Four memoranda, released in the last several business days, provide federal contracting officers guidance and suggested clauses to implement President Biden’s Executive Order 14042 (the Executive Order) in federal contracts imposing mandatory vaccination and workplace safety protocols for covered federal contractors and their employees as early as October 15, 2021. Issued by the Federal Acquisition Regulatory Council (FAR Council) (the FAR Council Memo), the Civilian Agency Acquisition Council (CAAC) (the CAAC Memo), the Principal Director, Defense Pricing and Contracting for the Department of Defense (DoD) (the DoD Memo), and the General Services Administration’s Senior Procurement Executive (the GSA Memo) (which we will be discussing in a separate posting), the memoranda move quickly to provide all procuring activities the necessary tools to ensure that by October 8, all solicitations and contract subject to the Executive Order adhere to its mandates and the evolving guidance issued by the Safer Federal Workforce Task Force (issued September 24) (Task Force Guidance). For those unfamiliar with the Executive Order and the resulting Task Force Guidance, please feel free to review our prior discussions of those issues here and here.
The DoD and GSA Memos implement two clauses addressed in the four memos, including FAR 52.223-99 ENSURING ADEQUATE COVID-19 SAFETY PROTOCOLS FOR FEDERAL CONTRACTORS (OCT 2021) (DEVIATION) (FAR Clause) and, for defense contracts, DFARS 252.223-7999 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (Deviation 2021-O0009) (OCT 2021) (DFARS Clause). Apart from some of the subtle nuances described below, the two clauses are generally similar, with key differences being that civilian agencies are expressly instructed not to change the text of the clause when issuing their deviations without prior approval of the CAAC Chair. The DoD Memo notes that the deviation is effective immediately and must be inserted in certain prescribed DoD contracts.
Some of the more notable implications for federal contractors are as follows:
- Unfortunately, the clauses simply adopt the exceedingly broad and somewhat ambiguous Task Force Guidance and instruct contractors to comply. Contractors that find themselves with a new contract or existing contract now modified by the FAR Clause or the DFARS Clause must look to and understand the requirements of the evolving Task Force Guidance, inclusive of Frequently Asked Questions, so as not to be in breach of contract.
- Confusion remains around contracts and subcontracts for products, the manufacturing of products, and the provision of products and services. All of the memoranda state flatly that the clause applies to “solicitations for contracts for services, including construction,” and both the FAR Clause and the DFARS Clause limit the flow-down obligation to subcontracts “for services, including construction.” However, none of the memoranda clarify the inconsistencies between the Executive Order, which expressly excludes “subcontracts solely for the provision of products,” and the internally inconsistent Task Force Guidance suggesting exemptions for (a) “a contract or subcontract for the manufacturing of products”; (b) “subcontracts for the provision of products”; and (c) the flow down of the clause “to the point at which subcontract requirements are solely for the provision of products.” Notwithstanding these purportedly excluded categories of contracts, the Task Force Guidance “strongly encourages” agencies to incorporate the clause in all such contracts regardless.
- For DoD contracts, the DoD Memo requires the immediate insertion of the clause in indefinite-delivery, indefinite-quantity contracts (IDIQ Contracts) which anticipate task orders above the simplified acquisition threshold (SAT) and have an ordering period beyond October 15. While task orders under IDIQ contracts were not specifically mentioned in the Task Force Guidance, they are specifically included in the DoD Memo.
- For DoD contracts, the DoD Memo permits the DFARS Clause to be included in contracts, task orders, or delivery orders (1) which currently exist or are awarded prior to November 14; (2) are below the SAT; or (3) are for “the manufacturing of products.” For modification of existing agreements, the agreement must be mutual. The Task Force Guidance “strongly encourages” agencies to include the requirements in existing and so-called excluded contracts. The DoD Memo leaves it to the discretion of the individual contracting officer and requires bilateral modification of existing agreements.
- For FAR-based contracts with civilian agencies, each agency may choose to issue its own deviation (due by October 8). Both the CAAC Memo and the FAR Council Memo provide that if an agency wants to stray from the language of the proposed clause, it “must consult with the CAAC Chair, William Clark, who will consult with OMB and the Task Force to ensure consistency with Administration policy. Any such request must be emailed to firstname.lastname@example.org.” However, it is still within the discretion of each of the civilian agencies as to whether and how it will accept the “strong encouragement” in the Task Force Guidance to include the requirements in existing and excluded contracts.
Preparation and Response
Contractors have been enlisted to assist with increasing the vaccination rate of the American population. Although exclusions and exceptions exist, they are intended to be rarely applied. Thus, contractors need to walk fine lines when approaching compliance with these quickly drafted and swiftly issued regulations:
- For medical or religious exemptions of covered employees, make sure to coordinate with human resources and labor and employment counsel to ensure robust compliance with all of the laws that such inquiries raise. Further, make sure that such efforts and offered accommodations are properly and consistently documented to limit both audit risk stemming from enforcement activities and litigation risk originating from irate and/or fired (former) employees.
- Contractors manufacturing products, providing products, and/or selling bundled products and services to federal customers will want to examine their contract modifications carefully to gauge the appropriate next steps. In light of the discretion afforded contracting officers and the inconsistencies between the operative orders, guidance, memoranda, and implementing clauses, there should be opportunities to address specific issues or concerns related to the inclusion of the clause.
- Attempt to capture and categorize, to the greatest extent possible, any additional costs or delays directly associated with the inclusion of the deviation(s) and its/their application. These are not costs or burdens that should be born solely by contractors, but proper documentation will be key to successfully recovering costs and/or obtaining relief from any delays.
- Coordinate with your subcontractors and/or primes to better understand the obligations directed or demanded. Efforts should be made to quickly flow down clauses when and where required so as not to impact subcontractor compliance with the regulations. Similarly, subcontractors should not hesitate in complying with their obligations or, if a product provider or manufacturer, seeking clarification as to the applicability of the deviation.