Compliance with the Contractor Vaccine Mandate May Cause Compensable Changes to Existing Federal Contract

By now, most federal contractors are well aware of Executive Order 14042 regarding vaccination of, and social distancing among, covered contractor employees. While a lot has happened in the last few weeks, there still is some uncertainty as to exactly what contracts/employees will be subject to the mandates in the Guidance issued on September 24, 2021 by the Safer Federal Workforce Task Force.[1] When the Guidance is included in new contracts, contractors should have a chance to include compliance in their prices. But, under President Biden’s E.O. and the Guidance, federal agencies are “strongly encouraged” to require compliance with the Guidance even for existing contracts not otherwise covered by the Executive Order. So while agencies have some discretion with respect to certain contracts, it is possible that nearly all federal contracts, both new and existing, will be subject to the requirements in the Guidance before very long.

One thing federal contractors should be thinking about as they make preparations to comply is whether compliance with the Guidance is a compensable change to existing contracts. To the extent that compliance with the Guidance either increases the cost of performance or increases the time required for performance, contractors may be entitled to equitable adjustments. For example, contractors may incur costs or delays related to any of the following:

• supervising implementation of the clause;
• checking employees’ vaccination records/documentation;
• evaluating the legitimacy and legality of exemption claims;
• terminating employees who refuse to get vaccinated without a proper exemption;
• replacing terminated employees;
• responding to discrimination and other lawsuits or Equal Employment Opportunity Commission complaints claiming questionable religious or other exemptions;
• responding to Union grievances and arbitrations;
• paying out arbitration awards that may be arbitrary;
• dealing with the loss of efficiency from losing workers and/or morale problems;
• working overtime to make up for the loss of workers;
• posting required signage on masking/social distancing procedures; and
• ensuring that all individuals at covered contractor workplaces comply with published Centers for Disease Control guidance.

While this list is non-exhaustive, it gives a sense of some of the major items contractors can and should monitor for possible compensable changes. Contractors should document and evaluate all their efforts to comply with the Guidance to determine if a compensable change has occurred. Since it is difficult to know exactly how the costs or time of performance will be affected by the new requirements, contractors should make sure to notify the contracting officer, in writing, immediately upon receiving an order to implement the new Guidance. Thereafter, a request for equitable adjustment should be submitted as soon as the costs are quantifiable. In the meantime, contractors should make sure that they do not sign any modifications that may waive their rights to an equitable adjustment.

Another thing contractors need to watch out for is that some agencies are using a clause that requires contractors to comply with the  Safer Federal Workforce Task Force Guidance “as it may be amended.” This mean that contractors’ obligations may change. This is another reason why contractors should be weary of signing away future claims.

The fact is that compliance with the Guidance is going to impact huge swaths of the federal contracting community. Covered contractors and employees working on many, if not most, government contracts will be subject to the requirements of the Guidance, each of which can pose major hurdles to federal contractors. Make sure you know your 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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[1] The Guidance is available here. For more information and most recent updates, the Safer Federal Workforce Task Force website is: https://www.saferfederalworkforce.gov/.