FAR Council Releases Guidance to Agencies on Issuance of Agency Deviation To Implement Executive Order 14042

Most federal contractors will soon see a new Federal Acquisition Regulation (“FAR”) clause mandating COVID-19 vaccinations and safety protocols included in their future federal solicitations and contracts. The following is a brief overview of what contractors should expect and when.

Agency Deviation Guidance

The FAR Council recently issued instructions directing federal agencies to implement new FAR clause 52.223-99 through the FAR class deviation process of FAR Part 1.4. This FAR clause mandates that covered prime contractors and their subcontractors adhere to the guidance of the Safer Federal Workforce Task Force (“Task Force” and “Guidance”) regarding COVID-19 safety protocols, including vaccinations, masking, and social distancing. The FAR Council is directing agencies to utilize this procedure in order to meet the deadlines required in Executive Order 14042 (the “Order”). Agency-specific deviations must be finalized no later than Oct. 15.

FAR deviations are temporary or interim changes to the FAR, usually to implement a policy, procedure, solicitation provision, or contract clause “that is inconsistent with the FAR.” To make FAR 52.223-99 permanent, the FAR Council will have to proceed through the required publication and comment process in the Federal Register. That process cannot be completed prior to the deadlines imposed by the Order. Thus, the FAR Council is requiring that agencies individually implement FAR 52.223-99 as a temporary rule until the clause can be implemented as a permanent revision to the FAR. While the class deviation process allows agencies to seek to issue FAR 52.223-19 which may differ from the recommended clause, it is expected that most agencies will implement the clause substantively identical to the FAR Council’s recommended clause. As of this writing, six agencies have implemented their respective deviations, including GSA, DOJ, DHS, DOD, and NASA.

Substance

FAR 52.223-19 requires all covered prime contractors to comply with all Guidance, including Guidance conveyed through Frequently Asked Questions (“FAQs”), published by the Task Force. The clause also requires covered prime contractors to include the clause in all subcontracts at any tier that exceed $250,000 for services, including construction, performed in the United States or its outlying areas as defined in the clause.

The Task Force’s Guidance requires that:

• Covered contractors must immediately designate one or more persons to coordinate implementation of and compliance with the Guidance and the required workplace safety protocols;
• All employees, except those with a permitted medical or religious accommodation, must be fully vaccinated for COVID-19 by Dec. 8; and
• All individuals, including employees and visitors, must immediately comply with published CDC guidance for masking and physical distancing in the workplace/sites.

Implementation

FAR 52.223-99 will be required to be included:

• In all solicitations and contracts for services, including construction, (“Covered Contracts”) awarded on or after Nov. 14 from solicitations issued before Oct. 15, (including new orders and orders under existing indefinite-delivery contracts);
• In options on existing Covered Contracts and orders exercised on or after Oct. 15.

Covered Contracts do not include contracts or subcontracts under $250,000 in value or contracts or subcontracts “solely for the manufacturing of products.” Contracts and subcontracts with Indian Tribes under the Indian Self-Determination and Education Assistance Act are excluded from this requirement but procurement contracts or subcontracts under the FAR with Indian-owned or tribally-owned business entities are considered Covered Contracts. Further, solicitations and contracts where employees are performing work only outside the U.S. or its outlying areas are excluded from the applicability of FAR 52.233-99.

In line with the Order, the FAR Council also “strongly encourages” agencies and Contracting Officers to apply the clause to contracts that are not considered Covered Contracts. As evidenced by the published GSA Deviation, we expect agencies to aggressively interpret and implement the Guidance and FAR 52.233-99. The GSA is requiring the Federal Acquisition Service (“FAS”) to seek to bilaterally modify all existing contracts and “contract-like instruments” awarded before Oct. 15, including those above the micro-purchase threshold of $10,000, notwithstanding the $250,000 exclusion threshold. Further, because GSA claims that it is “not administratively feasible to distinguish FSS contracts that are solely for products from FSS contracts that are primarily for products,” GSA intends to include FAR 52.233-99 in all FSS contracts to purportedly “simplify compliance tracking, vendor communication, and customer messaging efforts.”

It is important to note that contractors and subcontractors should carefully consider the impacts of agreeing to bilateral modifications, both in terms of costs and time of performance, as it will undoubtedly contain a standard waiver of future claims for this change. The opportunity to negotiate reimbursement of incurred costs and increased time of performance is prior to accepting any modification to a contract or order. While not mentioned in the FAR Council’s instructions, Section 7 of the Order requires that it be implemented consistent with applicable law and subject to the availability of appropriations. As such, if agencies do not have funds to cover increased costs resulting from the implementation of FAR 52.223-19, there may very well be situations where contracts cannot be modified.

Clark Hill’s Government Contracts and Regulatory Affairs teams will be monitoring these future actions and providing updated reports in further client alerts as warranted. Please feel free to contact the authors with any questions or comments.

The views and opinions expressed in the article represent the view of the author and not necessarily the official view of Clark Hill PLC. Nothing in this article constitutes professional legal advice nor is intended to be a substitute for professional legal advice.