Well, that was quick. In four memos dated September 30 and October 1, contractors learned the terms of the contract provisions implementing the COVID-19 vaccine and masking requirements mandated by President Biden’s Executive Order (EO) 14042, discussed here, and the implementing guidance issued by the Safer Federal Workforce Task Force (Task Force) on September 24. In the next 10 days we expect to see most other agencies issue deviation memos similar to the General Services Administration (GSA) and Department of Defense (DoD) memos discussed below.
As discussed in this post, while the contract provisions, along with updated guidance from the Task Force, answer some of the open questions, contractors are still in the unfortunate position of rushing to ensure they are compliant with these requirements when the contract provisions apply to them without knowing the answers to some fundamental questions. Despite these open questions, companies have little time, for example, to ensure that covered employees are vaccinated by the December 8, 2021 deadline. After that deadline, any contractor that becomes subject to these requirements will have to ensure that on new contracts or options/extensions that incorporate the new clause, covered employees are fully vaccinated by the first day of performance, which of course is impossible unless contractors enforce these vaccine mandates in advance. That said, the memos do seem to clarify that compliance with the Task Force guidance will not be required for prime contracts solely for the manufacturing of products.
The FAR Clause
On September 30, the Federal Acquisition Regulation (FAR) Council issued a memo providing agencies with “initial direction” requiring the implementation of the Task Force guidance. It includes FAR 52.223-99, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (OCT 2021) (Deviation), along with directions that agencies “expeditiously” issue class deviations to ensure that contracting officers can begin using the clause on or before October 15, 2021.
The clause implements the Executive Order by simply requiring that during the performance, the contractor comply with all current and future guidance on COVID-19 workplace safety published by the Task Force. As discussed in a prior post, that guidance has vast applicability, requiring the vaccination of all employees working directly on government contracts; in connection with government contracts to include HR, legal, and accounting, among other departments; as well as any employee working at a company facility at which even a single employee working on or in connection with a government contract works. It includes masking and distancing requirements and obligates contractors to appoint a COVID-19 workplace safety coordinator at each facility subject to the guidance.
In accordance with the EO, the FAR Council notes that agencies are required to include the new provision in:
- New contracts awarded on or after November 14, 2021 from solicitations issued before October 15, 2021 (this includes new orders awarded on or after November 14, 2021 from solicitations issued before October 15, 2021 under existing indefinite-delivery contracts).
- New solicitations issued on or after October 15, 2021 and contracts awarded pursuant to those solicitations (this includes new solicitations issued on or after October 15, 2021 for orders awarded pursuant to those solicitations under existing indefinite-delivery contracts).
- Extensions or renewals of existing contracts and orders awarded on or after October 15, 2021.
- Options on existing contracts and orders exercised on or after October 15, 2021.
In addition, the memo “strongly encourages agencies to apply the requirements … consistent with applicable law” in contracts awarded before November 15, 2021 and solicitations issued before October 15, 2021 as well as contracts and subcontracts below the simplified acquisition threshold (SAT) (typically $250,000) or contracts or subcontracts for the manufacturing of products. Notably, the fact that the memo encourages, but does not require, the inclusion of the provision in contracts for the manufacturing of products seems to clarify that this requirement does not apply to prime contracts or subcontracts exclusively for products. Further detailed discussion on this issue is below.
Like the EO, the memo notes that the clause may not be applied to contracts and subcontracts with Indian Tribes under the Indian Self-Determination and Education Assistance Act or solicitations and contracts if performance is outside the United States or its outlying areas.
The FAR provision does not explain the consequences of non-compliance, nor does it require that contractors certify that they are fully compliant. It does, however, mention that a FAR Case has been opened, 2021-021, to “make appropriate amendments in the FAR to reflect the requirements of the order.” The class deviations will likely be in place until the FAR is amended.
CAAC Deviation Guidance
Following the issuance of the FAR provision, on September 30, the Civilian Agency Acquisition Council (CAAC) issued Letter 2021-03 authorizing civilian agencies to issue class deviations to implement EO 14042 through the use of the new FAR provision.
It mirrors the FAR Council memo about which solicitations or contracts must include the clause, as well as in its encouragement that the clause be included in contracts that have been or will be awarded before November 14, 2021 or solicitations issued before October 15, 2021, contracts below the SAT, or “contracts and subcontracts for the manufacturing of products” (more on that last category later). The CAAC memo also repeats that the clause may not be applied to contracts and subcontracts with Indian Tribes under the Indian Self-Determination and Education Assistance Act or solicitations and contracts if performance is outside the United States or outlying areas.
By this memo, the CAAC authorizes civilian agencies to adopt the FAR clause as written in each agency’s deviation. To the extent agencies wish to revise the text in their deviations, they must first consult with the CAAC chair.
On September 30, the GSA issued the most detailed guidance yet from any agency, Class Deviation CD-2021-13, approving the use of the FAR provision in GSA contracts.
The GSA Deviation requires the use of FAR 52.223-99 in the following contracts:
- Contracts or contract-like instruments for services, construction, or a leasehold interest in real property exceeding the SAT or simplified lease acquisition threshold (SLAT).
- Contracts or contract-like instruments for services covered by the Service Contract Act, 41 U.S.C. § 6701, et seq.; exceeding the SAT/SLAT.
- Contracts or contract-like instruments for concessions, including any concessions contract excluded by Department of Labor regulations at 29 CFR § 4.133(b) exceeding the SAT/SLAT.
- Contracts or contract-like instruments 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, exceeding the SAT/SLAT.
While not required, the GSA encourages the use of the clause in contracts and subcontracts below the SAT/SLAT as well as contracts and subcontracts solely for the manufacturing of products, unless exempt by specific guidance. It also clarifies that the new clause does not apply to micro-purchases, site acquisition, sales of surplus and personal property, solicitations and contracts to be performed outside the United States or its outlying areas, or contracts and subcontracts with Indian Tribes under the Indian Self Determination and Education Assistance Act.
The GSA requires the clause be included in:
- New solicitations issued on or after October 15, 2021.
- Existing solicitations issued before October 15, 2021 that have not closed or awards that have not been made by October 15, 2021 by either amending the solicitation or including FAR 52.223-99 in the award of the apparent successful offeror (the latter would likely only be permissible by bilateral modification and may entitle the awardee to revise its price).
- New contracts, lease acquisitions, and contract-like instruments awarded on or after October 15, 2021, including those in the “strongly encourage” category.
This appears to mean that no matter the size or type of GSA contracts, contractors will be expected to comply with the new FAR provision. Indeed, the GSA’s included guidance to the Federal Acquisition Service (FAS) states that FAS “will bilaterally modify all existing contracts” to include FAR 52.223-99. The GSA deviation requires that contracting officers (COs) use an included template to request to enter into bilateral modifications to include the FAR provision in existing contracts and contract-like instruments, and mandates that COs complete as many modifications as possible by November 14, 2021. For Federal Supply Schedule (FSS) contracts, COs are required to include the provision in “all new and existing FSS contracts above the micro-purchase threshold, including contracts that are solely for products.” COs are also required to incorporate the clause into Blanket Purchase Agreements, Government-wide Acquisition Contracts, Multi-Agency Contracts, among others, including those for the provision of products.
While GSA acknowledges that the modifications must be bilateral, for those ID/IQ contractors who have not returned the signed modification to GSA by November 14, 2021, GSA directs COs to take the remarkable action of “temporarily hiding contractor information on GSA websites and/or e-tools,” likely meaning agencies would be unable to purchase off those contracts, or “flagging” contractors who have not signed the modification. It is not clear that the blacklisting of contractors who have not agreed to enter into bilateral modifications is permissible.
In addition, COs are directed to not exercise an option period or extend the period of performance of existing contracts unless the contract has been modified to include the new clause. As discussed above, including a new clause at the time of option exercise will almost certainly require a bilateral modification and will likely entitle contractors to renegotiate the contract price, among other terms.
DoD Class Deviation
On October 1, the Under Secretary of Defense for Acquisition and Sustainment issued Class Deviation 2021-O0009 (https://www.acq.osd.mil/dpap/policy/policyvault/USA001998-21-DPC.pdf) mandating the use of an identical DFARS provision, DFARS 252.223-7999. Contracting officers are required to include the clause in:
- New solicitations issued on or after October 15, 2021, and contracts and orders awarded under those solicitations that are expected to exceed the SAT.
- Contracts and orders expected to exceed the SAT that are awarded on or after November 14, 2021, awarded under solicitations issued before October 15, 2021 (this will likely require modification of those solicitations and submission of revised proposals).
- All extension or renewals issued on or after October 15, 2021 of contracts and order over the SAT.
- All options exercised on or after October 15, 2021.
- Existing ID/IQ contracts expected to exceed the SAT that have an order period beyond October 15, 2021.
The deviation also provides that contracting officers may include the clause in other solicitations and contracts, but cautions that a bilateral modification is needed to incorporate the clause in existing contracts and orders. This was expected, as all commercial contracts require that any modification be bilateral and the government’s right to issue unilateral changes in non-commercial contracts does not extend to the inclusion of vaccine mandates.
It is likely that a bilateral modification will also be needed to include the clause in options exercised on or after October 15, 2021, as the government only has a unilateral right to exercise pre-priced options if it does so in accordance with the exact terms of that option. By including a new contract provision, the government is actually seeking to modify the contract, not to exercise the option as written.
Like the FAR Council and GSA memos, the DoD memo includes “[s]olicitations, contracts, task orders, and delivery orders for the manufacturing of products” on the list of agreements that contracting officers are encouraged, but not required, to make subject to the new provision.
Prime Contracts for Products Don’t Appear to be Covered, But That Might Not Matter
Although guidance and contract provisions are still being issued, it is becoming clear that, despite broad language in some of the COVID-19 vaccine guidance, both subcontracts and prime contracts for the manufacturing of goods are not subject to the new requirements. But because many contracts include both goods and services components and at least one agency has indicated it will include the provision in all contracts, this exclusion may not matter.
The EO expressly exempts subcontracts solely for the provision or products from coverage, but does not mention prime contracts for products in the list of exemptions. But it also states that the obligations shall apply to contract or contract-like instruments that fall into one of these four categories:
- It is for services, construction, or a leasehold interest in real properly.
- If for services covered by the Service Contract Act.
- Is for concessions, including any concessions contract excluded on Department of Labor regulations at 29 C.F.R. § 4.133(b).
- Is in connection with federal property or lands and related to offering services for federal employees, their dependents, or the general public.
Further, the Task Force guidance issued on September 24 indicates that the Task Force does not believe prime contracts for the manufacturing of products are covered, including them in a list of contracts that are “not covered or directly addressed by the order.” Similarly, the memos issued on September 30 and October 1 include on the list of contracts that contracting officers may, but are not required to, include the clause solicitations, contracts, and orders for the manufacturing of products.
Even if prime contracts expressly for products are exempt, it is unlikely that contracts that include any type of service component will be. And the exemption itself may be disregarded by agencies. Indeed, as discussed above the GSA is directing COs to include the provision in all FSS and other contracts because the agency believes it is too difficult “to distinguish FSS contracts that are solely for products from FSS contracts that are primarily for products but also include ancillary-type services (e.g., installation, maintenance, training, ancillary services acquired via the Order-Level Materials SIN, etc.).”
Also, the government’s objective is to get as many people vaccinated as possible and federal agencies are therefore being strongly encouraged to expand the requirements to contracts not explicitly covered, including prime and subcontracts for products. So even contractors providing only products will likely see the clause in solicitations and new contracts, as well as option exercises and proposed contract modifications.
In sum, for companies that contract with the federal government it is time to carefully consider how you will go about complying with these COVID-19 workplace safety requirements. Failing to move forward now may mean that you cannot timely become compliant when these deviations start appearing in your contracts, which could potentially result in the loss of work. If you have any questions about how these COVID-19 mandates are applicable to government contractors or to your company, please contact Richard Arnholt at email@example.com or 202-827-2971.