For contractors, guidance on ever-evolving federal vaccine mandate makes compliance difficult

Update: The Biden administration on Thursday extended the deadline for federal contractors to comply with the vaccine mandate, a day after this story was initially posted. Contractors now have until Jan. 4, the same deadline that private sector companies have under new requirements from the Occupational Safety and Health Administration. 

This story was updated on Thursday, Nov. 4, 2021 at 9:10 a.m. to reflect the new deadline. 

Federal contractors now have two months to comply for their employees to comply with the president’s recent executive order requiring COVID-19 vaccines.

So far, government vendors and other stakeholders have reacted to the federal vaccine mandate in a variety of ways.

Some states have sued.

Republicans on the House Oversight and Reform Committee are looking for more information. They wrote to the Defense Department, General Services Administration and Office of Management and Budget on Wednesday seeking a variety of documents that explain the administration’s decision making process for the mandate.

Government contracts attorneys and professional services organizations say many of their clients are complying with the federal vaccine mandate, or at least they’re trying to.

“This is one of the biggest compliance mountains for companies to climb since I’ve been practicing law for more than 20 years,” said Eric Crusius, a partner at Holland and Knight. “It’s a really significant regulation. Contractors are in a little bit of bind because they don’t have a lot of time to institute compliance programs to make sure they’re compliant with it.”

So far nearly 20 states have sued the Biden administration over the federal vaccine mandate for contractors.

Attorneys general from Alaska, Arkansas, Iowa, Missouri, Montana, Nebraska, New Hampshire, North Dakota, South Dakota and Wyoming signed on to one lawsuit, which they filed in a federal district court in Missouri.

Another group, which includes Georgia, Alabama, Idaho, Kansas, South Carolina, Utah and West Virginia, filed a lawsuit in federal district court in Georgia.

Texas and Florida each filed their own lawsuits individually.

The lawsuits lodge a wide variety of challenges, including constitutional and state rights arguments, along with allegations that the administration’s approach violates federal procurement law.

Florida is seeking a preliminary injunction from the federal vaccine mandate, which they filed in federal district court Tuesday.

Plaintiffs in the Missouri case made a total of 12 arguments. They challenge the president’s authority under the Federal Property and Administrative Services Act to regulate procurement in this particular way.

“The statute was enacted broadly to provide ‘economic and an efficient system of procurement and supply.’ The courts, if you look back on this, really read that as a broad authority,” said Justin Chiarodo, a partner in Blank Rome’s government contracts practice.

The Missouri plaintiffs also say the government violated other procurement policy laws, including the Administrative Procedure Act, because it didn’t give stakeholders a notice-and-comment period to engage with the new guidance. In addition, they argue the Office of Management and Budget failed to consider the costs of implementing the federal vaccine mandate, and they believe the policy won’t promote economical or efficient procurement within government.

The plaintiffs believe employees will leave their employers over the federal vaccine mandate, making government contracting less efficient.

“This is a once in a generation pandemic that has taken the lives of more than 700,000 Americans, and the president has committed to pulling every lever possible to save lives and stop the spread of the virus,” an OMB spokesman said in an email to Federal News Network. “Vaccine requirements work: they’re good for workers, good for the economy and good for the country. The president has authority to promote efficiency in federal contracting in this way. The Department of Justice and Equal Employment Opportunity Commission have already determined that COVID vaccines can be mandated by employers.”

Crusius said issuing class deviations to temporarily avoid typical rulemaking procedures, as the Biden administration is doing to implement this particular vaccine policy, isn’t new.

“It’s unusual that a class deviation would be so dramatic, as far as changing federal policy so substantially,” he said. “That’s certainly an unusual part of this class deviation. It’s impacting contractors more than a class deviation would normally impact contractors. That could be a potential argument that plaintiffs bring to the table when arguing against the class deviation method of instituting this policy. As a whole, the executive branch has the right to police itself and figure how who it wants to do business with and how, as long as there’s not a discriminatory basis for it. It has a right to institute regulations on contractors who want to do business with the federal government. Doing business with the government is not a right; it’s a privilege.”

Overall, government contracts attorneys aren’t convinced the lawsuits will ultimately do much to sway the outcome with the federal vaccine mandate for contractors.

“I wouldn’t be surprised with the various lawsuits being filed around the country if one or two judges does issue some sort of injunction in the next week or two,” Crusius said. “But I think in the end, the efforts to strike down the regulation itself will be unsuccessful when the case goes forward to its conclusion and all the appeals are finalized and filed and decided.”

A ‘dynamic FAR clause’ poses challenges for contractors

What is certainly different, however, is the method the administration is using to implement these new contract requirements. Multiple attorneys say plaintiffs may be able to successfully challenge the administration’s methods for issuing guidance on the new federal vaccine mandate.

Under the executive order, agencies are supposed to embed recently-issued deviation clauses from the Federal Acquisition Council into federal contracts and “contract-like instruments,” such as other transaction agreements.

Those clauses essentially require contractors to follow guidance from the Safer Federal Workforce Task Force. But that guidance changes and evolves frequently, often on a weekly basis. The task force has made numerous updates to its frequently asked questions page for contractors.

“I would say it is a cause for concern when you have a clause that refers back to a website that can change at any time,” Stephanie Kostro, executive vice president for policy at the Professional Services Council, said Tuesday in an interview on the Federal Drive with Tom Temin. “When you’re a contractor dealing with your government counterpart, and talking about what are the requirements for that contracting officer from the government to say, ‘Well, just check out this website and see what’s new and updated.'”

On Monday alone, the task force said contractors must make a “good faith” effort to comply with the federal vaccine mandate, and it clarified companies don’t have to resolve all pending requests for medical or religious accommodations from their employees before starting work on a covered contract or at a covered workplace.

It said employees working for an affiliate company of a federal contractor are also covered under the administration’s federal vaccine mandate, even if the affiliate company doesn’t have a covered contract.

Attorneys say contractors could reasonably argue the ever-changing nature of the guidance places an undue burden on them, particularly as they try to comply with the vaccine requirements.

“The requirements that the contractors sign up for can change at a moment’s notice,” Crusius said. “Contractors will have to show an injury that a new standard’s being enforced against them that they didn’t sign up for.”

Ryan Roberts, a partner in Sheppard Mullin’s government contracts, investigations and international trade practice, said he too believes plaintiffs could potentially make a strong argument about the use of the Safer Federal Workforce Task Force website and FAQs as a “dynamic FAR clause.”

That approach, he said, is new to the federal contracting community.

Recent guidance may offer more flexibility to federal contractors

Monday’s guidance from the administration, however, may ease those concerns slightly. Chiarodo said it may provide contractors, perhaps deliberately, more flexibility in complying with the mandate.

“The new FAQs provide clarification that contractors will not face termination if they have a vaccination requirement in place and are working to bring their workforce into compliance, but still have some covered contractor employees who are not fully vaccinated, and do not have a pending or approved exception, as of the deadline,” the OMB spokesperson said.

Beyond urging contractors to make a “good faith” effort to comply with the federal vaccine mandate, the task force also suggested contractors evaluate the three-step process the administration is planning to use to enforce and discipline federal employees who fail to become fully vaccinated by the upcoming deadline.

That process doesn’t contemplate immediately firing an employee who isn’t fully vaccinated but instead suggests providing “counseling” and a brief, unpaid suspension to those who aren’t complying with the federal vaccine mandate.

“It’s a bit of executive action on the move, reacting to the feedback that’s coming out from the contractor community, contracting officers and federal agencies,” Chiarodo said. “But it is the kind of development that may dull the argument that this is in fact going to impact workers, it’s going to impact the minority or economically disadvantaged communities or lead to greater unemployment. These kinds of actions would theoretically give good responses to some of those points.”

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