The Atlanta appellate court's involvement in the dispute follows action on Jan. 5 by a Cincinnati appeals court panel, which in a 2-1 decision, upheld a Kentucky federal judge that the administration had overstepped its bounds. His ruling, based on a challenge to the Biden order by three states, halted it only in Kentucky, Ohio, and Tennessee until the case merits are decided.

But Cincinnati appellate court Chief Judge R. Guy Cole, the dissenter, said that the Biden order promotes economy and efficiency by reducing COVID-19 spread, “which will decrease worker absence, reduce labor costs and improve efficiency of contractors and subcontractors at sites.”

 

Mandate Support

According to Cole's opinion, “Congress clearly intended to grant the President direct and broad-ranging authority over those larger administrative and management issues that involve the Government as a whole." The fact that the order also is a valid public health objective does not mean it exceeds the President’s authority under the law, he said.

Under the executive order, the Federal Acquisition Regulation (FAR) was amended in September to include a COVID-19 safety clause for future contracts as of the mandate's effective date in November until they are renewed or extended. Existing contracts can be modified if both parties agree. The order also requires contractor workers to wear masks and maintain physical distance.

The federal Office of Management and Budget said that just as private businesses concluded that vaccination, masking, and physical distancing requirements "will make their operations more efficient and competitive in the market, the vaccine requirement will do the same for economy and efficiency in federal contracting.”

OMB also said reducing absences would outweigh any cost associated with replacing unvaccinated employees.

Delaying  implementation of the mandate will lead to productivity losses in the performance of federal contracts, from schedule delays, work absence and health care costs for workers who are sick, isolating, or quarantined, US Justice Dept. lawyers told the Atlanta appeals court.

 

Justice Dept. Arguments

Department lawyers noted that between March 2020 and February 2021, the pandemic cost $138 billion in lost work hours among full time private sector U.S employees. The Government Accountability Office said in the first six months of the pandemic, that the US Energy Dept. alone spent more than $550 million reimbursing contractors for COVID-19-related paid leave. They also noted vaccine mandate success at United Airlines and Tyson Foods, which had more than 99% and 96% of their respective workforces comply.

Justice lawyers said that just as the US Supreme Court recently concluded, in ruling on a vaccine mandate applying to certain health care workers, that the Executive Branch may “impose conditions of participation on recipients of Medicare and Medicaid [funding] that includes a vaccination requirement,” the court should uphold the same vaccination requirement as a condition of participating in federal contracting.

The lower court in Atlanta did not take issue with the connection between required vaccine and the statutory goal of an economical and efficient federal contracting system, but said the executive order exceeded the President’s authority because Congress did not authorize using the 1949 procurement law to impose vaccination requirements.

Government lawyers argued that requiring federal contractor workforce vaccination in response to a pandemic emergency “is the type of decision that Congress has entrusted the President to make.”

The lower court said the executive order violates “federalism principles,” but the Justice Dept. noted that federal contracting does not involve states, so the executive order does not raise federalism concerns.

The order “reflects the President’s decision as part of his power to manage public funds to impose contract terms on companies that elect to do business with the federal government,” Justice lawyers said.

The lower court also found that compliance costs of following the order were “irreparable.”

But the Atlanta appeals court previously held that compliance costs could only be irreparable if economic conditions are so bleak that they would put an entity out of business. “Most plaintiffs are sovereign states or their agencies, none of which faces the threat of economic insolvency,” the government lawyers said.

 

Associated Builders and Contractors

Justice attorneys said that despite ABC noting vaccination compliance costs for its member firms generally, nothing in the record suggests that any members are about to be forced out of business by them.

The lower court, which found only two ABC member firms that had established injury from the mandate, erred by granting a nationwide federal injunction on that basis, the lawyers said.  

Attorneys also said ABC did not produce evidence to substantiate its claim that member firms would be forced to undertake mass firings without an injunction. The group's claim that “some employees of some employers might quit rather than be vaccinated” is speculative and does not show an irreparable injury is likely, the government said.

OMB said there is “no systematic evidence” that the mandate would lead some workers to quit or that it would be likely to occur among employees of federal contractors. The experience of private companies is to the contrary, the government lawyers said, noting a Kaiser Family Foundation study that found only “1% of all adults say they left a job because an employer required them to get vaccinated.”

“the pandemic continues to pose complex and dynamic challenges to the government’s ability to deliver essential services to the American people," said government attorneys. "The harm the injunction inflicts on this essential government work far outweighs plaintiffs’ speculative claims of injury."

Briefs from mandate challengers that sued in the Atlanta district court, including several states and ABC, are due to the appellate court next month.

 

Others Weigh In

Meanwhile, case observers speculate how the US Supreme Court could view the contractor mandate, if it were to agree to a case review, following the justices ruling earlier this month to halt the US Occupational Safety and Health Administration vaccine mandate for all employers of 100 or more.

"In some respect, the government may argue that it has wide authority to condition the receipt of appropriated funds through federal contracts, including a vaccine mandate. However, the courts have not been persuaded that the Federal Property and Administrative Services Act permits the government to impose such a sweeping vaccine mandate," says Shaun Kennedy, a partner at Washington, D.C., law firm Holland & Hart, who specializes in government contracts. "Other courts have commented that the federal contractor mandate raises other constitutional and legal considerations, such as conflicting with the Tenth Amendment," which governs states' rights.

While the federal contractor vaccine mandate is halted as it winds through its legal path, the contractors affected by it still raise questions.

Firms "are still concerned about particulars on compliance and still being able to focus on important work for federal clients," says Steve Hall, government affairs senior vice president of the American Council of Engineering Cos., which includes a number of federal contractors. "This industry performs some pretty essential work for the government, in some cases, specialized or classified."

Hall refers to remaining uncertainties in the broad contractor mandate that may apply to an ACEC member's employees who are not involved on a federal project. "The policy is uncertain about waivers in certain situations," he says. "ACEC is focusing on the practical side, how to implement something that our members can abide by and still do work."

The legal challenges "present the administration with the opportunity to fine tune" order compliance, says Hall. ACEC, which has not been a party to lawsuits, "is trying to work with agencies to tailor [mandate] implementation," says Hall.

Based on conversations with ACEC member firm executives, he says companies "are doing their best to encourage employees to get vaccinated," adding that "less than 10%" of their employees are not.

"Members want to follow the rules," says Hall. :"Give them clear rules to follow." He acknowledges "adjustments" made to the contractor mandate guidance since last year following ACEC discussions with staff from the White House, OMB and the federal Office of Procurement Policy.