Likely in response to the flurry of litigation challenging the government contractor vaccine mandate, on November 16 the Office of Management and Budget (OMB) published a new notice of determination and request for comments in the Federal Register. The new determination, which rescinds and supersedes the prior notice issued on September 24, 2021, and published in the Federal Register on September 28, 2021, provides additional support for the revised Safer Federal Workforce Task Force (Task Force) Guidance issued on November 10, 2021.

Task Force Guidance Published for the First Time

The revised notice, which asks that comments be submitted on or before December 16, 2021, is divided into three parts.  Part I published in the Federal Register for the first time the entire Task Force Guidance. While it is positive that the Guidance has finally been published, it is incomplete in one major respect. Specifically, although the November 10 version published in the Federal Register includes links to the regularly-updated frequently asked questions (FAQs), OMB fails to mention that the FAQs and the Guidance are subject to revision or that the contract provisions implementing these requirements mandate that contractors comply with the Guidance as it appears now and “as amended during the performance” of the contract.

OMB Expands its Economic Analysis

Part II of the notice, titled “Economy-and-Efficiency Analysis,” provides a post hoc justification for the measures initially taken over six weeks ago.  While some of OMB’s arguments and observations may have merit, the analysis leaves many open questions.

OMB explains that the “analysis of the economic impact of the Guidance is based on OMB’s subject matter expertise and OMB’s review and analysis of the academic literature on interventions to prevent the spread of COVID-19.”  The notice then points out that COVID-19 is highly communicable and can be spread by asymptomatic individuals. Therefore “safety protocols applied to all employees in a workplace can meaningfully reduce the spread of COVID-19.”  This, coupled with the fact that employees who catch COVID-19 may miss eight days of work if they comply with the CDC’s recommended 10 days of isolation, imposes “substantial costs on employers.”

In order to determine the cost to an employer of this lost time, the OMB uses the worker’s hourly pay, which it acknowledges is “an imperfect proxy.”  Using OMB’s calculated average hourly wage for a federal contractor employee of approximately $31.51, OMB calculates the cost for this lost labor of one employee for eight days to be $2,016, and even higher in high-cost areas like D.C., Maryland, and Virginia.  OMB then posits that these substantial costs borne by contractors will be passed on to the government “either in direct cost or lower quality, including delays,” which may or may not be the case for  fixed price contracts or where the government’s price is tied to commercial prices.

Thankfully, OMB’s argument goes, “vaccines, masks, and physical distancing have all been proven to reduce the prevalence of COVID-19 infection, and vaccines have been shown to greatly reduce the severity of breakthrough infections.”  Therefore, OMB asserts that requiring workers to get vaccinated “would generate meaningful efficiency gains for Federal contractors.”  This is particularly true, OMB continues, given that the vaccines are free and the “cost of implementing the vaccine mandate is largely limited to administrative costs associated with distributing information about the mandate and tracking employees’ vaccination status.”

Because the administrative costs will be “small” and because OMB “expects few employees to quit because of the vaccine mandate” or to lose work time because of vaccine side effects, OMB concludes that it is appropriate for the federal government to follow the lead of private companies like United Airlines and Tyson Foods that mandated vaccines for their employees.  OMB also claims that despite “anecdotal reports” that the vaccine mandate will cause people to quit, OMB knows of “no systematic evidence that this is a widespread phenomenon, or that it would be likely to occur among employees of federal contractors.”  And even if some employees quit, replacing those employees would be a one-time cost while the benefits of forcing employees to get vaccinated “would be long-lasting.”

The notice also explains, with citations to a handful of studies, that masking and physical distancing “have proven to be effective in reducing the spread of COVID-19.”  Given the low costs of masks and OMB’s belief that physical distancing “can often be done without additional costs,” as well as the fact that companies like Walmart impose these requirements, OMB concludes it is appropriate to require that contractors impose this requirement on their employees.

OMB Attempts to Address Procedural Problems

The third and final section of the revised notice attempts to address some of the procedural arguments raised in the multiple lawsuits challenging the mandate.

First, OMB argues that because the president delegated to the OMB director his authority to determine whether the mandate would improve economy and efficiency in federal contracting, it is not subject to the notice-and-comment requirements of 41 U.S.C. § 1707.  And even if that requirement is applicable, the OMB claims that urgent and compelling circumstances justify deviation from the notice-and-comment and delayed-effective-date requirements. OMB argues that the “once-in-a-generation pandemic,” which has already cost over 750,000 lives and resulted in over 3.2 million hospitalizations, “continues to present an imminent threat to the health and safety of the American people,” and references the Delta variant.

No mention is made as to why, given the emergency situation, it took almost two years for the government to propose any government contractor workplace safety measures and almost 12 months from the date vaccines were developed to mandate that contractors required that their employees get vaccinated.  Nor is there any discussion of the fluctuation in COVID-19 cases over the past few months, which some claim indicates that the crisis is easing, perhaps because over 190 million people in the United States are already fully vaccinated.

The risk posed by the pandemic, OMB explains, will be substantially diminished by the vaccine mandate.  That, coupled with the delay from December 8, 2021, to January 18, 2022, justifies not complying with the notice and delay requirements.  Coordination between the federal contractor mandate; the OSHA Emergency Temporary Standard, which the 5th Circuit has stayed; and the CMS vaccine mandate applicable to Medicare and Medicaid facilities, provides a further justification.  OMB claims that setting the same deadline eases the burden on private companies.  No mention is made as to why the different mandates have different substantive requirements or what the government is doing, if anything, to ease the challenges that presents to private employers.

Similarly, OMB claims its determination is not subject to judicial review under the Administrative Procedure Act (APA) because the president delegated it to the OMB director per 3 USC § 301.  And even if the APA notice-and-comment requirement was applicable, OMB claims “the good-cause exception” waives the waiting period as it would be “impracticable, unnecessary, or contrary to the public interest.”

Open Questions Mean Litigation is Likely to Continue

While OMB’s revised notice is a significant improvement over the prior half-page justification, a number of questions remain.  In light of those questions, some of which are included below, the multiple lawsuits challenging the government contractor vaccine mandate filed by over 20 states, among others, will almost certainly continue.  In fact, an amended complaint has already been filed in at one of those cases addressing OMB’s revised notice.

First, OMB’s analysis overlooks the hiring challenges employers are already facing, which could be exacerbated should any employees quit as a result of a vaccine mandate.  There are currently over 10 million open positions in the United States and many businesses are not able to operate at total capacity because of these labor shortages.

Nor is there any explanation as to why all business owners have not already mandated that their employees get vaccinated if the costs of such a mandate are more than offset by productivity gains.  If productively gains were likely to result from such a mandate, thereby improving a business’s profitability, rational owners would push, or even require, that their employees get vaccinated. Instead, OMB provides not suggests that it is perhaps simply an oversight on the part of thousands of businesses across the country. More likely, businesses are concerned that they could lose a significant portion of their workforce if they impose a vaccine mandate and, in an exceedingly tight labor market, have balanced the risk of a mass walkout with the risk of an occasional illness from a disease for which there are multiple effective vaccines and therapeutics.

And whether private companies have imposed a vaccine mandate may be relevant to the question of whether the government imposes a vaccine mandate on government employees, but it is not clear why the government believes it justifies the imposition of such a mandate on individuals who work for other entities.  Further, there is no explanation for why different mandates have different requirements.  For example, unlike the government contractor mandate the OSHA Emergency Temporary Standard ETS, which, again, was halted last week by the 5th Circuit, allows for a testing option.  If that is sufficient to limit the impact of COVID-19 for businesses across the United States with over 100 employees, why is that not sufficient for contractors?  Did OMB consider the problems companies subject to multiple mandates will face when some employees are required to get vaccinated while others have the option to get tested?

It is also unclear why vaccinations are required if masking and distancing requirements are so effective.  Or why OMB does not acknowledge natural immunity from prior COVID-19 infections, which some studies have shown to be many times more effective than vaccines.  And it does not address distinctions between working conditions that may present distinctly different COVID-19 risks or why the Guidance requires that individuals who work remotely need to be vaccinated given that basis for this requirement is that “employees working at a single workplace will come regularly into contact ….”

The Bottom Line

While OMB’s revised support for the government contractor vaccine mandate attempts to plug some of the holes in its legal foundation, many questions remain. To the extent the government believed this new determination would moot some or all of the many legal challenges, it is not clear that will be the case. In hearings over the coming days and weeks, courts across the country will be evaluating whether this new determination provides adequate justification for the mandate.

If you have any questions about the government contractor vaccine mandate, please contact Richard Arnholt at rarnholt@bassberry.com or 202-827-2971.