United States: COVID-19 Vaccine Requirements For U.S. Government Contractors

Timing of Implementation

The new Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors ("Executive Order") went into effect immediately, but its impact will not be felt by contractors for at least a few weeks.  Initially, the Safer Federal Workforce Task Force has been directed to issue guidelines by September 24, 2021 that will define the scope of required COVID-19 safeguards, as well as any exceptions.  The Administration has indicated that a vaccine mandate will be included in the guidelines.  However, other workplace requirements relating to masks, tests, and sanitation could be included as well.  Once issued, The Director of the Office of Management and Budget will need to determine that the guidelines are appropriate and publish this determination in the Federal Register.

In parallel, the Federal Acquisition Regulatory ("FAR") Council has until October 8, 2021 to issue a contract clause that will be included in covered solicitations and contract actions (including new contract awards, contract extensions, and option exercises) beginning on October 15, 2021, or any later dated selected by the FAR Council.  The Executive Order does not directly impose requirements on existing contracts already in effect on September 9, 2021, or entered into prior to the effective date of the new clause, but does "strongly encourage" executive agencies to ensure that COVID-19 safeguards required by the new clause are applied in such contracts.

Past experience with similar policy-based clauses suggests that many agencies may push contractors to accept modifications that would include the clause in existing contracts even if not technically required by the Executive Order or subsequent guidance.  Contractors may also be required to implement related COVID-19 safeguards under new labor, Medicare and Medicaid, or on-site contractor requirements as discussed below.

Scope of Covered Solicitations and Contracts

The Executive Order applies to a broad range of solicitations, contracts, and "contract-like" instruments, but ambiguity remains as to whether it will extend to prime contracts that are primarily for products.  The Executive Order also indicates that it likely will apply only to specific work locations at which employees are "working on or in connection with" a covered agreement.

In defining the scope of covered instruments, the Executive Order adopts a definition from a recent proposed rule for a federal contractor minimum wage that broadly defines a covered "contract-like" instrument as "an agreement between two or more parties creating obligations that are enforceable or otherwise recognizable at law."  The proposed rule notes that this definition would cover:

all contracts and any subcontracts of any tier thereunder, whether negotiated or advertised, including procurement actions, lease agreements, cooperative agreements, provider agreements, intergovernmental service agreements, service agreements, licenses, permits, or any other type of agreement, regardless of nomenclature, type, or particular form, and whether entered into verbally or in writing.

The Executive Order, therefore, would clearly extend to procurement contracts, other transaction authority agreements, and leases.  However, because the Executive Order only applies to particular types of work and is subject to various exceptions, it likely will not apply to other forms of agreements covered by the definition in the proposed rule, such as grants, intellectual property licenses, and cooperative research and development agreements, unless expressly extended by the FAR Council or individual agencies to cover such agreements.

Importantly, although the Executive Order covers a wide range of instruments, it only applies when a covered instrument is:

1. for services, construction, or a leasehold interest in real property;
2. covered by the Service Contract Labor Standards statute (i.e., the Service Contract Act); or
3. a concession contract or related to federal lands and offering services for federal employees, their dependents, or the general public.

The Executive Order expressly excludes grants (without specifically excluding related cooperative agreements) in addition to agreements with Indian tribes under the Indian Self-Determination and Education Assistance Act.  Moreover, the Executive Order excludes contracts valued at or below the simplified acquisition threshold, which is currently $250,000.  Employees performing work outside the United States and its outlying areas are also not covered by the Executive Order's requirements.  Once covered contractors receive a contract with the new clause, they will need to flow down the Executive Order's requirements to their subcontractors, unless they are subject to an exemption.

The Executive Order expressly excludes subcontracts that "are solely for the provision of products."  However, as noted above, there is an open question as to whether the Executive Order intends also to exclude prime contracts that primarily require the contractor to provide products to the U.S. Government.  A contract to provide products would generally not fall into any of the covered categories enumerated in the Executive Order, which are listed above.  It is critical that the FAR Council address this issue in the implementation process, as it affect a large number of contractors that solely provide products to the U.S. Government.

Other Vaccination Requirements

In tracking implementation of the Executive Order, contractors should keep in mind that they separately also may be subject to COVID-19 safeguard requirements through a parallel rulemaking process that has been announced by the Occupational Safety and Health Administration ("OSHA").  If fully implemented without being successfully challenged, this process is expected to result in a requirement that employers with 100 or more employees mandate that their workforce be fully vaccinated or, at minimum, provide proof of negative test results on a weekly basis.  Contractors are also expected to need to offer employees paid time off for vaccination and recovery.  OSHA currently is developing an emergency rule mandating implementation of these requirements in advance of issuance of a final rule.  Similar requirements are expected to be implemented by the Centers for Medicare & Medicaid Services with respect to workers in healthcare settings employed by organizations that receive Medicare or Medicaid reimbursement.

As a result of these parallel processes, contractors that are ultimately not covered by the federal contractor Executive Order may still need to implement similar requirements under OSHA or Medicare and Medicaid mandates.  In addition, contractors that are subject to the Executive Order may need to navigate overlapping requirements in each of these settings, which may limit their options to, for example, permit employees to offer weekly test results instead of proof of vaccination status.  More stringent state and local requirements would also continue to apply under the federal contractor Executive Order.

Separately, contractor employees that perform work at federal facilities or on federal land will likely still need to consider additional and potentially conflicting requirements imposed by federal agencies.  On-site employees have already been subject to additional requirements for some time following a previous executive order and Office of Management and Budget guidance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.