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Services contractors are wondering just what their options are now that the Biden administration has lost an appeal of a federal court ruling. The ruling upheld an injunction against contractor vaccine mandates. But the same three-judge panel also said the injunction should not be national. Now companies are wondering whether every contracting officer will have read the confusingly written advice from the White House.  The Federal Drive with Tom Temin  gets more now from the president and CEO of the Professional Services Council, David Berteau.

Interview transcript:

Tom Temin: David, this one really is a head scratcher. What is the council’s take on what happened?

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David Berteau: Well, Tom, we go back to ground zero here. And that was the executive order 14042 that was issued last year that required federal contractors to get vaccines. There was a lot of procedure around that. The implementation of that had been stretched out for some time and ultimately was enjoined not only by the Southern District Court of Georgia but  by a host of other court cases that have injunctions that are limited in their scope. The big injunction, though, was nationwide, as you point out, and a couple of Fridays ago, the 11th circuit court issued an opinion that says it shouldn’t have been nationwide. It should only be applied to the seven states that were in that case, and the one trade association in that case. Now, application in this case is a bit confusing. How do you limit contracts to a state? Well, that has to be sorted out. But more importantly, is the fact that the Federal Acquisition Regulation, the FAR clause that the judge who rules on this taps back into? Not its own language, but language on a website for the safer federal workforce task force. It’s pretty rare that an acquisition regulation doesn’t include all that you need in its own words. But in this case, it goes back to a website that is unsigned and gets updated regularly, but not in ways that are predictable or easy to discern by others.

Tom Temin: I guess most people probably don’t remember there is a safer federal workforce task force.

David Berteau: Exactly, especially if you have to try to say it five times fast. But most importantly, there are plenty of contracts where the clause is in that contract now, but not enforceable. Now the workforce put out the task force that’s put out new guidance. That said, it should not be enforced unless agencies tell you otherwise. And now, as far as we know, no agency has told anyone otherwise. So we’re worried about two things here. We’re really worried about three things, I guess. One is the extent and ultimate resolution of the various injunctions, I think there are now 24 of the 50 states have some form of injunction against this task force order. There’s a second concern, which is guidance to contracting officers has not been issued. The task force guidance is on their website, but as far as we know, no agency has sent out notice to contracting officers, please consult the website and do what it says which is don’t enforce the rule. We have asked our members whether or not they have had any inquiries from contracting officers, because of course, not every contracting officer gets up every morning and looks at the task force website. And so we’re worried that to be a contracting officer, say, I read in the newspaper about the injunction being lifted. I mean, I’ve read the whole story, they certainly probably didn’t read the 61-page ruling. And now they might try to enforce that. That rule. There’s a third complication, though, which is a different set of rules governing access to federal facilities, which is not governed by either the taskforce, or the executive order, or the court rulings. And this comes into play. And oftentimes, the guards at the gate are a little confused in terms of which rule they’re enforcing, and with whom.

Tom Temin: Right. I mean, the whole point of a vaccine mandate, I would think, is for people from contractors that are going to a federal agency. Otherwise, who cares if they’re not ever near you.

David Berteau: While there is an issue there, although that’s unclear from the the guidance, whether you can exempt people just by letting them stay home, right, it’s still got to be covered. But the the balance point that we’ve all sought here from the beginning, is you want a healthy workforce, you want to be able to protect your workers. And you know, to the extent vaccines are a part of that regimen, and that’s what you want to support. But you also as a company, you have to have the workforce necessary in order to be able to perform the tasks that you’re contracted for, and to bid and win the next contract. That’s your obligation. That’s the contractual obligation you have. So balancing that is still the number one priority for PSC and our members.

Tom Temin: All right, so the bottom line, is there still some clarification needed from the White House? And if that’s in particular what the 11th court said, we can only we feel that we should only have a ruling upholding the injunction for the seven states that we’re concerned with. It sounds like maybe the Supreme Court would have to rule nationwide.

David Berteau: It may be that it eventually gets to that point. We haven’t seen it in writing except from reporters, but apparently, a  spokesperson for OMB has said that the Justice Department is reviewing the ruling and until they have completed their review, and I think they have 45 days after the issuance of the ruling in order to make a motion back to the court. And then seven days after that before the court has to do anything. So it can be a couple of months here before we see any of this resolved.

Tom Temin: So in the meantime, contractors that have employees on site should just check locally with what is expected of them. And go ahead and do that.

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David Berteau: We’ll certainly from the facility access point of view, it is governed by local conditions. And you know, CDC made this more complicated by it’s not just the caseload, but it’s a couple of hospitalization ratios as well. And I don’t know what algorithm they use to determine low, medium or high. I would note that I checked this morning, and their website hasn’t been updated since August 11. I would hope they would update that. But that’s what governs whether or not you have to have a vaccine when to go into a building.

Tom Temin: Well, maybe we need a good flu season to kind of drown it all out. We’re speaking with David Berteau, president and CEO of the Professional Services Council. And then there’s the ongoing issue of inflation, and whether federal contracts can help out contractors facing inflation as we approach a continuing resolution, which does not mitigate in favor of spending more on existing contracts. So what is new on the inflation front?

David Berteau: You raised three great points. So there are two data points last week, Tom.  One is the jobs report that came out last Friday, indicating continued strength in the job market, not quite as strong as it was in July, but over 300,000 net new jobs created. And we also saw in a continuing trend that has been around for two years now have got roughly 10%, year over year, payroll growth 5% year over year job growth. The difference, of course, is the 5% wage increase that we’ve seen across the board. And this has penetrated government contractors, even to a greater extent than nationwide, because the competition for workforce is so great in the government contracting community, and the costs are much higher. That’s not going down anytime soon, even though we’ve seen an increase in the labor force as well. So it used to be there were like two jobs open for every one person pursuing a job. Now it’s gotten down to where it’s about 1.8 jobs open for every person pursuing the job. That’s still a seller’s market. Right. And we don’t see that going away anytime soon. The second thing is that the President announced that he would be seeking a 4.6% pay raise for federal civilians in the FY23 budget. Why? Because their cost of living has gone up so much well, so have the workers for the contractors by an equivalent amount. So what we’re arguing is that that should be accommodated in the FY23 appropriations. But we’re not going to get an appropriations, we’re going to start the year under a continuing resolution, which technically is an appropriation but it’s only a bridge. And so PSC and our fellow associations have been arguing that a CR needs to take this into account. And I’ll explain a little bit why this is different than previous years.

Tom Temin: Yeah, the question is, how can the CR take that into account?

David Berteau: Right, so for almost two decades now, inflation has been so low, that a CR that started with last year’s appropriation level, didn’t have to take inflation into account because there was almost no inflation. But if you go back into the past, when we did have inflation, continuing resolutions were still present. They’ve been with us for most of the time since we passed the budget reform act of 1974, which was supposed to get rid of them. But it didn’t. And what we did in those days is we would not enact a CR at the previous year’s level, we would enact a CR at the lower level of the bills that had already been marked up. So in this case, FY23, the lowest markup is from the House Appropriations Committee. The subcommittee’s marked up to the President’s budget level, not the FY22 level. So one of the things that we’re asking Congress to do is if you have to enact a CR, we’d rather you have a full year appropriation but doesn’t look like it’s going to happen by September 30. So if you have to have a CR, mark it up to the lower level of the already marked up bills, that would incorporate about four and a half percent additional funding, which would go a long way towards covering the cost of inflation.

Tom Temin: So this is a matter really, then of the lobby people more than the business development people at this point.

David Berteau: At this point, that’s what we’re working on is is is we are lobbying Congress to do that. There’s a second element of this though, which is the agencies themselves could issue guidance that would open the door to request for equitable adjustment in existing contracts, subject to available funding. If you have the money in your program, let the company submit, you know, you want the evidence. You want the data, you want the indications of where that cost has actually gone up. You just don’t want an assertion, you want documentation. That’s what an REA, a request for equitable adjustment, would require. But many agencies including the Defense Department, have discouraged rather than encouraged this. Even if funding is available. We’d like to see that change.

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Tom Temin: From your lips to Congress’s ears, I guess. David Berteau is president and CEO of the Professional Services Council.

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