Articles

Client Alert: Forced Bilateral Modifications to Comply with Future Guidance, and Other Strangeness

Date: October 11, 2021
Being a government contractor is hard; the rules are complex, and the penalties for non-compliance can be harsh.  So, when the President of the United States tells the world that there will be a vaccine mandate for U.S. government contractors, contractors might have some questions.
  1. What just happened?
On September 9, 2021, President Biden issued Executive Order 14042, entitled: “Ensuring Adequate COVID Safety Protocols for Federal Contractors.” That EO requires government agencies to include in their contracts a clause requiring both contractors and subcontractors to “comply with all guidance for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force (Task Force Guidance or Guidance).”[1]
         
And, on September 30, 2021, The FAR Council issued a memorandum on “Issuance of Agency Deviations To Implement Executive Order 14042,”[3] explaining when and how these clauses will come into effect.  In turn, the Civilian Agency Acquisition Council,[4] the Department of Defense, [5] and the General Services Administration[6] issued their own memoranda on implementing these clauses.
  1.  My head is starting to spin; when does this apply to my company?
You will receive a contract modification from your Contracting Officer adding a new FAR Clause 52-233.99 to your contract.[7]  In accordance with the FAR Council memorandum, Contractors should especially anticipate seeing the new clause when existing contracts are up for extension or renewal under any option(s), though it could appear at other times as well.  The government is trying to get these modifications to you by October 15, 2021.
  1. What exactly will this new clause require?
The clause will require compliance:

(c) Compliance.  The Contractor shall comply with all guidance, including conveyed through Frequently Asked Questions, as amended during the performance of this contract, for contractor or subcontractor workplace locations published by the Safer Federal Workforce Task Force (Task Force Guidance) here.

In short, all contractor employees must be vaccinated by December 8, 2021 (with limited exceptions); all contractor employees must follow (evolving) masking and social distancing guidance; and the contractor must have a designated person in charge of COVID-19 compliance.
 
  1. I get that the new clause can be put into Solicitations for new contracts, and we can “bake in” the costs of compliance, but what about existing contracts?
The government will implement this new clause through a “bi-lateral” modification; presumably one in which the government does not include any compensation for the increased costs that the contractors will incur.  Pay particular attention to any “release” or “waiver” language in the modification or any reference to the modification being a “no-cost” modification.
  1. So, if it is a bi-lateral modification, I don’t have to agree, right?
Right.  And the government does not have to extend or renew your contract, or exercise any option years on your contract if you do not.
  1. So, how do I get compensated for all of my new costs based on the current Task Force Guidance?
The Contractor must be prepared to request an equitable adjustment by providing accurate, complete data reasonably supporting a change in costs (including the costs of preparing the request) while meeting any applicable timeliness requirements (e.g., 30 days after a written notice from the Government), subject to the release/waiver/no-cost language mentioned above. 

Chances are, however, the Government will insist that Contractors “agree” to “bi-lateral” modifications that adopt potentially costly changes at no charge if the Contractor ever wants to get another contract, contract extension or option year exercised.
  1. But, did I read that right? We have to follow guidance that the Task Force includes on its website’s Frequently Asked Questions? And it can change that Guidance, and we still have to comply?
Yup.  You read that right. 

Suffice to say the Task Force Guidance could fluctuate wildly within a given term of contract performance.   One day a location could be under a lower or moderate community transmission level and, the next, fall in a substantial or high level.  That change would result in a change in the applicable Task Force Guidance, which the Contractor would have to comply with even without a formal contract change or modification, and which could significantly affect a Contractor’s costs.   

The proposed clause is basically an Agreement that the Contactor will comply with fluctuating agency guidance, possibly (indeed, probably) in no way connected to or coordinated with the Contracting Officer. 
  1. Is there any good news here?
That all depends on your perspective.  But from the perspective of a Contractor looking to recover some of the costs the Government has just imposed, the fluctuating Task Force Guidance actually may be an opening to cost recovery.

Once the new FAR clause has been incorporated into your contract, we should not expect the Contracting Officer to provide Contractors with further modifications, let alone further “bi-lateral” modifications in which they ask contractors to waive their rights, related to the EO or Task Force Guidance.  However, each time the Task Force Guidance changes again – for example, when the Task Force adds some new FAQs to the website that impose additional obligations on the Contractors – that may trigger the opportunity to seek an equitable adjustment.

The Contractor must be very adept at change management.  Whether the Contractor decides to treat a change in Task Force Guidance as an ordered or constructive change under FAR 52.243-1 through -4 (the Changes Clause), the Contractor must be prepared to request an equitable adjustment by providing accurate, complete data reasonably supporting a change in costs (including the costs of preparing the request) while meeting any applicable timeliness requirements (e.g., 30 days after a written notice from the Government), where changes may occur rapidly, frequently and unpredictably.  One can be reasonably sure—and Contractors should assume—that changes in Task Force Guidance will not be monitored by the Contracting Officer, and that no written change orders will be issued when the Guidance changes.  Contractors must be mindful of changes to the Task Force Guidance, and be ready to act on them.   
  1. So, let me get this straight – I have to “agree” to a new contract clause or I risk all my future government business; I may not be able to recover any costs associated with my new obligations; and my best hope for recovering some of my new costs is that the Government will continue to change the terms of my contract.  What’s next?
Stay tuned.  And reach out if you need any help.
[6] https://www.gsa.gov/cdnstatic/Class%20Deviation%20CD-2021-13_0.pdf [PDF link invalid as of June 2023]
[8] Id.

The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.