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Executive Order 14042 (the “EO”) and the implementing FAR clause and Safer Workforce Task Force (SWTF) Guidance – which mandate that government contractors and their subcontractors be vaccinated absent a legal exception – has been challenged by 26 states, as well as other entities.  Many of these suits allege that the President’s actions exceeded his authority under the U.S. Constitution and as delegated by Congress through legislation. Certain suits also challenge the rulemaking to implement the EO, and raise federalism and states’ rights concerns. Previously, we reported on the preliminary injunction issued by Judge Van Tatenhoven of the District Court for the Eastern District of Kentucky, enjoining the enforcement of the EO for federal contracts and contract-like agreements involving performance in the States of Kentucky, Ohio, and Tennessee.  We also reported on the nationwide injunction issued by Judge Baker of the District Court for the Southern District of Georgia, similarly enjoining enforcement of the EO but expanding it to cover federal contracts and contract-like agreements “in any state or territory of the United States of America.”

In the latest decision issued in this trail of State-led challenges, Judge Drell of the District Court of the Western District of Louisiana, issued a preliminary injunction over implementation of the EO for the States of Louisiana, Mississippi, and Indiana with regard to “contracts, grants, or any other like agreement by any other name between the Plaintiff States and the national government.”  The Court declined to extend the stay to private contractors since there was “not a single plaintiff representative of private contractors,” nor evidence of the EO’s effect on private contractors presented in that case, and there was a national injunction already in place for private contractors under the Georgia v. Biden case.

The Louisiana Court found that the identified States had standing to bring suit based on their contracts and the “Hobson’s choice” they faced in addressing the Government’s “strong-arming tactics” of accepting the clause or risking the loss of current and future contracts given their lack of bargaining power. The Louisiana Court discussed, but did not reach the question of whether the States had parens patriae standing to bring suit on behalf of its citizenry although the Court seemed to be sympathetic to finding such standing. Instead, the Court based its finding of standing on the fact that the States had established a case or controversy in regard to conflict between the EO and implementing actions and the Tenth Amendment of the U.S. Constitution.

In issuing the preliminary injunction here, the Louisiana Court noted that there were “bizarre coverage differences” between the EO and the FAR memorandum implementing it. The Court pointed out that the EO does not apply to existing or current contracts, or grants, contracts with Indian Tribes, contracts at or below $250,000, contracts for work performed outside the U.S., or contracts for products. In contrast, the Court found that the FAR memorandum implementing the EO expressly seeks to expand the scope by applying the requirements more broadly.  While contracts with Indian Tribes and those performed outside the U.S. are expressly excluded under the FAR memorandum, the Court pointed out that grants were not excluded.

While the author of this blog notes that FAR provisions do not normally apply to grants unless expressly incorporated into the grant or grant rules applicable to the grant, the Court’s finding does not appear to be based solely on the fact that the FAR memorandum does not exclude grants.  Rather, it appears to rely on the facts brought forth in live testimony during the hearing that the National Institute of Health contacted the University of Louisiana and requested that the University comply with the SWTF Guidance through the inclusion of a deviation clause into an existing grant.  The testimony reported that the University was left with no choice but to accept the deviation clause without bargaining, or risk loss of its grant. Personnel employed by the University also presented testimony that the University denied their assertion of a religious exception because there was “uncertainty as to whether any accommodation for a religious exemption is sufficient to comply” with the SWTF Guidance and that the personnel would be fired unless they obtained fully vaccinated status by January 18, 2022.

In examining whether the Federal Property and Administrative Services Act (FPASA) provided legislative authority for the EO’s required government contractor vaccine mandate, the Court stated that there would need to be a “close nexus” between the FPASA and the EO.   However, the Court determined that the primary purpose of the EO, to motivate public health policy first and foremost to increase vaccinations, was not aligned with FPASA policy, which is to promote economy and efficiency, encompassing factors like “price, quality, suitability, and availability of goods or services that are involved in all acquisition decisions.”  Further, the Court found that the public health policy purpose of the EO conflicts with the Tenth Amendment of the U.S. Constitution, which entrusts the protection of the “safety and the health of the people,” a noneconomic activity, principally to the States.

With regard to challenges that the States’ brought against the rulemaking under the EO, the Court determined that, two years into the pandemic, the circumstances did not satisfy the urgent and compelling circumstances test so as to justify waiver of the relatively short required notice and comment period for rulemaking. Notably, the Court stated that the Office of Management and Budget’s (OMB’s) actions to calendar a comment period on the OMB determination was a “manipulation” of the letter of the law and the revised OMB determination to adopt the then updated SWTF Guidance and move the date for full vaccination of government contractors to January 18, 2022 did not “pacify” complaints that the arbitrary effective date was inconsistent with the Administrative Procedure Act.

Cases in other jurisdictions are also winding their way through the judicial process.

In the interim, the revised SWTF Guidance still provides that “The Government will take no action to enforce the clause implementing requirements of Executive Order 14042, absent further written notice from the agency, where the place of performance identified in the contract is in a U.S. state or outlying area subject to a court order prohibiting the application of requirements pursuant to the Executive Order . . . . In all other circumstances, the Government will enforce the clause, except for contractor employees who perform substantial work on or in connection with a covered contract in an Excluded State or Outlying Area, or in a covered contractor workplace located in an Excluded State or Outlying Area. . . . Note: Federal agency COVID-19 workplace safety protocols for Federal buildings and Federally controlled facilities still apply in all locations.”  The Government clearly is still hoping to overturn or dial back the nationwide stay. Contractors with contracts that task them to perform work at government facilities still need to comply with agency requirements.  And  those that have contracts with the clause and perform within and outside the United States and its outlying areas may have questions about the impact of this enforcement “stay” on their contracts in light of this ambiguous language. Contractors in these circumstances may want to check with their contracting officer to confirm the scope of their requirements.

Stay tuned for further developments.