New Vaccine Mandates Go into Effect for GSA Landlords

Over the past two weeks, the long-expected vaccine mandate for government contractors and landlords has been issued and is being implemented at a rapid pace. First, on Sept. 9, 2021, President Joe Biden issued an Executive Order on Ensuring Adequate COVID Safety Protocols for Federal Contractors (E.O. 14042), mandating the creation of a clause requiring federal contractors and subcontractors to comply with all guidance "for contractor or subcontractor workplace locations" published by the Safer Federal Workforce Task Force. Shortly thereafter, the Task Force issued its implementing COVID-19 Workplace Safety Guidance for Federal Contractors and Subcontractors (the Safety Guidance), which mandates compliance with the following "workplace safety protocols":

• COVID-19 vaccination of covered contractor employees, except in limited circumstances where an employee is legally entitled to an accommodation
• compliance by individuals, including covered contractor employees and visitors, with the Safety Guidance related to masking and physical distancing while in covered contractor workplaces
• designation by covered contractors of a person or persons to coordinate COVID-19 workplace safety efforts at covered contractor workplaces

And, following the Task Force's Safety Guidance, the Federal Acquisition Regulatory (FAR) Council issued a memorandum, entitled Issuance of Agency Deviations to Implement Executive Order 14042, providing federal agencies with initial direction for incorporation of the clause mandated by the E.O. into their solicitations and contracts. Concurrent with the FAR Council's guidance, the General Services Administration (GSA) approved Class Deviation CD-2021-13 to implement the E.O.

Finally, on Oct. 5, 2021, the GSA issued a Leasing Alert, providing specific guidance on how the agency intends to implement the requirements of the E.O. in GSA lease agreements. The action was swift: on Oct. 15, 2021, GSA landlords began receiving automated emails asking them to sign lease amendments (via DocuSign) memorializing their obligations with regard to the new workplace safety requirements. Several of these automated emails have noted that GSA leasing contracting officers cannot extend or renew the lessor's existing lease if the lessor does not agree to accept the new clause or impose other penalties for a lessor's refusal to sign. At the same time, however, the GSA is not offering lessors consideration for their acceptance of these new requirements (e.g., an equitable adjustment to cover increased compliance costs).

The clause and the incorporated guidance have generated a substantial amount of confusion and a number of questions about the interpretation of landlord obligations. This alert provides an update on the new requirements for existing and future leases to assist landlords with their obligations and options moving forward.

Who Is Covered by the Vaccine Mandate?

Under the Task Force's Safety Guidance,¹ "[c]overed contractors must ensure that all covered contractor employees are fully vaccinated for COVID-19, unless the employee is legally entitled to an accommodation." A "covered contractor" is defined as "a prime contractor or subcontractor at any tier who is party to a covered contract," which includes all GSA landlords.

The Safety Guidance defines these individuals as "any full-time or part-time employee of a covered contractor working on or in connection with a covered contract or working at a covered contractor workplace." Covered contractor employees include "employees of covered contractors who are not themselves working on or in connection with a covered contract."

Recently, GSA engaged with industry on Oct. 13, 2021, via a webinar and explained that it believed the following groups of individuals must be vaccinated against COVID-19 under the E.O. and the Task Force's implementing guidance:

The GSA's interpretation, consistent with the broad applicability contemplated by the Task Force's Safety Guidance, is that landlord employees working in any way "in connection with" a lease agreement that includes the new FAR clause – including indirectly, such as in billing or human resources – are "covered contractor employees" for purposes of the vaccine mandate and other workplace safety requirements. Further, the Task Force's Safety Guidance even notes that individuals working on covered contracts remotely (e.g., from their home or a location other than a covered contractor workplace or federal workplace) are still considered "covered contractor employees" and thus subject to the vaccination requirement, "even if the employee never works at either a covered contractor workplace or Federal workplace during the performance of the contract."

For many GSA landlords, the leased properties are often held by single purpose entities (i.e., limited liability companies (LLCs) or S corporations formed for the "single purpose" of holding the specific parcel of real estate) with no employees, so there may be no direct impact to lessor entities. However, the new FAR clause requires contractors to "flow down" the clause to subcontracts "at any tier" that:

• exceeds the simplified acquisition threshold ($250,000) or simplified lease acquisition threshold on the date of subcontract award
• are for services (including construction)
• are performed in whole or in part inside the United States

Conversely, flow down is not required for subcontracts:

• at or below the simplified acquisition threshold ($250,000) or simplified lease acquisition threshold on the date of subcontract award
• for the provisioning of products
• performed wholly outside the United States

To illustrate:

However, neither the Safety Guidance nor GSA's communications to date have addressed a common scenario for GSA landlords: how to determine whether the clause must be flowed down to the property manager (or other property service providers) when the total value of the subcontract exceeds the simplified lease acquisition threshold but the portion allocable to the government tenant falls below that amount. Landlords should consider this issue on a case-by-case basis.

How Must Covered Contractors Comply with the Mandate?

As noted, the Task Force's Safety Guidance imposes three distinct requirements on covered contractors: vaccination of all covered contractor employees, except where an employee is legally entitled to an exemption; compliance related to masking and physical distancing requirements; and designation of a person or persons to coordinate COVID-19 workplace safety efforts.

Accommodations

All covered contractor employees must be "fully vaccinated" by Dec. 8, 2021. Employees are considered "fully vaccinated" two weeks after receiving the second dose in a two-dose vaccine series, or two weeks after they have received a single-dose vaccine. Contractors are instructed to review covered employees' vaccination cards or copies of other documentation proving vaccination status.

The Safety Guidance notes that covered contractors "may be required to provide an accommodation to covered contractor employees … that they are not vaccinated against COVID-19 because of a disability (which would include medical conditions) or because of a sincerely held religious belief, practice, or observance." Generally, the covered contractor (and not the agency, e.g., GSA) is responsible for determining if a covered employee must be provided an accommodation.

However, just because an employee may be legally entitled to an accommodation from the vaccine requirement does not mean that they are free and clear from the entirety of the workplace safety protocols. Importantly, employees not vaccinated against COVID-19 (whether because of a medical condition, sincerely held religious belief or otherwise) are thus not "fully vaccinated" personnel, as per the Safety Guidance. And with regard to individuals who are not fully vaccinated, the Safety Guidance requires that these individuals "wear a mask indoors and in certain outdoor settings [ ] regardless of the level of community transmission in the area." These individuals should also "maintain a distance of at least six feet from others at all times, including in offices, conference rooms, and all other communal and work spaces."

What About Onsite Contractors?

The Task Force has imposed additional requirements for "onsite contractors" – meaning those contractors working "onsite" at a "Federal workplace" (defined as "any place, site, installation, building, room, or facility in which any Federal executive department or agency conducts official business, or is within an executive department or agency's jurisdiction, custody, or control"). Specifically, these requirements apply to onsite lessors and lessors' onsite subcontractors.

Federal agencies will be required to ask onsite contractor employees about their vaccination status prior to their entering a federal building. Onsite contractor employees who are not yet fully vaccinated or who decline to provide information about their vaccination status will be required to continue wearing a mask and physically distancing, and must produce proof of a negative COVID-19 test from within the past three days before being allowed onsite.

These requirements apply even though the contractor employees "may not yet be subject to a contractual requirement to be vaccinated[.]" Practically speaking, the vaccine mandate and other safety protocols will effect GSA leasing contractors sooner than most.

When Does the Mandate Take Effect?

As noted, the mandate may be effective now if you are performing services onsite – meaning, be prepared for GSA or the agency tenant to start inquiring about vaccination status. In addition, be prepared to provide proof, otherwise be prepared to submit a negative COVID test, wear a mask and physically distance.

Guidance for onsite contractors aside, the GSA is incorporating the terms of the new clause in all contracts and lease acquisitions awarded on or after Oct. 15, 2021. For awards made prior to Oct. 15, 2021, the GSA will seek to modify the lease agreement bilaterally to include the new FAR clause. The GSA's directive to contracting officers is to complete "as many modifications as possible" by Nov. 14, 2021.

What Should Contractors Do Now: Key Takeaways

Over the next coming weeks, the following actions are recommended:

• Monitor contract actions from the GSA regarding incorporation of the new FAR clause. Contractors should start assessing which employees will be considered covered contractor employees for purposes of the E.O. and the Task Force's Safety Guidance, remembering that the term "covered contractor employees" extends to those employees working "in connection with" a covered contract (e.g., indirect employees).
• Look at subcontract agreements and the supply chain, and consider which subcontracts you are required to flow the FAR clause down to and which subcontracts are exempt. Remember, the flow-down requirement applies only to subcontracts for services in excess of $250,000 on the date of subcontract award.
• Keep diligent records of covered employees' vaccination status and justifications for granting legally required accommodations.
• Track all costs associated with complying with the E.O. and Task Force's Safety Guidance (e.g., costs associated with developing policies and procedures, requests for accommodations; costs of providing for regular COVID tests; potential time off for employees to get vaccinated; etc.). Consider reserving the right to seek increased costs when faced with a bilateral modification imposing these requirements.

For more information or questions regarding the vaccine mandate for federal contractors and its applicability to GSA lease agreements, please contact the authors.

Notes

¹ FAR Clause 52.223-99 – which is the clause that GSA now seeks to add to GSA leases – incorporates by reference the Task Force Guidance, so we discuss both the requirements from the clause and the Guidance in this post.

Information contained in this alert is for the general education and knowledge of our readers. It is not designed to be, and should not be used as, the sole source of information when analyzing and resolving a legal problem, and it should not be substituted for legal advice, which relies on a specific factual analysis. Moreover, the laws of each jurisdiction are different and are constantly changing. This information is not intended to create, and receipt of it does not constitute, an attorney-client relationship. If you have specific questions regarding a particular fact situation, we urge you to consult the authors of this publication, your Holland & Knight representative or other competent legal counsel.