Federal Government Moves Toward a Vaccine Mandate for All Employees of Government Contractors

On September 9, 2021, President Biden issued an “Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors.” Contrary to widespread media reports, that Executive Order does not expressly require that employees of government contractors be vaccinated against COVID-19. But, the E.O. does take a step in that direction.

Specifically, Biden’s Executive Order requires that new contracts—including extensions, renewals, and options—and all contract-like instruments awarded after October 15, 2021 include a clause requiring the contractor and its subcontractors to comply with all guidance for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force. The E.O. states that the clause shall apply to any workplace locations in which an individual is working on or in connection with a Federal Government contract or contract-like instrument.

Biden’s E.O. further requires that the Safer Federal Workforce Task Force issue its guidance by September 24, 2021. Among other things, the guidance shall include definitions of relevant terms for contractors and subcontractors, explanations of protocols contractors and subcontractors must follow, and any exceptions that apply to contractor and subcontractor workplace locations and individuals in those locations working on or in connection with a Federal Government contract or contract-like instrument. In other words, the guidance is supposed to answer such burning questions as who must be vaccinated and whether a vaccine mandate will apply to workers who are not working on government contracts but who are co-located with employees working on government contracts.

Biden’s E.O. is part of a long history of Presidents imposing employment-related requirements on Federal contractors via executive orders. Traditionally, such orders have applied only to “new contracts” to avoid imposing additional costs on contractors that they never had a chance to include in their price proposals. Biden himself followed that tradition earlier this year when he ordered the minimum wage for contractors raised to $15 per hour in new contracts awarded beginning in 2022. However, Biden’s COVID Safety order departs from past practice by including contract extensions and options in the definition of “new contracts.” This means that the new guidance may apply to contractors whose contracts were priced and awarded before anyone had even heard of COVID-19.

The cost of vaccines may not be significant to the extent it is borne by insurance or by the Government. However, contractors will incur costs to administer any new requirements—for example, to confirm employees’ vaccination status. Contractors also may incur costs to terminate or reassign unvaccinated employees, including workers doing purely commercial work but co-located with workers performing a Federal contract. (Contractors may even face lawsuits from such workers, whether justified or not.) Alternatively, contractors may incur costs to move their government contract workers to a separate location from their commercial workers. In other words, contractors may incur direct costs to implement the new guidance on a specific contract, but they also may incur indirect costs (overhead and General & Administrative costs) to implement the new requirements company-wide. These are all costs that contractors might seek to recoup from the Government.

Significantly, Biden’s E.O. directs that the guidance issued by the Safer Federal Workforce Task Force be incorporated into Federal contracts via a new contract clause. That fact should weaken any Government argument that it is immune from paying costs because the new guidance is a “Sovereign Act.” Contracting officers should be issuing formal contract modifications if they want to incorporate the new requirements into existing contracts, options, or extensions. If a contractor receives the forthcoming guidance as a mere email attachment from a contracting officer, that contactor may need to take steps to preserve its right to a price adjustment. Contractors also should comply with any other requirements for giving notice of a Change to the contract. Of course, contractors should be careful not to sign a premature release of their rights.

For more information about this or other Government Contracts or employment issues, please contact the author or your regular Brown Rudnick attorney.

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