facility controlled by a covered contractor constitute a covered contractor workplace?

A: Yes, unless a covered contractor can affirmatively determine that none of its employees on another floor or in separate areas of the building will come into contact with a covered contractor employee during the period of performance of a covered contract. This would include affirmatively determining that there will be no interactions between covered contractor employees and non-covered contractor employees in those locations during the period of performance on a covered contract, including interactions through use of common areas such as lobbies, security clearance areas, elevators, stairwells, meeting rooms, kitchens, dining areas, and parking garages.

Q: If a covered contractor employee performs their duties in or at only one building, site, or facility on a campus controlled by a covered contractor with multiple buildings, sites, or facilities, are the other buildings, sites, or facility controlled by a covered contractor considered a covered contractor workplace?

A: Yes, unless a covered contractor can affirmatively determine that none of its employees in or at one building, site, or facility will come into contact with a covered contractor employee during the period of performance of a covered contract. This would include affirmatively determining that there will be no interactions between covered contractor employees and non-covered contractor employees in those locations during the period of performance on a covered contract, including interactions through use of common areas such as lobbies, security clearance areas, elevators, stairwells, meeting rooms, kitchens, dining areas, and parking garages.

If I have covered employees working on multiple worksites, how does that impact my coverage analysis?

See above answer. If a covered employee works at two or more worksites, each of those worksites is deemed covered, requiring all employees at both sites to comply with the requirements of EO 14042 and implementing guidance.

If my contract or subcontract is covered, by when do all of my employees need to be vaccinated, and what requirements does that deadline impose?

In tandem with OSHA’s issuance of the ETS, which are currently stayed, the White House issued an announcement pushing back the vaccination deadline to January 18, 2022, including for federal contractors. As noted above, this revised deadline was incorporated into the Task Force FAQs and Guidance on November 10, 2021; GSA has likewise updated its FAQs to reflect the new deadline. Accordingly, all covered employees—including employees who work in covered facilities but not on a covered contract—have to be “fully vaccinated,” including the two-week waiting period, by January 18, 2022. The Task Force Guide defines “fully vaccinated” as follows:

Fully vaccinated – People are considered fully vaccinated for COVID-19 two weeks after they have received the second dose in a two-dose series, or two weeks after they have received a single-dose vaccine. There is currently no post-vaccination time limit on fully vaccinated status; should such a limit be determined by the Centers for Disease Control and Prevention, that limit will be considered by the Task Force and OMB for possible updating of this Guidance.

To comply, this means unvaccinated covered employees should get vaccinated as soon as possible, as it can take anywhere from several weeks to over a month for employees to become “fully vaccinated.” But, those unvaccinated covered employees will need to get the final vaccination dose—or first Johnson & Johnson vaccination dose—no later than January 4, 2022, in order to comply with the fast-approaching January 18, 2022 deadline. That said, and as discussed in this article, a contractor’s good-faith efforts to come into compliance can potentially shield it from contract termination for failing to be in full compliance by this deadline. Specifically, the vaccination deadline was softened to a certain degree based on the following Task Force FAQs:

Q: Do all requests for accommodation need to be resolved by the covered contractor by the time that covered contractor employees begin work on a covered contract or at a covered workplace?

A: No. The covered contractor may still be reviewing requests for accommodation as of the time that covered contractor employees begin work on a covered contract or at a covered workplace. While accommodation requests are pending, the covered contractor must require a covered contractor employee with a pending accommodation request to follow workplace safety protocols for individuals who are not fully vaccinated as specified in the Task Force Guidance for Federal Contractors and Subcontractors.

Q: What steps should a covered contractor take if a covered contractor employee refuses to be vaccinated?

A: A covered contractor should determine the appropriate means of enforcement with respect to its employee at a covered contractor workplace who refuses to be vaccinated and has not been provided, or does not have a pending request for, an accommodation. This may include the covered contractor using its usual processes for enforcement of workplace policies, such as those addressed in the contractor’s employee handbook or collective bargaining agreements.

One model for enforcement among employees with respect to non-compliance with a vaccination requirement is that being followed by Federal agencies. Guidance for Federal agencies is to utilize an enforcement policy that encourages compliance, including through a limited period of counseling and education, followed by additional disciplinary measures if necessary. Removal occurs only after continued noncompliance. Guidance for Federal agencies is that employees should not be placed on administrative leave while the agency is pursuing an adverse action for refusal to be vaccinated but will be required to follow safety protocols for employees who are not fully vaccinated when reporting to agency worksites.

During the time period of enforcement, the covered contractor must ensure the covered contractor employee at a covered contractor workplace is following all workplace safety protocols for individuals who are not fully vaccinated.

An agency may determine that a covered contractor employee who refuses to be vaccinated in accordance with a contractual requirement pursuant to EO 14042 will be denied entry to a Federal workplace, consistent with the agency’s workplace safety protocols.

Though there is arguably some breathing room in terms of the vaccination deadline, once the requirements of EO 14042 are incorporated into a contract or subcontract, contractors should immediately institute measures to comply with all masking and social distancing requirements. Contractors should also designate a person or persons to coordinate COVID-19 workplace safety efforts at covered contractor workplaces as soon as possible.

Can I reject a bilateral modification or other contract action implementing EO 14042 requirements?

Yes, but not without risk. Those risks include, but are not limited to, termination of the contract and negative impacts on customer relationships. Given the situation-specific analysis affecting each contract, including the cross-contract and flowdown impacts caused by complying with EO 14042, we strongly recommend consulting an attorney before making any decision in this respect.

Are there measures or other actions my company can take to recover costs later down the road for yet-to-be-awarded contracts?

Yes. It would be prudent to incorporate and account for compliance costs resulting from or otherwise caused by EO 14042 in any contracts, subcontracts, and vendor agreements explicitly or arguably covered by EO 14042.

Are there measures or other actions my company can take to recover costs later down the road for existing contracts?

Yes, potentially, but this analysis depends on a variety of situation-specific factors, such as whether the contract is a fixed-price or cost reimbursement contract. Recognizing that it can be extremely difficult—if not impossible—to determine all potential compliance costs, it is best to be mindful of the changes clause included in each contract; to verify what, if any, waivers are included in a bilateral modification or other contract action incorporating an implementing clause, as well as subsequent contract modifications; and, depending on the unique facts of each circumstance, to consider notifying the contracting officer of a reservation of rights.

PENDING LAWSUITS

As noted above, several lawsuits have been filed over the past several weeks challenging either an agency’s application of EO 14042 or the general legality thereof, several of which are discussed below. As matters currently stand, unless and until a statewide or nationwide injunction is issued, contractors and subcontractors have to comply with the requirements of EO 14042 if their contracts and subcontracts are covered and include an implementing clause.

COFC Pre-award Protest

On October 26, 2021, PDS Consultants, Inc., a service-disabled veteran-owned small business, filed a pre-award protest at COFC, challenging the decision by the VA “to amend [the RFP] to resolicit revised price proposals as a result of the incorporation of COVID-19 safety provisions into the Statement of Work.” Plaintiff claims the revision, which allows offerors to add a “COVID surcharge” to their proposals, does not reflect the VA’s actual needs given its concurrent issuance of no-cost bilateral modifications in other contracts. This case is currently pending.

Florida Suit Filed in the U.S. District Court for the Middle District of Florida

On October 28, 2021, the State of Florida filed suit against the United States, President Biden, and multiple executive officials in the U.S. District Court for the Middle District of Florida, challenging the legality of EO 14042. Plaintiff asserts various constitutional and administrative challenges to EO 14042, arguing that the president’s actions both exceeded the scope of his authority in issuing EO 14042 under the Federal Property and Administrative Services Act (FPASA) and violated the Nondelegation Doctrine. Plaintiff additionally disputes the implementation of the “OMB Rule” and “FAR Council guidance,” claiming both violated the Administrative Procedure Act (APA) and had to go through notice and comment procedures because they are related to the expenditure of appropriated funds, have a significant effect beyond an agency’s internal procedures, and have a significant cost or administrative impact on contractors. Plaintiff further contends that the EO, Task Force Guidance, OMB Rule, and FAR Council guidance impose unconstitutional conditions of Florida’s receipt of federal funds in violation of the Spending Clause, as they ask the state “to agree to an ambiguous contract term” that “can be changed at any time.”

Seven States File Suit in the U.S. District Court for the Southern District of Georgia

On October 29, 2021, Georgia, Alabama, Idaho, Kansas, South Carolina, Utah, and West Virginia collectively filed suit in the U.S. District Court for the Southern District of Georgia against President Biden, the Task Force, multiple executive officials, and other agencies and individuals, alleging, inter alia, that the “Contractor Mandate”— including EO 14042, the OMB Determination, Task Force Guidance, and FAR Deviation Clause—is both invalid and conflicts with state law. Like in the Florida lawsuit, plaintiffs argue that the president’s directives violated the Nondelegation Doctrine and that the Contractor Mandate directly contravened the Spending Clause and FPASA. Plaintiffs also claim the “Contractor Mandate and the OMB Determination impose universal and uniform requirements without regard to the particularized needs and circumstances of each federal agency and are therefore arbitrary and capricious in violation of the APA.” Last, plaintiffs allege the Contractor Mandate violates the Necessary and Proper Clause of the Constitution and is an unlawful “exercise of the police power” that, under the Tenth Amendment, is reserved to the states.  

Ten States File Suit in the U.S. District Court for the Eastern District of Missouri

On October 29, 2021, Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, and Wyoming collectively filed a complaint in the U.S. District Court for the Eastern District of Missouri against a group of plaintiffs similar to those in the other district court cases, including President Biden, the United States, various federal agencies, multiple executive officials, and others. Plaintiffs also allege similar arguments—for example, plaintiffs assert that the vaccine mandate and Task Force Guidance violated both the APA and FPASA and that, in promulgating the FAR Clause, the failure to implement the formal notice and comment process was in direct contravention of the APA. Plaintiffs further contend the EO violated separation of powers principles in the Constitution and that the vaccine mandate improperly infringed states’ police powers and the Anti-Commandeering Doctrine of Tenth Amendment. Plaintiffs additionally argue that the vaccine mandate violates the Spending Clause, Tenth Amendment, and Free Exercise Clause of the Constitution because it “is an unconstitutional condition on the Plaintiff States’ receipt (by and through their agencies and political subdivisions who are federal contractors) of federal funds,” is neither necessary nor effective and will cause employees to resign or be fired, and improperly extends to employees “who have no connection to the federal contract beyond just being coworkers with an employee who works on such a contract and being likely to come into contact with them.”

Three States File Suit in the U.S. District Court for the Eastern District of Kentucky

On November 4, 2021, Kentucky, Ohio, and Tennessee collectively filed suit in the U.S. District Court for the Eastern District of Kentucky against essentially identical plaintiffs to those in the other district court lawsuits, alleging, inter alia, that EO 14042 is invalid and unconstitutional, and seeking a declaratory judgment and injunctive relief. Similar to the other lawsuits, plaintiffs claim EO 14042 and the mechanisms implementing the requirements thereof are arbitrary and capricious and violated the APA as well as the Non-Delegation Doctrine, Necessary and Proper Clause, and Spending Clause of the Constitution. Plaintiffs also contend that the EO exceeded the authority provided under FPASA and, in violation of the Tenth Amendment, injured states’ parens patriae interests “to set their own laws regarding workplace vaccination policies under their ‘police powers.’” Last, plaintiffs argue that the “OMB Determination” “is inconsistent with the requirements of the Competition in Contract Act,” as it unlawfully “precludes an entire class of contractors from obtaining federal contracts without regard to their capability to perform the contract,” and that the OMB Determination and FAR Council Guidance improperly failed to undergo the necessary formal notice and comment process.

Three States File Suit in the U.S. District Court for the Western District of Louisiana

On November 4, 2021, Louisiana, Indiana, and Mississippi collectively filed a complaint in the U.S. District Court for the Western District of Louisiana against a group of plaintiffs nearly identical to those in the other district court suits, seeking a declaratory judgment and injunctive relief. Plaintiffs similarly contend that the vaccine mandate and EO exceed the authority of the Executive Branch and that the “OMB Rule” and “FAR Guidance” violate FPASA and the APA. Plaintiffs assert that the vaccine mandate also violates FPASA because it is a regulation, not a policy or directive, and that the mandate improperly usurps plaintiffs’ police powers to manage public health, undermines plaintiffs’ “commitment to religious liberty and individual rights embodied in their laws and policies,” and violates the Nondelegation Doctrine, Tenth Amendment, Anti-Commandeering Doctrine, and the Spending Clause of the Constitution.