FAR Council and Agencies Publish Class Deviation Clauses and Instructions to Implement EO 14042 Vaccine Requirements

Government Contracts Update

Date: October 08, 2021

Key Notes:

  • The FAR Council has issued its initial guidance regarding implementation of Executive Order 14042: Ensuring Adequate COVID Safety Protocols for Federal Contractors (“EO”) and the Safer Federal Workforce Task Force’s COVID-19 Workplace Safety: Guidance for Federal Contractors and Subcontractors (“Task Force Guidance”).
  • Several agencies have issued deviation clauses to the FAR Council’s interim clause. The new publications include the FAR deviation clause that is to be used in the near term, FAR 52.223-99, as well as the Department of Defense’s own clause, DFARS 252.223-7999.
  • The FAR and DFARS clauses do not add substantive guidance and, instead, cite to EO 14042, direct contractors to follow the Task Force Guidance, and require flowdowns to covered subcontracts.

On October 1, a full week ahead of the October 8 deadline, the Federal Acquisition Regulatory Council (“FAR Council”) issued the draft FAR deviation clause, FAR 52.223-99, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors, which is to be inserted into covered contracts and subcontracts, as well as a memorandum, Issuance of Agency Deviations to Implement Executive Order 14042, that provides guidance to agencies regarding its implementation. When included in contracts and contract-like instruments, the draft deviation clause will impose the Task Force Guidance’s requirements on contractors and subcontractors. The FAR Council’s guidance permits agencies to develop their own deviation clauses, and the council has opened a case to make appropriate amendments to the FAR to reflect the requirements of the EO.

FAR Council Memo and Deviation Clause

The following are some key takeaways from the FAR Council’s memo:

  • In alignment with the Task Force Guidance, the FAR Council recommended including the clause in contracts beyond the scope of the EO (including supply contracts and contracts under the simplified acquisition threshold (“SAT”), which is currently $250,000).
  • Civilian agencies can adopt the clause attached to the FAR Council’s memorandum without making any changes. Alternatively, an agency may use a class deviation clause after consulting with the Civilian Agency Acquisition Council Chair no later than October 15, 2021.
  • The actual FAR deviation clause, FAR 52.223-99, provides that contractors with contracts containing the clause need to comply not only with the Task Force Guidance itself, but also “shall comply with all guidance, including guidance conveyed through Frequently Asked Questions, as amended during the performance of this contract, for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force at https://www.saferfederalworkforce.gov/contractors/.” (emphasis added). This means that, once inserted into a contract, the clause, FAR 52.223-9, will require contractors to comply with the Task Force Guidance, as well as any future amendments with respect to the same.
  • While the FAR Council has indicated that it will begin the process for permanent rulemaking by engaging in the notice and comment process to issue a final regulation, there is no deadline set for this undertaking and it will not delay the current implementation plan and schedule. As a result, it currently is unclear how long the FAR deviation clause will remain in effect.
  • As to subcontracts, the FAR class deviation remains largely consistent with the EO, but in the case of subcontracts that procure a mixture of supplies and services, the line between a supply contract and a services contract remains unclear.
Applicability and Effective Dates

The FAR Council directs agencies to act “expeditiously” to issue any deviation clauses to allow contracting officers to begin applying the deviation clauses on or before October 8. The FAR Council’s memo also provides information regarding the applicability and effective dates of the clause as follows:

  • New contracts awarded on or after November 14 from solicitations issued before October 15 (this includes 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 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.

Agencies are also “encourage[d]” to apply the requirements of the Task Force Guidance broadly, consistent with applicable law, by including the clause in:

  • Contracts that have been or will be awarded prior to November 14 on solicitations issued before October 15; and
  • Contracts that are not covered or directly addressed by the EO because the contract or subcontract is either (1) under the SAT or (2) a contract or subcontract for the manufacturing of products.

This FAR Council guidance appears to give agencies greater latitude in beginning the process of amending existing contracts to include the FAR deviation clause.

Exclusions

Pursuant to the FAR Council’s memo, the FAR deviation clause will not be applied to:

  • Contracts and subcontracts with Indian Tribes under the Indian Self-Determination and Education Assistance Act (this exclusion will not apply to a procurement contract or subcontract under the FAR to an Indian-owned or tribally-owned entity); or
  • Solicitations and contracts if performance is outside the United States or its outlying areas (the exclusion is limited to employees who are performing work only outside the United States or its outlying areas).
Agency Class Deviations

In conjunction with the release of the FAR Council’s memo, several agencies (including the General Services Administration (“GSA”) and Department of Defense (“DoD”)) have issued their own deviation clauses and provided additional guidance that addresses two key areas of uncertainty for contractors: (1) incorporation of the vaccine mandate into existing contracts and (2) application (if any) to contracts excluded by EO 14042, which the Task Force Guidance “strongly encourages” agencies to incorporate into contracts excluded by the EO.

Generally, the agency deviations go beyond the EO’s requirements by allowing (or in some cases requiring) the deviation clause to be added to prime supply contracts (not just services contracts). Although most agency deviation instructions defer questions on incorporation to more operational levels, the DoD and GSA instructions have additional nuances, which are discussed in further detail below.

Department of Defense

DoD published Class Deviation 2021-O0009 on September 30 to provide direction to DoD contracting officers on the incorporation of new DFARS clause, DFARS 252.223-7999, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (Deviation 2021-O0009). The DFARS deviation clause is materially the same as the clause at FAR 52.223-99 and also tracks the provisions of the EO and the current Task Force Guidance. The DoD memorandum also notes that the deviation is effective immediately and must be inserted into certain prescribed DoD contracts. Contractors performing DoD contracts should be aware of two key issues raised in the memo:

  • Contracts for Supply and Manufactured Products. The DoD class deviation encourages contracting officers to include the clause in agreements not otherwise expressly covered by the EO (with the notable exception of leasehold interests in real property, which were included in the EO), including “solicitations, contracts, task orders, and delivery orders that are valued at or below the SAT and are for services (including construction) performed in whole or in part within the United States and its outlying areas” and “[s]olicitations, contracts, task orders, and delivery orders for the manufacturing of products.”
  • Bilateral Modifications. The DoD class deviation requires contracting officers to use bilateral modifications to incorporate the DFARS deviation clause into existing contracts, task orders, and delivery orders. The FAR Council’s memo is silent on the manner in which the FAR deviation clause should be included in existing contracts.
General Services Administration

GSA published Class Deviation CD-2021-13 on September 30 to provide direction to GSA contracting officers on how to incorporate the new FAR deviation clause. While the GSA class deviation generally tracks the provisions of the EO and the Task Force Guidance provided thus far, it offers additional guidance for different contract types as well as GSA-specific instructions. Key issues raised in the GSA class deviation include:

  • Contracts for Supply and Manufactured Products.TheGSA class deviation strongly encourages contracting officers to include the FAR deviation clause in all other contracts and subcontracts, including those under the SAT and for supplies. The class deviation includesspecificguidanceregardingGSA Federal Supply Schedules (FSS), Blanket Purchase Agreements (BPA),Multi-Agency Contracts (MAC), Government-Wide Acquisition Contracts (GWAC), Agency-specific Indefinite Delivery Vehicles (IDV), and Indefinite Delivery Indefinite Quantity (IDIQ) contracts:
    • For FSSs and BPAs, GSA is requiring the FAR deviation clause’s inclusion, even in supply contracts.
    • For GWACs, MACs, and IDV/IDIQ contracts, GSA is requiring inclusion of the FAR deviation clause in contracts solely for supplies, except in a few limited contract types (e.g., non-FSS automotive), where it will only be strongly encouraged.
  • Open Solicitations and Contract Awards. GSA’s class deviation requires contracting officers to either amend open solicitations to incorporate the clause or incorporate the clause into contract awards of the apparent successful offeror in open solicitations issued prior to October 15, 2021 (i.e., in solicitations that have not been closed yet), as well as contract awards that have not been finalized by October 15, 2021.
  • Modifications to Existing Contracts. Contracting officers are required to send a cover letter and modification request to contractors in order to add the clause to existing contracts in accordance with the following:
    • Contract modifications to incorporate the clause must be bilateral.
    • Contracting officers are required to use the template cover letter that is provided in the class deviations at Attachment B, Sample Cover Letter. Of particular note, the template cover letter states for existing contracts that “GSA strongly encourages you to accept this contract modification at this time.” This statement seems to be in contrast with other parts of the template cover letter which indicates that the modification is mandatory, such as for renewals, extensions, and option exercises.
    • November 14, 2021 is the deadline by when contracting officers “shall complete as many modifications as possible.”
    • For IDIQ contracts, contracting officers may take interim actions if a signed modification is not received by November 14, 2021, including “temporarily hiding contractor information to GSA websites and/or e-tools,” and “flagging contractors as not having accepted the modification.”
Additional Contractor and Subcontractor Considerations
  • Given the likelihood that compliance with the Task Force Guidance will require contractors to incur additional costs, contractors and subcontractors should monitor and record expenses directly related to compliance with the Task Force Guidance. The FAR Council may provide guidance on contract price adjustments related to compliance, but barring such guidance, contractors should review their options for recovery of additional incurred costs related to compliance. To protect the ability to recover those costs, contractors and subcontractors should document carefully the myriad potential costs associated with the inclusion of the deviation(s) and its/their application in order to potentially support future requests for equitable adjustments.
  • Contractors manufacturing or selling products as well as selling bundled products and services to federal customers should examine any contract modifications carefully to determine application of the FAR or agency deviation clause to their contract and any potential grounds to object to its application. In light of the discretion afforded to contracting officers (as well as the inconsistencies between the operative orders, guidance, memoranda, and implementing clauses), there should be opportunities to address specific issues or concerns before the contract deviation clauses are formally included.
  • While the FAR class deviation largely follows the EO’s guidance regarding subcontracts, it remains unclear at what point a mixed contract for supplies and services would be considered a contract for services. As a result, subcontractors likely will be subject to prime contractor interpretations of the Task Force Guidance and its application to subcontractors. Accordingly, subcontractors should engage with their prime contractors to understand and possibly negotiate the application of the FAR or agency deviation clause to the subcontract.
  • Prime contractors and subcontractors should review the FAR Council’s memo to understand the impact of the FAR deviation clause on their contracts and their respective obligations to comply. Prime contractors should be prepared to flow down clauses expeditiously when and where required so as not to impact both the subcontractor’s and their own compliance with the regulations. Similarly, subcontractors should prepare to comply with their obligations or, if a product provider or manufacturer, seek clarification as to the applicability of the deviation at issue.
Conclusion

Any government contractor or subcontractor that potentially must comply with the requirements in the EO, Task Force Guidance, and new agency class deviations should be aware of when and how the required contract clauses will affect their contracts. Such actions include monitoring the continued guidance as updated by the Safer Federal Workforce Task Force and carefully assessing the appropriateness of agency efforts to include implementing clauses. Contractors and subcontractors should consider developing written guidance on how to respond to these vaccine requirements, carefully documenting any potential costs associated with mandated compliance in order to potentially support future requests for equitable adjustment, and providing clear guidance to impacted employees.

FOR MORE INFORMATION

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Jessica V. Haire
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Tom Mason
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Joseph R. Berger
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