Conflicting State and Federal Requirements for Government Contractors . . . Again

Merle M. DeLancey, Jr. 

In 2021, federal government prime contractors and subcontractors found themselves in a difficult situation with respect to COVID vaccination requirements. More than a dozen states enacted laws prohibiting companies from requiring their employees to be COVID-19 vaccinated or even show proof of COVID-19 vaccination as a condition of employment. At the same time, federal government contracts were subject to mandatory employee vaccination requirements in the FAR and DFARS. (i.e., FAR 52.223-99 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (OCT 2021) (DEVIATION) and DFARS 252.223-7999 Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors (Deviation 2021-O0009) (OCT 2021). Luckily, the potential conflict was resolved, on May 9, 2023, when President Biden signed Executive Order (“EO”) 14099, Moving Beyond COVID–19 Vaccination Requirements for Federal Workers, which revoked EO 14042, Ensuring Adequate COVID Safety Protocols for Federal Contractors. EO 14099 directed agencies to rescind any policies that were adopted to implement EO 14042. Thus, the potential conflict between inconsistent federal and state laws concerning COVID-19 vaccinations was mooted.

A new conflict between state and federal procurement requirements may be brewing for federal prime contractors and subcontractors concerning race-based employment preferences and diversity policies after the Supreme Court decision in Students for Fair Admissions v. Harvard and Students for Fair Admissions v. UNC.

On July 13, 2023, 13 state attorneys general (Alabama, Arkansas, Indiana, Iowa, Kansas, Kentucky, Mississippi, Missouri, Montana, Nebraska, South Carolina, Tennessee, and West Virginia) issued a warning to the CEOs of Fortune 100 companies operating in their states. The letter threatened “serious legal consequences” over race-based employment preferences and diversity policies. The letter emphasized the Court’s statement that “[e]liminating racial discrimination means eliminating all of it.” Thus, the attorneys general’s interpretation of the Court’s opinion expanded its application beyond colleges and universities to include private-sector diversity policies. The letter does not address federal acquisition regulations requiring affirmative action (FAR 52.222-25 and -27) and federal contracting programs for minority-owned businesses (FAR Part 19).

Federal prime contractors and subcontractors may need to walk a tightrope once again. The potential conflict raises preemption questions. Contractors may opt to open communications with their contracting officers to make their positions clear, however, recognizing that no contracting officer will give a contractor a pass to ignore federal procurement regulations. A similar approach seems prudent when communicating with applicable state government officials. Blank Rome’s Government Contracts practice and State Attorneys General team can assist companies with these complex issues.

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