Mandatory Vaccination Coverage Expanded in Practice for All Federal Contractors and Subcontractors

Latest update in series:
Eleventh Circuit Narrows Scope of Contractor Vaccine Mandate Injunction (August 28, 2022)
What’s Next for Employers After the Supreme Court’s Vaccine Rulings? (January 14, 2022)

As McGuireWoods noted in a Sept. 10 alert, Sept. 20 FAQs and Sept. 27, 2021 update, part of the Biden administration’s COVID-19 vaccination mandates applies only to federal contractors and subcontractors. And, even then, the Sept. 9, 2021 Executive Order 14042 (EO) and Sept. 24, 2021 Safer Federal Workforce Task Force Guidance appear to limit coverage to only a subset of such employers.

However, after publication of the Task Force Guidance, the Federal Acquisition Regulatory (FAR) Council and federal agencies have taken an aggressive position in rolling out the vaccination mandate — “encouraging” contracting officers to include the EO clause in all federal contracts beginning Oct. 15, 2021. This includes contracts for goods and contracts below the FAR simplified acquisition threshold.

Where Do the Contractor and Subcontractor Mandates Come From?

Separate from announced (but yet to be published) industry-specific federal rules that will apply to certain healthcare entities, the Biden administration’s COVID-19 employee vaccination mandates have three main component sources that potentially apply to federal contractors and subcontractors:

Federal Site Access Requirement. One involves a “site access” vaccination requirement applicable to contractor employees who physically work on-site at federal facilities or on federal land.
OSHA Requirement. One involves a “vaccinate or test mandate” applicable to companies with 100 or more employees.
Federal Contractor Requirement. One involves a “vaccination mandate” applicable to covered employees of certain federal contractors and subcontractors (which includes employees who do not necessarily work on-site at federal facilities or on federal land).

Rules and timelines for the federal site access vaccination requirement were announced earlier via a January 2021 EO 13991 and Safer Federal Workforce Task Force Agency Model Agency Safety Principles issued in July 2021 and updated on Sept. 13, 2021.

Rules and timelines for the OSHA 100+ employee “vaccination or test” mandate will be set by an OSHA emergency temporary standard that has not yet been issued, as is generally outlined in the White House’s COVID-19 Action Plan.

Rules and timelines for the federal contractor and subcontractor “vaccination mandate” have been issued and are governed by Executive Order 14042, Safer Federal Workforce Task Force Guidance, and FAR Council Instructions.

What Are the Core Requirements of EO 14042 for Covered Contractors and Subcontractors?

The impact of EO 14042 on contractors and subcontractors is that:

Covered employees at contractors and subcontractors must be vaccinated for COVID-19, except in limited circumstances where an employee is legally entitled to an accommodation for disability or religion. Thus, unlike the OSHA emergency temporary standard, there is no “test option” except in circumstances where an accommodation may apply.

Covered employees and visitors at contracting work sites must comply with Task Force Guidance related to masking and physical distancing.

Contractors must designate a person or persons to coordinate COVID-19 safety efforts at covered work sites.

Further, the government is taking a very broad approach to who is a covered employee, asserting that the EO 14042 vaccination requirement applies to all full-time and part-time employees (a) who work “on or in connection with a covered contract,” and (b) who do not personally work “on or in connection with a covered contract” but are likely to come into contact with covered employees at a contractor’s physical workplace.

Covered employees also include individuals who perform tangential services that are “necessary to the performance of the covered contract,” even if not directly engaged in the specific work called for by a contract (e.g., human resources, billing and legal). In addition, per the government, covered employees who must be vaccinated also include remote employees if working virtually on a covered contract — even if they never visit a contractor’s physical work site.

What Does the EO Say About Which Contractors Are Covered?

Per the express terms of EO 14042, federal contractors and subcontractors are affected by the mandatory vaccination requirement only if they have a contract or “contract-like instrument” (1) for services, construction or a leasehold interest in real property; (2) for services covered by the Service Contract Act; (3) for concessions; or (4) 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.

There is no small business (e.g., less than 100 employee) exception to the EO or the Task Force Guidance. However, per the terms of the EO, in theory, supply contracts providing only “goods” and equipment to the federal government (and similar subcontracts to federal prime contractors) are not covered. Further, contracts not covered based on the express terms of the EO include:

Grants.
Indian tribe contracts.
Contracts with a value equal to or less than the FAR simplified acquisition threshold (SAT) (currently $250,000).
Contracts involving employees performing work outside the United States.
Subcontracts solely for the provision of products.

Does EO 14042 Apply to All Contracts for “Services”?

There may be an argument that EO 14042 and the Task Force Guidance limit coverage to service contracts covered by the Service Contract Act (SCA), which generally applies to contracts whose principal purpose is to provide services using Fair Labor Standards Act non-exempt service employees. The SCA also contains some specific statutory exemptions for certain industries.

The text of EO 14042 applies to (among other things) a procurement contract or contract-like instrument for “services” and “a contract or contract-like instrument” for services covered by the SCA. One canon of statutory construction would be to treat these as separate categories because they are expressed that way in the text of the EO. However, this same text structure was used in the latest federal minimum wage executive order for certain covered federal contractor and subcontractors — i.e., EO 14026. Further, the Department of Labor’s proposed regulations implementing EO 14026 collapse the two categories and indicate that only SCA contracts are covered under that order.

This regulatory collapsing of the two “service” categories theoretically provides the basis for an argument that EO 14042 (i.e., the vaccine order) should be interpreted the same way, because EO 14042 and the Task Force Guidance point to the proposed rules for the federal contractor minimum wage for definitions of “contract” or “contract-like instrument.” Thus, one could argue that under EO 14042 contracts covered by the SCA are the only “service” contracts to which the vaccination mandate should apply. In addition, to the extent the issue arises as part of FAR contract negotiations, federal contractors with non-SCA service contracts may want to consider advising contracting officers that the EO 14042 clause should not be included in applicable agreements on the bases described above.

If I Have a Contract Below the SAT, for Goods Only or for Non-SCA Services, Can EO 14042 Still Apply to Me?

Despite the above, the short but unfortunate answer for now is — yes.

First, as to services, it should be noted that although the preamble discussion in the proposed regulations for the federal contractor minimum wage expressly omits coverage for procurement contracts for services other than those covered by the SCA, the Task Force Guidance does not contain any similar discussion. The Task Force Guidance is also silent on how to define “services.” Thus, there remains a risk that service providers may be covered by clauses requiring compliance with the Task Force Guidance if incorporated by reference into federal contracts and subcontracts, even if the providers do not have any contract covered by the SCA.

There is also troublesome language in the Task Force Guidance that expressly “encourages” contracting officers to incorporate the new EO 14042 mandatory vaccination clause in contracts that are not covered by the EO — such as contracts for goods or contracts below the FAR SAT.

“Consistent with applicable law, 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 Simplified Acquisition Threshold as defined in section 2.101 of the FAR or is a contract or subcontract for the manufacturing of products. Agencies 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.”

This same “encouragement” is included in the related FAR Council Instructions issued on Sept. 30, 2021, noting:

“To maximize the goal of getting more people vaccinated and decrease the spread of COVID-19, the Task Force strongly encourages agencies to apply the requirements of its guidance broadly, consistent with applicable law, by including the clause in … contracts that are not covered or directly addressed by the order because the contract or subcontract is under the simplified acquisition threshold or is a contract or subcontract for the manufacturing of products.”

Further, agencies such as the General Services Administration, Department of Defense, NASA, Homeland Security and Veterans Administration have followed suit with their own FAR Clause Deviation instructions to contracting agencies, subagencies and officers.

What’s the Bottom Line?

Unless and until legally challenged, the government’s push to include the EO 14042 vaccination clause in contracts well beyond the EO’s scope means that all federal contractors and subcontractors will need to monitor their new and updated agreements carefully over the next several months to ensure that FAR clause 52.223-99 regarding mandatory vaccinations is not included in new solicitations or contract updates — as required, or simply as a matter of alleged contracting agency discretion.

Where Can I Learn More?

For questions about the federal contractor mandatory vaccination requirements or their coverage scope, or if you need assistance in FAR and other negotiations with contracting agencies or prime contractors, please contact the authors of this article, your McGuireWoods contact, or a member of the firm’s labor and employment, affirmative action, federal contracting or COVID-19 response teams.

McGuireWoods has published additional thought leadership analyzing how companies across industries can address crucial business and legal issues related to COVID-19.