Supreme Court Stays OSHA’s Vaccine-or-Test Rule

By: Sati HarutyunyanMatthew L. HawsGabrielle SigelEmma J. SullivanJoseph J. Torres, and Ishan K. Bhabha

On January 13, 2022, a divided Supreme Court stayed OSHA’s vaccine-or-test emergency temporary standard (ETS). Nat’l Federation of Independent Business v. Dep’t of Labor, OSHA , 595 U.S. ___ (2022). The matter came before the Court on a request for emergency relief after the Sixth Circuit granted an emergency motion by OSHA to dissolve a stay of the ETS previously issued by the Fifth Circuit.

Focusing on the statutory authority provided under the Occupational Safety and Health Act (the Act), the majority held that the Act does not authorize a rule as broad as the OSHA ETS. The per curiam (unsigned) majority opinion found that, particularly given the “significant encroachment into the lives—and health—of a vast number of employees,” Congress had to clearly authorize OSHA’s “exercise [of] powers of vast economic and political significance.” Opinion at 5-6. The majority held that the Act does not authorize the ETS because it goes beyond OSHA’s authority to issue only “occupational safety and health standards.” Opinion at 6 (emphasis supplied). The Court found that although COVID-19 risk occurs in many workplaces, it is a “universal risk...no different from the day-to-day dangers that all face.” Id. at 6-7. “Permitting OSHA to regulate the hazards of daily life—simply because most Americans have jobs... —would significantly expand OSHA’s regulatory authority without clear congressional authorization.” Id. at 7. The Court determined that OSHA exceeded this authority by imposing an indiscriminate and overly broad regulation of public health, an area that “falls outside of OSHA’s sphere of expertise.” Id. The Court also focused on the unique nature of vaccination: “A vaccination, after all, ‘cannot be undone at the end of the workday’.” Id. at 7.

Importantly, the majority described the ETS as a “blunt instrument” that “draws no distinctions based on industry or risk of exposure to COVID–19,” id. at 3, and it clarified that its ruling does not mean OSHA lacks authority to regulate occupation-specific risks related to COVID-19: “Where the virus poses a special danger because of the particular features of an employee’s job or workplace, targeted regulations are plainly permissible.” The majority expressed “[no] doubt, for example, that OSHA could regulate researchers who work with the COVID–19 virus. So too could OSHA regulate risks associated with working in particularly crowded or cramped environments.” Id. at 7.

Concurring in the judgment, Justice Gorsuch (joined by Justices Thomas and Alito) emphasized that compared to the states, the federal government has limited powers and that under the “major questions doctrine” Congress must provide clear authorization before OSHA can issue sweeping regulations impacting hundreds of millions of Americans. Concurrence at 3. Moreover, under the “nondelegation doctrine,” Congress cannot “hand off all its legislative powers to unelected agency officials.” Id. at 5. The concurrence found that if the statutory language on which OSHA relied “really did endow OSHA with the power it asserts, that law would likely constitute an unconstitutional delegation of legislative authority.” Id. at 6. According to the concurrence, the power to respond to the pandemic “rests with the States and Congress, not OSHA.” Id. at 7

Writing together, Justices Breyer, Sotomayor, and Kagan dissented. They argued that nothing in the Act supported the majority’s limitation on OSHA’s regulatory authority and that the Act does not require that employees are exposed to regulated dangers “only while on the workplace clock.” Dissent at 7. 

As noted above, this decision was issued on an emergency basis, seeking relief from a Court of Appeals decision that itself was issued on an emergency basis. Thus, this ruling is technically a temporary stay pending the final disposition of the consolidated case before the Sixth Circuit (and any subsequent petition to the Supreme Court). But the writing is on the wall for the OSHA ETS: even if OSHA prevails on the merits at the Sixth Circuit, challengers will petition Supreme Court review. Indeed, the emergency stay expressly applies until the Supreme Court has the opportunity to weigh in on any contrary final Sixth Circuit decision. Opinion at 9.

The OSHA ETS ruling also provides important indications for how the Court might rule on the federal contractor COVID-19 mandate which has been stayed by various district courts. Specifically, challengers to that mandate will be emboldened by the Court’s requirement that COVID-19 vaccine mandates be authorized by specific statutory language. The challengers to the contractor mandate have argued that the authorizing statute—the Federal Property and Administrative Services Act—does not provide the necessary authority. Similarly, the Supreme Court’s focus on the nature of vaccination as a medical procedure that “cannot be undone” may find even greater purchase in the context of the contractor COVID-19 mandate, which does not provide a testing option such as that available under the OSHA ETS.

On the other hand, the federal government may be encouraged by the Supreme Court’s decision—on the same day it struck down the OSHA ETS—to uphold the vaccine mandate issued by Centers for Medicare & Medicaid Services (CMS). Biden v. Missouri, 595 U.S.__(2022). The CMS mandate generally provides that employees of all facilities receiving Medicare or Medicaid funding must be fully vaccinated. The Court held that the CMS vaccination mandate “fits neatly within the language of the statute” authorizing the Secretary of Health and Human Services “to impose conditions on the receipt of Medicaid and Medicare funds that ‘the Secretary finds necessary in the interest of the health and safety of individuals who are furnished services.’” CMS Opinion at 5. 

So where does this leave government contractors? First, the OSHA ruling resolves the question of whether the OSHA ETS could apply to contractors while the contractor mandate is preliminarily enjoined or if it is permanently struck down. The answer is no. Second, these rulings shift attention back to the lower courts in which the contractor COVID-19 mandate is being litigated. The nationwide preliminary injunction issued by a district court in the Southern District of Georgia remains in effect and is currently on appeal in the Eleventh Circuit. Most recently, the Eleventh Circuit denied the government’s motion for emergency stay of the injunction. The more limited injunctions issued by district courts in Kentucky, Florida, and Missouri are in various stages of litigation or appeal. (Following the Supreme Court decisions, the Biden Administration has appealed the Eastern District of Missouri injunction.) Given the signals from the Supreme Court on similar issues regarding the OSHA ETS, discussed above, the government may reevaluate its litigation strategy or even adjust its regulatory direction. When appealed, the federal government will strenuously argue that the federal contractor mandate is clearly authorized under existing federal law and regulations, as was the CMS vaccine mandate.

The bottom line is that both the OSHA ETS and contractor mandates are currently stayed. While attention shifts back to the lower courts, the Supreme Court’s decisions indicate that those mandates face difficult odds of ever coming into force.


The Government Contracts Legal Round-Up | Episode 19

Co-hosts Matthew L. Haws and Sati Harutyunyan discuss the implications of the US Supreme Court decision to stay OSHA’s vaccine-or-test emergency temporary standard (ETS). During the episode, Mr. Haws and Ms. Harutyunyan explain what the ruling signals for federal contractors and what to expect as attention shifts back to the lower courts in which the contractor COVID-19 mandate is being litigated..


Government Contracts Legal Round-Up | 2021 Issue 24

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Vaccine Update

1. Legal Developments Continue Regarding Federal Contractor Vaccine Mandate (December 21, 2021)

  • After a busy few weeks in the courts, there are now multiple stays issued against the federal contractor COVID-19 vaccine mandate, including a nationwide stay issued by a Federal District Court in Georgia.
    • On December 17, 2021, the Eleventh Circuit denied the Biden Administration’s request for a stay of that nationwide injunction pending appeal.
    • The Biden Administration may appeal that denial to the Supreme Court or could determine it is better to wait and allow other COVID-19 litigation to proceed.
  • Given this nationwide stay, litigation challenging the OSHA ETS has become more relevant for government contractors.
    • On December 17, 2021, a three-judge panel of the Sixth Circuit dissolved the Fifth Circuit’s stay of the OSHA ETS.
    • The challengers immediately filed in the Supreme Court a request for emergency stay and cert before judgment (per Sup. Ct. Rule 11).
    • The Supreme Court has given the government until December 30, 2021 to respond to the request.
  • OSHA posted a notice on its website extending compliance dates under the ETS to January 10 and February 9, 2022.

We are closely tracking legal challenges to the federal contractor mandate and OSHA ETS, and stand ready to advise you on the impact of these challenges nationwide.

Protest Cases

1. Harmonia Holdings Group, LLC v. United States, Case 2020-1538 (December 7, 2021)

  • The Court of Appeals for the Federal Circuit confirmed that the Blue & Gold waiver rule is still applicable law but not as applied by the Court of Federal Claims in Harmonia’s protest.
  • In January 2020, the Court of Federal Claims (COFC) ruled that Harmonia had waived its right to protest—post-award—amendments to a Customs and Border Protection (CBP) solicitation for services in support of cargo systems applications.
  • Harmonia had raised its solicitation objections prior to the applicable submission deadline but only in an agency-level protest. Five months after CBP denied the agency-level protest and only after CBP awarded the contract to another vendor, Harmonia filed its complaint at COFC. In rejecting the protest, the court explained that “while Harmonia facially met the requirements under Blue & Gold, Harmonia nevertheless waived its right to bring those claims before this Court by failing to timely and diligently pursue its objections . . . .”
  • The Blue & Gold waiver rule—established in the Federal Circuit’s 2007 Blue & Gold Fleet, L.P. v. United States decision—generally requires that an offeror who seeks to challenge the terms of a solicitation at the Court of Federal Claims bring such a protest prior to the deadline for proposal submission. In Blue & Gold Fleet, the Circuit held that “[r]ecognition of a waiver rule, which requires that a party object to solicitation terms during the bidding process,” furthered the Tucker Act mandate that courts expeditiously resolve protests.
  • Here, the three-judge Federal Circuit panel disagreed with COFC that Blue & Gold applied in this instance.
  • The Federal Circuit explained that “the Blue & Gold waiver rule is predicated not only on the notion of avoiding delay that could benefit the delaying party, but also on the notion of preserving challenges and providing notice to interested parties . . . Harmonia’s undisputedly timely, formal challenge of the solicitation before CBP removes this case from the ambit of Blue & Gold and its progeny.” That is, by filing an agency-level protest, Harmonia had preserved its right to re-raise its solicitation objections in a post-award protest.
  • This appeal gained attention because Judge Reyna, who sat on this panel, had previously questioned the viability of the Blue & Gold waiver rule in his much talked about dissent in Inserso Corp. v. United States.

For now, the Federal Circuit’s Blue & Gold waiver rule remains the law. This means that an offeror who wishes to protest the terms of a solicitation must do so prior to the deadline for proposal submission—in any of the protest forums. Here, the Circuit established that if a timely agency-level protest is filed, the offeror has preserved its right to re-raise its objections in the Court of Federal Claim—even after award—notwithstanding the Circuit’s Blue & Gold waiver rule.

2. Science Applications International Corporation, B-420005 et al. (October 27, 2021)

  • GAO sustained a protest alleging that the agency failed to provide adequate discussions and did not advise the protester that its prices were unreasonably high.
  • GAO also sustained the protest because the agency solicited but then ignored information from the offerors regarding proposed prices.
  • After receipt of initial proposals, the agency engaged in two rounds of discussions and obtained final proposal revisions before awarding the contract to Noble Supply and Logistics. Although SAIC received overall higher non-price ratings, Noble’s proposed price of approximately $1 billion was significantly lower than SAIC’s proposed price of approximately $1.5 billion.
  • GAO agreed with the protester that the agency provided inadequate discussions. The record showed that throughout the acquisition, the agency found SAIC’s price unreasonably high, yet the agency only advised SAIC that certain of its prices were “high” without ever informing SAIC that any of its prices, either individually or overall, were “unreasonably high.”
  • GAO also found unreasonable the agency’s decision to overlook inadequate substantiating price information submitted by the awardee and requested by the agency given the significant pricing disparity between offerors.

Although the solicitation in this procurement contemplated a consideration of reasonableness (whether prices were too high) but not a realism evaluation (whether prices are too low), GAO held that the agency erred because once it requested from the offerors pricing data that could provide confidence that the offered prices were fair and reasonable, the agency was not free to ignore the requested information (or lack thereof). Here, SAIC substantiated its price with a detailed submission as requested by the agency, while Noble failed to provide adequate information.

 


 

On behalf of the entire Jenner & Block Government Contracts Practice, we thank our clients for their support this year and wish them and all our readers a happy and safe holiday.

- David Robbins, Co-Chair, Government Contracts Practice


The Government Contracts Legal Round-Up | Episode 18

Co-Hosts Matthew L. Haws and Sati Harutyunyan discuss the latest court orders blocking the enforcement of the Biden Administration’s vaccine mandate for federal contractors issued on September 9, 2021 through Executive Order 14042 (EO 14042). During the episode, Mr. Haws and Ms. Harutyunyan walk listeners through the orders’ implications, the path forward in the courts, and what government contractors should be aware of as they considered company level requirements.


Nationwide Injunction of Federal Contractor Vaccine Mandate Issued by US District Court, Southern District of Georgia

Harutyunyan_Sati_COLOR Haws_Matthew_COLOR Sigel_Gabrielle_COLOR Whitman_Scott_COLOR


By: Sati HarutyunyanMatthew L. HawsGabrielle Sigel, and Scott E. Whitman

On December 7, 2021, Judge R. Stan Baker of the U.S. District Court for the Southern District of Georgia issued a nationwide injunction of the Biden Administration’s vaccine mandate for federal contractors issued on September 9, 2021 through Executive Order 14042 (EO 14042). This most recent order takes last week’s ruling from the Eastern District of Kentucky, which was limited to three states and which we covered here, a significant step further: it blocks enforcement of the vaccine mandate “for federal contractors and subcontractors in all covered contracts in any state or territory of the United States of America.” 

In its order, the court found that there would be an “extreme economic burden” that contractors “have suffered and will continue to suffer in endeavoring to comply with EO 14042.” According to Judge Baker, these burdens include, among other things, the “extensive and costly administrative work by employers” and the predicament of “at least some individuals to choose between getting medical treatment that they do not want or losing their job.” 

Against that backdrop, Judge Baker stated that the court was “unconvinced, at this stage of the litigation,” that the Federal Property and Administrative Services Act (the Procurement Act) authorized President Biden “to direct the type of actions by agencies that are contained in EO 14042.” Specifically, the court determined that the vaccine mandate operates as a “regulation of public health.” The court concluded the Procurement Act did not “clearly authorize the President to issue the kind of mandate contained in EO 14042, as EO 14042 goes far beyond addressing administrative and management issues in order to promote efficiency and economy in procurement and contracting, and instead, in application, works as a regulation of public health, which is not clearly authorized under the Procurement Act.”

In addition to finding a lack of clear statutory authorization, the court concluded that EO 14042 does not have a sufficient nexus “to the purposes of the Procurement Act and thus does not fall within the authority actually granted to the President in that Act.” The court stated that the government defendants did not cite any cases where a court has upheld an executive order 1) aimed at public health; and 2) imposing similar burdens as EO 14042. The court asserted that under the government’s proposed reading of the Procurement Act, the President would have the “right to impose virtually any kind of requirement on businesses that wish to contract with the Government (and, thereby, on those businesses’ employees) so long as he determines it could lead to a healthier and thus more efficient workforce or it could reduce absenteeism.” 

Unlike last week’s order from the U.S. District Court for the Eastern District of Kentucky, Judge Baker concluded that an injunction with national scope was appropriate under the “unique circumstances” before the George federal court. While noting that courts typically resist universal injunctions, Judge Baker concluded that a nationwide injunction was appropriate here because one of the intervening plaintiffs is a trade association with members throughout the United States and enjoining enforcement in a more limited geographic area would mean that the trade association’s "members would not have injunctive relief as to covered contracts in other states….[and] limiting the relief to only those before the Court would prove unwieldy and would only cause more confusion.”

The nationwide applicability of this injunction adds another factor to the complex landscape facing government contractors as they approach the January 18 deadline previously in place for compliance with the vaccine mandate. For example, in response to last week’s order by the Eastern District of Kentucky, Defense Pricing and Contracting issued guidance instructing contracting officers to not include the clause requiring compliance with Task Force guidance in new solicitations, contracts, or orders, including extensions or renewals, that may be performed at least in part in Kentucky, Ohio, and/or Tennessee. This guidance is likely to be updated following Judge Baker’s order issued yesterday. Note also that, particularly with enforcement of the OSHA vaccine and testing Emergency Temporary Standard stayed and enforcement of the federal contractor vaccination mandate enjoined, private employers may be subject to several states’ requirements limiting employers’ ability to require COVID-19 vaccination. Jenner & Block is ready to assist our clients with navigating this increasingly complicated space.


Government Contracts Legal Round-Up | 2021 Issue 23

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Regulatory Developments

1. Legal Wrangling Continues Regarding Federal Contractor Vaccine Mandate (December 3, 2021)

  • In an emergency motion, the US Department of Justice requested a stay of the three-state bar (KY, OH, and TN) to the federal contractor vaccine mandate in order to have time to appeal that injunction.  
  • The government argues that blocking Biden’s vaccine mandate risks irreparable harm by disrupting the government’s selection of federal contractors who must safely work while carrying out national security missions and manufacturing equipment for national defense.
  • The underlying vaccine mandate in Biden’s September executive order has thus far been implemented through clauses in new contracts and modifications to existing contracts.
  • The key question for the court is whether the President’s delegated power to manage federal procurement allows imposition of vaccines on the employees of federal contractors and subcontractors.
  • We are closely tracking legal challenges to the federal contractor mandate and stand ready to advise you on the impact of these challenges nationwide.

2. Changes to Guidance on Agency Enforcement of the Vaccine Mandate by Federal Employees, (November 29, 2021)

  • The Safer Federal Workforce Task Force updated its guidance to clarify agency enforcement of the vaccine mandate by federal employees.
  • For those not yet vaccinated, the guidance now advises an “appropriate” period of education and counseling, rather than a “brief,” or “five day” period. 
  • Following education and counseling, agencies may issue a letter of reprimand, followed by a short suspension, now described as 14 days or less. Continued noncompliance during the suspension can be followed by the agency proposing removal. However, depending on operational needs and individual circumstances, agencies may expedite or extend the enforcement process, such as by moving to a second suspension of 15 days or more prior to removal.
  • Agencies are cautioned that “consistency across Government in enforcement of this Government-wide vaccine policy is desired, and the Executive Order does not permit exceptions from the vaccination requirement except as required by law.”
  • Guidance for agency handling of unvaccinated employees provides a framework for federal contractors to use in fashioning their own policies. We continue to track the changes to guidance regarding vaccine-related workforce policies and stand ready to advise regarding your implementation of the federal contractor vaccine mandate.

Protest Cases

1. Enterprise Resource Planned Systems International, LLC, B-419763.2; B-419763.3 (November 15, 2021) (Published December 3, 2021)

  • GAO denied a protest alleging in part that the agency improperly performed a price realism evaluation.
  • A price realism analysis considers whether an offeror’s low price reflects a lack of technical understanding or risk. Agencies are only permitted to assess price realism if offerors are on notice such an evaluation will be performed.
  • Here, the solicitation did not include a price realism as an evaluation factor. ERPSI alleged that the agency nonetheless performed one, claiming the evaluators raised concerns about ERPSI’s proposed price being too low to fulfill the representations made in its technical proposal.
  • GAO denied this protest ground, finding that statements made by the evaluators did not demonstrate that the agency evaluated ERPSI’s price for realism. Instead, the record reflected the agency’s concern that the protester’s proposal carried technical risk in multiple respects, which in turn carried price risks. For instance, ERPSI’s proposal included ambiguities as to what, specifically, the firm was proposing as its technical solution; GAO found reasonable the agency’s conclusion that it might have to incur additional costs to satisfy the requirements of the contract due to these ambiguities.

Evaluation references to price risk do not necessarily constitute price realism. GAO maintains a distinction between cases where it is the protester’s price that raised concerns about the risk or feasibility of their technical approach, versus those where the agency had concerns about the firm’s technical approach that increased the possibility of additional costs during performance of the contract to meet the requirements.

2. Computer World Services Corporation; CWS FMTI JV LLC, B-419956.18 et al. (November 23, 2021)

  • GAO sustained a protest challenging the terms of the National Institutes of Health’s (NIH) Chief Information Officer-Solutions and Partners 4 (CIO-SP4) solicitation.
  • Relevant here, the solicitation included a self-scoring component in phase 1 of the competition under which an offeror could claim points for multiple criteria based on various experience (e.g., under the corporate experience criterion, performing in the RFP’s ten task areas). The RFP permitted an offeror to submit experience examples by mentor-protégé joint venture members, or members of a contractor team arrangement (CTA).
  • CWS and CWS’s mentor-protégé joint venture protested because, for a mentor-protégé joint venture, the solicitation limited the experience examples that a large business mentor could submit for credit. The protester argued that these limitations unreasonably restricted the ability of a protégé to take advantage of the experience of its large business mentor.
  • GAO first rejected CWS FMTI’s argument that the RFP violated 13 C.F.R. § 125.8, which provides that “[a] procuring activity may not require the protégé firm to individually meet the same evaluation or responsibility criteria as that required of other offerors generally.” GAO concluded that the RFP did not violate any specific statutory or regulatory provisions because the RFP’s limitations on the experience that could be submitted by the large business mentor did not impose on the protégé a requirement that was different than “other offerors generally,” because the protégé was not required to submit any experience itself.
  • Nonetheless, GAO sustained the protest because the restriction was unduly restrictive of competition.
  • NIH maintained that limiting the amount of experience that may be credited to a large business mentor would ensure that the agency would be able to meaningfully consider the experience of the protégé member of the joint venture, but GAO emphasized that the CIO-SP4 RFP did not actually require the protégé to submit any experience, and therefore did not ensure that the agency would be able to meaningfully consider that joint venture member’s experience after all. (This also distinguished the situation here from a comparable restriction GAO found unobjectionable in Ekagra Partners, LLC in early 2019.)

The purpose of the Small Business Administration’s mentor-protégé joint venture program is to allow small business protégés to benefit from the capabilities of mentor firms—which may be large or small businesses. GAO sustained one of the dozens of protests filed challenging the CIO-SP4 solicitation because NIH had no reasonable support for its decision to limit the submission of experience from a large business mentor, which essentially favored joint ventures with small business mentors.

Claims Cases

1. JKB Solutions and Services, LLC v. United States, Fed. Cir. 2021-1257 (November 17, 2021)

  • JKB received an IDIQ contract to provide training services to the US Army. The Army ordered 14 training sessions per year, but then failed to use or pay JKB for that many sessions. JKB brought an action for breach of contact.
  • After a series of motions, the government moved for summary judgment based on the contract’s inclusion of FAR 52.212-4 and the doctrine of constructive termination for convenience.
  • The Court of Federal Claims granted the government’s motion for summary judgment, holding that FAR 52.212-4 incorporated a termination for convenience clause and nothing limited the applicability of that clause to commercial items.
  • The Court of Appeals for the Federal Circuit disagreed, finding that FAR 52.212-4 does not apply to a services contract and, thus, the termination for convenience clause within it was not applicable. The court remanded to the lower court to consider whether the Christian Doctrine would read into the contract a different termination for convenience clause and whether the government’s actions would then permit constructive termination for convenience.

Courts have gone to great lengths to avoid holding that the government has breached its contract and is liable for breach damages. This decision recognizes basic limits on invoking termination for convenience and finding constructive termination for convenience. It also highlights the complexity of—and the need for experienced counsel in—any situation where the government refuses to live up to its end of the bargain and threatens termination.

Investigations and Enforcement

Yesterday, the President announced the United States’ Strategy on Countering Corruption. We link to the fact sheet from the White House, which further links to the strategy itself. Additional analysis to follow in future alerts.


Court Enjoins Enforcement of Federal Contractor Vaccine Mandate in Kentucky, Ohio, and Tennessee

Whitman_Scott_COLOR Harutyunyan_Sati_COLOR Haws_Matthew_COLOR


By: Scott E. WhitmanSati Harutyunyan, and Matthew L. Haws

On November 30, 2021, the United States District Court for the Eastern District of Kentucky issued an order (PI Order) enjoining the federal government from enforcing the federal contractor vaccine mandate “in all covered contracts in Kentucky, Ohio, and Tennessee.” As contractors develop their compliance plans for this mandate, this significant development may indicate how similar challenges pending in other federal district courts will fare. (See our prior alerts on Executive Order 14042 (EO) and the Task Force Guidance here, here, and here.)

Background 

On November 4, 2021, the states of Kentucky, Ohio, and Tennessee filed a federal complaint seeking a preliminary injunction to prevent the federal government from enforcing the vaccine mandate. The states alleged that the vaccine mandate was unlawful under the Administrative Procedure Act and unconstitutional.

The PI Order

On November 30, 2021, the district court granted the preliminary injunction and ordered that “[t]he Government is enjoined from enforcing the vaccine mandate for federal contractors and subcontractors in all covered contracts in Kentucky, Ohio, and Tennessee.” PI Order at 29. The court noted that, although vaccines are effective and the government may, at times, mandate vaccinations for the public interest, the President likely may not use "congressionally delegated authority to manage the federal procurement of goods and services to impose vaccines on the employees of federal contractors and subcontractors." Id. at 1. In reaching its decision, the court found that the vaccine mandate likely exceeds the President’s delegated authority for federal procurement, including because it: (1) effectively amounts to a sweeping public health regulation, which is beyond the scope of authority delegated to the President under the Federal Property and Administrative Services Act (FPAS); (2) violates the Competition in Contracting Act (CICA); and (3) violates the 10th Amendment by regulating noneconomic activity (i.e., choice to remain unvaccinated) that falls within the States’ police power. Id. at 14–20.

The court’s FPAS and CICA analyses are particularly significant for government contract regulation more broadly, and the court’s logic could be extended far beyond the vaccine mandate. For example, in determining that the vaccine mandate likely violates CICA, the court looked to the recent United States Court of Appeals for the Federal Circuit’s decision in Nat’l Gov’t Servs, Inc. v. United States, 923 F.3d 977, 985 (Fed. Cir. 2019), and concluded that “Defendants may run into the same problem [as occurred in NGS]: contractors who ‘represent[] the best value to the government’ but choose not to follow the vaccine mandate would be precluded from effectively competing for government contracts.” Id. at 15 (quoting 923 F.3d at 990).

The Court considered whether it should issue a nationwide injunction, but chose not to, in deference to the authority of other federal district courts and to prevent forum shopping. Id. at 27–28.

What Now?

There are preliminary injunction hearings scheduled in several other challenges to the contractor vaccine mandate over the next week, including before the Southern District of Georgia (December 3) and the Middle District of Florida (December 7). While this PI Order does not apply nationwide, it provides one roadmap for courts in other districts to consider in evaluating similar lawsuits. Notably, as the PI Order alluded to, at least one federal court has dismissed a challenge to the vaccine mandate by individuals for lack of standing. Hollis v. Biden, 2021 WL 5500500 (N.D. Miss. Nov. 23, 2021).

With the rapidly approaching January 18 deadline, contractors will be watching closely as each decision adds to the complexity of vaccine mandate compliance plans and policies. Jenner & Block continues to follow closely these developments and to assist our clients in applying the requirements to their unique situations.


Government Contracts Legal Round-Up | 2021 Issue 22

Welcome to Jenner & Block’s Government Contracts Legal Round‑Up, a biweekly update on important government contracts developments. This update offers brief summaries of key developments for government contracts legal, compliance, contracting, and business executives. Please contact any of the professionals at the bottom of the update for further information on any of these topics.

Executive Orders

1. Executive Order on Nondisplacement of Qualified Workers Under Service Contracts (November 19, 2021)

  • President Biden has re-instituted the rule on non-displacement of qualified workers under service contracts subject to the Service Contract Act. In simple terms, this rule requires contractors to offer covered employed under the predecessor contract and its subcontracts a right of first refusal of employment under a successor contract in positions for which those employees are qualified.
  • Contractors should expect the Department of Labor to issue a final rule implementing the change no later than May 2022, with FAR implementation following within 60 days. Despite often bumping up against rulemaking deadlines, DOL could issue this rule in fairly short order due to the framework already provided by the original rule issued by President Obama, but rescinded by Trump. Regardless, contracting officers are likewise “strongly encouraged” to include the relevant clause in any contracts issued between the date of the Order and the final rule.
  • DOL may issue sanctions and remedies for noncompliance, including orders requiring employment and payment of wages lost; and, for willful violations, suspension or debarment.

Regulatory Developments

1. Class Deviation 2022-O0005: Pilot Program for Streamlining Awards for Innovative Technology Projects (November 18, 2021)

  • With a sunset date of October 22, 2022, this Class Deviation exempts from certified cost or pricing data requirements contracts, subcontracts, or modifications of contracts or subcontracts valued at less than $7.5 million awarded to a small business concern or nontraditional defense contractor, when awarded pursuant to 
    • A technical, merit-based selection procedure, such as a broad agency announcement (see FAR 35.016(b)(2));
    • The Small Business Innovation Research Program; or
    • The Small Business Technology Transfer Program.

2. Class Deviation 2022-O0004: Requirements for Nonavailability Waiver Determinations Under the Buy American Statute (November 18, 2021)

  • Defense Pricing and Contracting has issued a Class Deviation to implement key Biden initiatives designed to improve transparency of domestic sourcing (Buy America) waivers and increase the public’s trust in efforts to expand the US manufacturing base. 
  • In lieu of the relevant FAR provisions, this Class Deviation requires DoD contracting officers to execute an individual nonavailability waiver determination if no offer for a domestic end product is received in response to competitive acquisitions.
  • Contracting officers must post such waiver determinations digitally to MadeinAmerica.gov via System for Award Management (SAM.gov) for “Made in America Office” (MIAO) review unless an exception applies. Such exceptions include an urgent need or a prior class determination of nonavailability for the type of product to be purchased. Portions of this posting will be available to the public while source selection information will remain protected.
  • Contracting officers shall not make an award until receiving confirmation that the MIAO: (1) completed its review of the proposed nonavailability waiver determination; or (2) waived its review. The final decision to execute an individual nonavailability waiver determination shall be approved in accordance with DFARS 225.103(b)(ii).
  • A similar Class Deviation applies to civilian agencies and is available here: Class Deviation 2022-01.

Protest Cases

1. GAO Bid Protest Annual Report to Congress for Fiscal Year 2021 (November 16, 2021)

  • GAO issued its annual report to Congress providing data concerning GAO’s overall protest filings for Fiscal Year (FY) 2021.
  • 1,897 cases (including protests, cost claims, and requests for reconsideration) were filed, down 12% from the prior year. In comparison, FY 2018 saw a five-year high with 2,607 cases filed.
  • GAO’s sustain rate of 15% remained consistent with prior years.
  • The effectiveness rate (based on a protester obtaining some form of relief from the agency, either as a result of voluntary agency corrective action or GAO sustaining the protest) likewise remained steady at 48%.
  • The most prevalent reasons for sustaining protests during the 2021 fiscal year were: (1) unreasonable technical evaluation; (2) flawed discussions; (3) unreasonable cost or price evaluation; and (4) unequal treatment.

2. ASHLIN Management Group, B-419472.3; B-419472.4 (November 4, 2021) (Published November 15, 2021)

  • GAO sustained a protest alleging that the agency should have evaluated the awardee’s quotation as technically unacceptable because one of the awardee’s quoted key personnel became unavailable during corrective action.
  • In January 2021, the Department of Labor took corrective action following a protest challenging the award to Booz Allen Hamilton (BAH). When BAH had submitted its quotation in October 2020, one of its then-current employees was slated to fill a key position. In March 2021, the individual submitted a resignation letter notifying BAH of the employee’s intent to leave BAH in two weeks’ time; the employee left the company in April. During this period, the agency was still implementing its corrective action; BAH did not provide notice that the key personnel had departed. The agency again awarded the task order to BAH.
  • The protester argued that BAH’s quotation became technically unacceptable during the corrective action period because this individual was no longer available.
  • GAO sustained the protest, finding that BAH had actual knowledge of the unavailability of one of its quoted key personnel during the corrective action period and failed to notify the agency.
  • GAO was unpersuaded by BAH’s argument that it did not have actual knowledge of the individual’s unavailability because BAH might seek to re-hire the individual if the agency rejected a key personnel substitution, and he might agree to be rehired. GAO also did not accept BAH’s argument that no duty to notify arose here because the task order issued to BAH in December 2020 remained in place throughout the corrective action period, making this the replacement of a key person after award that is a matter of contract administration not for consideration by GAO.

The question of whether to notify agencies regarding the departure of key personnel is one that perpetually vexes contractors. GAO’s decision here reinforces that the failure to do so will render the proposal technically unacceptable—even if the departure occurs during corrective action. If faced with this situation, the proposal team should consult with legal counsel for guidance navigating the traps.

Claims Cases

1. Appeal of Lockheed Martin Aeronautics Co., ASBCA No. 62209 (October 27, 2021)

  • Lockheed submitted a claim for excessive “over & above” work on a contract to upgrade C-5 aircraft.
  • The parties engaged in an increasingly contentious discovery process, with multiple motions to compel. The ASBCA appears to have become increasingly frustrated with the parties and pointedly noted that it “is optimistic that this will be the final [motion to compel] and [the decision] will guide the parties in working together to resolve any future discovery disputes.”
  • The ASBCA noted that broad discovery is permitted before the Board, subject to limits of relevance and proportionality. It then found that Lockheed’s requests were within the bounds of relevance and permitted discovery. Specifically, Lockheed had identified its intent to use a measured mile approach in demonstrating quantum and was entitled to seek information that might support that approach. The government’s view that Lockheed did not have sufficient facts to prove entitlement did not permit the government to refuse to engage in discovery.
  • The ASBCA also rejected the government’s boilerplate objections to interrogatories. The Board found that generalized objections—such as it being “unduly burdensome to attempt to locate” relevant individuals or information—were not sufficient. Such a response failed to demonstrate that the government engaged in a good faith effort to respond to the interrogatories and failed to identify the actual burden the government might face in responding.

Discovery disputes can be costly and time consuming for both parties. They also fail to serve the government’s interest and obligation to treat contractors fairly. Carefully articulated discovery requests and thoughtful trial strategy can help reduce unnecessary costs and painful delay during the discovery process.


The Government Contracts Legal Round-Up | Episode 17

Host David R. Robbins fdiscusses the latest rule changes and regularly announcements made by the Biden Administration that will impact government contractors and grant recipients. Among those announcements are the deadline extension for government contractors to comply with the COVID-19 vaccine mandate, the US Department of Defense’s Cybersecurity Maturity Model Certification 2.0, and several important changes to the Department of Justice’s Corporate Criminal Enforcement Policies and Practices.


Government Contractors Provided “Flexibility” Regarding Timing and Enforcement of COVID-19 Vaccine Mandate

Harutyunyan_Sati_COLOR Haws_Matthew_COLOR

 

By: Sati Harutyunyan and Matthew L. Haws

The last two weeks have brought a flurry of activity and changes to the Safer Federal Workforce Task Force (Task Force) Guidance issued pursuant to President Biden’s Executive Order 14042 (EO). (See our prior alerts on the EO and Task Force Guidance here and here.) As government contractors work to understand and implement these requirements, they have been left interpreting a number of White House press statements and updates to Q&As available on the Task Force website. Here is a brief summary of recent updates and key issues:

  • A New Deadline: According to a White House press briefing and Fact Sheet, the deadline for covered contractor employees to receive the required shots for full vaccination will be extended to a new date of January 4, 2022. The White House stated the extension was provided to align with the deadline under new COVID-19-related requirements from the Occupational Safety and Health Administration (OSHA). At this time, however, neither the actual Task Force Guidance document nor any related Q&As have been updated to reflect this change. In addition, the press briefing and Fact Sheet use a different phrase than the Task Force Guidance—leaving unclear whether covered contractor employees will be required to be “fully vaccinated” by the new date or merely have completed all necessary shots.

    • The press briefing and the Fact Sheet describe the new January 4 deadline as the date by which covered employees must “have their final vaccination dose.”

    • The Task Force Guidance, on the other hand, had set out a deadline for employees to become “fully vaccinated” which the Guidance defines as “two weeks after they have received the second dose in a two-dose series, or two weeks after they have received a single-dose vaccine.”

  • Interaction with OSHA ETS: A new Q&A provides that covered contractors must comply with the Task Force Guidance and may not choose to instead comply with the OSHA Emergency Temporary Standard (ETS). The White House Fact Sheet echoes that covered contractor workplaces are not also subject to the ETS: “OSHA is also clarifying that it will not apply its new rule to workplaces covered by either the CMS rule or the federal contractor vaccination requirement.” It continues: “And, the newly-released ETS will not be applied to workplaces subject to the federal contractor requirement or CMS rule, so employers will not have to track multiple vaccination requirements for the same employees.” Nonetheless, this could create a complicated patchwork of requirements for some businesses.

  • More Flexibility: In addition to the extended deadline, both White House press statements and updated Q&As indicate that contractors will have some flexibility over how they enforce vaccination requirements for workers who refuse to become vaccinated. To be clear, this flexibility appears to be limited to the timing of completing the regimen of shots where an employee has sought an “accommodation” under the rule or is in the contractor’s discipline / enforcement process. Specifically, the new Q&As provide that:

    • Agencies “should work with” covered contractors who “are working in good faith and encounter challenges with compliance with COVID-19 workplace safety protocols to address the challenges of compliance with the Task Force Guidance” and should not consider contract termination unless a contractor has failed to “work[] in good faith” to comply.

    • Contractors will be permitted to “determine the appropriate means of enforcement with respect to” employees who refuse the vaccine. For example, before terminating unvaccinated employees, contractors may first go through their “usual processes for enforcement of workplace policies, such as those addressed in the contractor’s employee handbook or collective bargaining agreements” to encourage vaccination.

    • Contractors are not required to make a final determination on medical or religious accommodations for their employees before unvaccinated employees start work on a covered contract or at a covered workplace. Indeed, a “covered contractor may still be reviewing requests for accommodation as of the time that covered contractor employees begin work on a covered contract or at a covered workplace.”

  • Coverage for Affiliates: New Q&As address certain circumstances where “covered contractor employees” are likely to be present at workplaces controlled by corporate affiliates that do not have a covered contract or where employees of corporate affiliates are working on or in connection with a “covered contract.”

    • Under the new Q&As, for purposes of the Task Force Guidance, “business concerns, organizations, or individuals are affiliates of each other if, directly or indirectly: (i) either one controls or has the power to control the other; or (ii) a third party controls or has the power to control both.”

    • The Q&As now state that if a corporate affiliate of a covered contractor does not otherwise qualify as a covered contractor, the employees of that affiliate are still considered covered contractor employees subject to the Guidance if they perform work at a covered contractor workplace.

    • A “workplace is considered a covered contractor workplace” if “any employee of a covered contractor working on or in connection with a covered contract is likely to be present during the period of performance for a covered contract at a workplace controlled by a corporate affiliate of that covered contractor.”

  • Subcontractor Flowdown: The original Q&A included with the Task Force Guidance indicated that a prime contractor’s responsibility for “verifying that subcontractors are adhering to the mandate” was centered on “ensuring that the required clause is incorporated into its first-tier subcontracts….” A new Q&A on the Task Force website returns to this issue even more directly: “Q: May the prime contractor assume the subcontractor is complying with the clause? A: Yes, unless the prime contractor has credible evidence otherwise.” While seemingly a reduction in the prime contractor’s oversight burden, this answer actually creates a host of potential issues: is this effectively a “don’t ask; don’t tell” policy; what is “credible evidence” (a somewhat unique term used primarily in the FAR mandatory disclosure rule) in this context; and what is a contractor required to do if it does have “credible evidence” a subcontractor is not complying?

These updates reflect an ever-evolving, complex compliance framework for federal contractors. The Q&As are being updated frequently to reflect material changes, but the Task Force Guidance has itself yet to be updated as a whole. With January 4 as the new target date, contractors will need to reevaluate their implementation plans and compliance policies. Jenner & Block continues to follow closely these developments and to assist our clients in applying the requirements to their unique situations.