Update on Federal Contractor and Subcontractor Vaccine Mandate

Government Contracts Update

Date: February 17, 2022

Key Notes:

  • President Biden’s Executive Order 14042 directs federal agencies to require certain federal contractors and subcontractors to implement COVID-19 workplace safety measures, including a vaccine mandate with no testing option.
  • The federal contractor vaccine mandate and its implementing clause have resulted in six preliminary injunctions blocking enforcement of the executive order in whole or in part.
  • The Safer Federal Workforce Task Force has updated its website to reflect that the government will take no action to enforce the contract clause enforcing the executive order.

Despite recent decisions by the U.S. Supreme Court on COVID-19 vaccine mandates for large employers and health care facilities, there are still questions about the future of Executive Order (EO) 14042, issued by President Biden in early September 2021, which requires federal contractors to adhere to specified COVID-19 prevention measures, including employee vaccinations and workplace safety measures. The Safer Federal Workforce Task Force (“Task Force”) issued guidance in late September 2021 (“Task Force Guidance”) implementing the EO, which has been frequently updated in the following months.

Following issuance of the Task Force Guidance, several states brought legal challenges against the EO and the Task Force Guidance in federal district courts across the country. At present, six federal district courts have issued injunctions against enforcement of the EO and the Task Force Guidance. While the underlying legal challenges remain pending before the federal district courts and courts of appeals, the court injunctions have stopped enforcement of the EO and Task Force Guidance, including the contractor employee vaccine mandate.

EO and Task Force Guidance Preliminary Injunctions

The injunctions issued by the six federal district courts are not uniform and apply to different states, different elements of the EO and Task Force Guidance, and different contracting parties (states and federal contractors and subcontractors). Significantly, while the injunction issued by the Georgia federal district court applies on a nationwide basis, the court recently clarified that the injunction is limited to enforcement of the employee vaccine mandate. It therefore is important for contractors to understand the reach and scope of each of the six court injunctions.

All six preliminary injunctions are summarized below, including the scope of each injunction and its current status.

  1. Kentucky Order (E.D. Ky. & 6th Circuit): The injunction applies to all covered contracts in Kentucky, Ohio, and Tennessee, and explicitly enjoins the federal government from enforcing the vaccine mandate for federal contractors and subcontractors. The injunction did not explicitly address the other provisions of the Task Force Guidance, which include masking, physical distancing, travel, quarantine, and other workplace safety provisions (including the requirement that federal contractors and subcontractors covered by EO 14042 designate a coordinator to oversee compliance with these requirements). The injunction is currently on appeal to the 6th Circuit.
  2. Georgia Order (S.D. Ga. & 11th Circuit): The injunction applies on a nationwide basis. On January 21, 2022, the court issued an order explaining that the injunction applies only to the vaccine mandate. The injunction is currently on appeal to the 11th Circuit, with oral arguments scheduled for early April 2022.
  3. Louisiana Order (W.D. La.): The injunction applies to all contracts, grants, and other agreements between the federal government and the plaintiff states (Louisiana, Mississippi, and Indiana), and expressly does not reach contracts with private contractors. The injunction enjoins the Task Force Guidance and the Federal Acquisition Regulatory (FAR) Council’s September 30, 2021 Memo, which would include both the vaccine mandate and the non-vaccine requirements (i.e., the workplace safety protocols).
  4. Missouri Order (E.D. Mo.): The injunction applies to all covered contracts in Missouri, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, and Wyoming. The injunction enjoins the vaccine mandate for federal contractors and subcontractors performing contracts in each of these states and does not address the non-vaccine requirements (i.e., workplace safety protocol requirements).
  5. Florida Order (M.D. Fla.): The injunction applies to all covered contracts in Florida. Additionally, the injunction enjoins all aspects of the Task Force Guidance (both the vaccine mandate and masking/physical distancing requirements) “within Florida.”
  6. Arizona Order (D. Ariz.): The court on January 27th issued an order granting the plaintiffs’ motion for preliminary injunction with respect to the EO’s contractor employee vaccine mandate, and directed the parties to submit additional briefing focused on the individuals and entities that are enjoined, the capacity in which they are enjoined and the precise activities in which they are enjoined from engaging.

Bottom line – While the Georgia federal court injunction has halted enforcement of the employee vaccine mandate on a nationwide basis, the court has clarified that the injunction does not impact the remainder of the EO and Task Force Guidance with respect to workplace safety. As discussed in more detail below, the Task Force has updated its guidance to address the Georgia and other federal court injunctions, precluding the government from enforcing the contract clause that implements the EO and Task Force Guidance. However, as these legal challenges evolve in the courts, the impact of these injunctions and the government’s suspension of enforcement of the EO may change.

Vaccine Mandate Enforcement Update

In response to the court injunctions, the Task Force has updated the guidance on its website with respect to enforcement of the EO. The Task Force’s current guidance states that “[t]he Government will take no action to enforce the clause implementing requirements of Executive Order 14042, absent further written notice from the agency, where the place of performance identified in the contract is a U.S. state or outlying area subject to a court order prohibiting the application of requirements pursuant to the Executive Order.” As of this alert’s publication, the Task Force’s website continues to list all 50 states, the District of Columbia, and all outlying territories as excluded from enforcement of the EO.

The General Services Administration (GSA) similarly has announced that its contracting officers shall not take any action to enforce the vaccine requirements in FAR 52.223-99, Ensuring Adequate COVID‑19 Safety Protocols for Federal Contractors, in any contract or contract-like instrument. GSA’s website states: “Contractor and subcontractor employees do not have to meet the vaccination mandate in the Safer Federal Workforce Task Force Guidance.” In addition, contractors will continue to be eligible for new contracts, new orders, options, and extensions even if they have not agreed to follow FAR 52.223-99.

The Department of Defense (DoD) also issued a memorandum stating that its contracting officers shall not enforce Defense Federal Acquisition Regulation Supplement (DFARS) 252.223-7999, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors. DoD instructed its contracting officers not to include the DFARS clause in existing contracts, task orders, and delivery orders. In addition, the memo directs that DoD contracting officers shall not include the class deviation clause in new contracts or orders and must not amend existing contracts or orders to incorporate the clause.

The Office of Management and Budget (OMB) has issued similar guidance, stating that for existing contracts implementing the requirements of EO 14042, agencies must notify contractors of the new Task Force Guidance providing that the government shall take no action to enforce implementation of the clause subject to court orders. For existing contracts that do not contain a COVID safety protocols clause, agencies still may move forward with issuing bilateral modifications when exercising an option, issuing a new order under the contract, or extending the term of the contract, and must inform the contractor of the government’s enforcement position when requesting that a contractor agree to the addition of the clause. With regard to solicitations for new orders to be issued under existing indefinite delivery/indefinite quantity (IDIQ) contracts that do not contain a clause implementing requirements of EO 14042, the agency must include the clause and a provision summarizing the government’s enforcement position. OMB’s guidance makes clear that apart from application of requirements pursuant to EO 14042, there are no changes to the Task Force’s Guidance for COVID-19 workplace safety protocols for federal agencies. Workplace safety protocols still apply to federal buildings and federally controlled facilities, and contractor employees working onsite in those locations must still comply with those rules.

The CMS Mandate and Federal Contractors, Subcontractors, and Suppliers

In November 2021, the Secretary of Health and Human Services announced that, in order to receive federal Medicare and Medicaid funding, participating facilities must ensure that their staff are vaccinated against COVID-19, barring any applicable medical or religious exemption. As discussed in our firm’s previous client alert, on January 13, 2022, the U.S. Supreme Court granted an emergency request for relief regarding one of the two Biden administration COVID-19 employee vaccine mandates on appeal before the court:

  • Halted – The Occupational Safety and Health Administration’s (OSHA) COVID-19 Vaccine and Testing Emergency Temporary Standard (ETS), which requires employers with 100 or more employees to mandate COVID-19 vaccination for covered employees or to test unvaccinated employees weekly.
  • Not Halted – The Centers for Medicare & Medicaid Services’ (CMS) interim final rule, which requires mandatory COVID-19 vaccination for health care workers at certain CMS-covered facilities (i.e., with no testing option, except for approved accommodations).
  • Specifically, the Supreme Court stayed prior lower court orders granted a preliminary injunction of the CMS interim rule pending disposition of the government’s appeal.

The practical implication of the Supreme Court rulings in National Federation of Independent Business v. Department of Labor and Biden v. Missouri is that:

  • Federal implementation of the ETS was effectively suspended, thereby relieving employers from moving forward with the written policy and other deadlines effective January 10 and February 9, 2022, for the ETS. OSHA subsequently withdrew the ETS to the extent it served as a temporary directive, but has left the door open to roll out a new regulatory mandate in the future through the formal rulemaking process.
  • Federal implementation of the CMS interim rule remains active/ongoing in all 50 states plus U.S. territories, with January 27 and February 28, 2022 deadlines for Phase 1 and Phase 2 implementation.

Although the federal contractor and subcontractor mandate was not before the Supreme Court in the decisions discussed above, those decisions do have some important repercussions for federal contractors, subcontractors, and suppliers. First, matters are simpler for contractors, subcontractors, and suppliers concerned about overlapping coverage under the contractor mandate and OSHA’s mandate. With both stayed or revoked, they are covered by neither for the time being.

Second, subject to any conflicting state legal considerations, contractors, subcontractors, and suppliers that are also Medicare- or Medicaid-certified health care providers or suppliers, including hospitals, long-term care facilities, nursing homes and others, need to move quickly to come into compliance if they had delayed due to an injunction previously in effect in part of the United States. It is important to note that any organization covered by the health care mandate remains covered by the health care mandate, regardless of any other mandates.

Bottom line – Covered facilities must act quickly to: (1) determine whether the CMS vaccine mandate applies to their facilities and workforce; (2) review and modify existing infection prevention and control policies and procedures to ensure compliance with the new vaccination and documentation requirements; and (3) process exemption requests and ensure staff vaccinations are consistent with the January, February, and March deadlines.

Best-Practice Recommendations

While the challenges to the federal contractor and subcontractor vaccine mandate continue to make their way through the courts, contractors and subcontractors should consider taking the following steps in the interim to best prepare themselves for possible outcomes of the litigations:

  • Contractors with contracts or subcontracts that mandate employee vaccinations should review those agreements and determine whether they are subject to the enjoined EO or were voluntary agreements between the parties (i.e., higher-tier federal contractor and its subcontractors).
  • Contractors should understand whether their customers have implemented location- or program-specific COVID-19 requirements, including vaccine mandates, that would apply to their contracts or subcontracts.
  • Monitor federal, state, and municipal COVID-19 vaccine requirements and safety protocols to determine relevant workforce and facility mandates applicable to employees in all jurisdictions. This includes tracking the status of legal challenges to determine the scope and validity of requirements and required contractual actions.
  • Implement safety protocols for federal covered contractor workplaces, including masking and physical distancing requirements, set forth in the Task Force’s guidance on its website. The Georgia and Kentucky court injunctions address the vaccine mandate, not other precautions required by the Task Force Guidance, which remain valid.
Conclusion

As the various legal challenges to Executive Order 14042 continue through the courts, contractors, subcontractors, and suppliers should monitor the status of the various court injunctions and their impact on federal contractor compliance obligations under the EO and Task Force Guidance. It also is critical that they understand whether they hold a contract or subcontract subject to program- or customer-specific requirements that fall outside the scope of the court injunctions.

FOR MORE INFORMATION

Thompson Hine’s Government Contracts group will continue to monitor developments relevant to these legal challenges and is available to discuss the specific impacts on contractors. For more information, please contact:

Francis E. (Chip) Purcell, Jr.
202.263.4118
Chip.Purcell@ThompsonHine.com

Tom Mason
202.263.4168
Thomas.Mason@ThompsonHine.com

Jessica V. Haire
202.973.2778
Jessica.Haire@ThompsonHine.com

Ryan S. Spiegel
202.973.2742
Ryan.Spiegel@ThompsonHine.com

Joseph R. Berger
202.263.4193
Joseph.Berger@ThompsonHine.com

Mona Adabi
202.263.4147
Mona.Adabi@ThompsonHine.com

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