Friday Flash 09/09/2022

Register Now – The IT Category: Creating Opportunities for Small Business, Oct. 6

Mark your calendars for October 6, and join the Coalition for Government Procurement for a hybrid event for the IT contractor community in conjunction with GSA, The IT Category: Creating Opportunities for Small Business, held in Tysons, Virginia. This forum, open to members and non-members, will bring together acquisition experts from government and industry to share the latest on programs and key policies impacting small businesses in the IT sector.

The day will begin with opening remarks from Laura Stanton, Governmentwide IT Category Manager and Assistant Commissioner of GSA’s IT Category.  Laura will bring her unique perspective to the governmentwide and GSA-focused efforts to support small businesses in the federal IT market.  Laura will discuss the overarching strategy for the IT Category in creating additional opportunities for small businesses.

Following Stanton’s remarks, there will be a 60-minute panel made up of program managers from NASA SEWP, NIH CIO-SP, and GSA’s MAS and AAS programs. These panelists will discuss contracting opportunities and how their respective programs engage with and support small businesses. We will then move to a second panel that will focus on crucial policies and legal issues that affect IT small businesses. In addition to these sessions, the event will provide a great networking opportunity for IT professionals.

Registration for the event is available here. Both in-person and virtual attendance are offered to Coalition members and the IT contractor community at large.

The full agenda, along with speaker bios, can be found below.

The IT Category: Creating Opportunities for Small Business

Location: Holland & Knight – 1650 Tysons Blvd., 16th Floor, Tysons, VA 22102

8:00-9:00 am: Registration Opens, Networking

9:00-9:30 am: Opening Remarks

Laura Stanton, Governmentwide IT Category Manager, Assistant Commissioner, Information Technology Category, GSA

9:30-10:30 am: Governmentwide Contracting Opportunities through NASA, NIH and GSA

Jim Ghiloni, Group Manager, IDIQ Labs/Innovation Sector, GSA

Joanne Woytek, SEWP Program Director, NASA

Ricky Clark, Deputy Director, NITAAC

Cheryl Thornton-Cameron, Executive Director, Office of Acquisition Operations, GSA

10:30: Break

10:45-11:45 am: Small Business Policy and Legal Update

John Shoraka, Co-Founder and Managing Director, GovContractPros

David Black, Partner, Holland & Knight

Ken Dodds, Government Contracting Industry Expert, Live Oak Bank

Jon Williams, Partner, PilieroMazza

Coalition Meeting with GSA on Inflation and EPAs, September 15  

Last week, the Coalition notified members about a letter we sent to FAS Commissioner Sonny Hashmi about the impacts of inflation on contractors and the delays processing Economic Price Adjustments (EPAs) at GSA. In response, GSA has notified the Coalition that they are considering adjustments to the Temporary Moratorium Acquisition Letter (MV-22-02) which was designed to address the impacts of inflation.

GSA also agreed to meet with members to discuss the acquisition letter and how to address the delays processing EPAs.

Meeting with GSA on Inflation and EPAs 

GSA Speakers: Jeff Koses, Senior Procurement Executive in the Office of Acquisition Policy; Mark Lee, Assistant Commissioner of the Office of Policy and Compliance; Charlotte Phelan, Assistant Commissioner of the Office of Enterprise Strategy Management

Thursday, September 15

9AM-11AM EDT

Mayer Brown (1999 K St NW, Washington, DC 20006)

Members may attend in person or virtually. To register, click here.

DoD Preparing New Guidance for Contractors On Inflation

Federal News Network reports that the Defense Department (DoD) is finalizing guidance that will grant contracting officers more leeway to reimburse vendors who have seen increasing costs due to inflation. Dr. Bill LaPlante, the Undersecretary of Defense for Acquisition and Sustainment, said a key area for the update will be to provide relief to companies that signed firm fixed-price contracts before the inflationary period. Dr. LaPlante said that, “[DoD] want[s] to keep our industrial base whole, we want to keep them solvent. We need them. That’s what we’re after.

DoD previously published guidance which was criticized by industry for instructing contracting officers not to accept requests for equitable price adjustments. Industry has since advocated for a response beyond normal contracting practices in light of the historic economic challenges that DoD’s industrial base is facing. LaPlante stated that he and other officials acknowledge the concerns, “We’ve been looking at several things,” he said. “One, can we loosen or broaden the definition of what an EPA clause can be used for, including for firm fixed-price? And can we use what’s called extraordinary circumstances in some cases to make people whole? What I’ve been asking of industry, though, is data. I need data about companies that are either potentially going under or not bidding that are affected by inflation. Because we need to inform the Congress, we need to inform the Pentagon. I’m convinced there’s real-world examples of people being hurt — how can you not read the news and not see that? But we need to show the data.

Gabe Camarillo, the undersecretary of the Army, stated that even before the current inflationary period began there was evidence of a concerning decline in the industrial base. He sees the threat of a reduced supply base causing particular concern for small businesses. “I asked our team to look at doing some more in depth analysis to say, ‘What are these trends? Do we see it on the services side on R&D, or facilities and maintenance? I also want to focus the causes for some of that decline,” Camarillo said at a conference hosted by Defense News. “Are these small businesses simply not doing business with the department? Are they going to commercial customers? Or are they hidden to us because they’re doing more teaming or being bought out by other larger companies? I think some forensics are in order, and we’re doing some analysis right now with some FFRDCs. And I hope to get the results of that later this year.” DoD officials plan to continue working on ways to find relief for companies affected by inflation and expect to release the new guidance by next week.

DoD Plans to Launch Virtual Tech Marketplace for AI

Fedscoop reported that the Chief Digital and Artificial Intelligence Office (CDAO) at the DoD plans to launch a new one-stop virtual marketplace, named the Tradewind Solutions Marketplace, for AI-related technologies, machine learning, data, and analytics. The marketplace would allow for DoD components to rapidly purchase these technologies. The CDAO plans to launch the platform in the first quarter of fiscal year 2023. DoD is seeking feedback from government and industry through September 30 on how to shape the marketplace’s framework. More information on the opportunity to comment as well as general information on the marketplace can be found on tradewindai.com. DoD officials are looking for specific feedback on “how they might best provide a venue where defense and military insiders can search for the technologies of interest,” as well as “a single location to interact with external organizations that can deliver them through an established rapid contracting pathway.

The CDAO envisions that organizations will be able to submit videos showcasing their products and services to the marketplace that DoD customers will be able to search, view, compare, negotiate, and eventually purchase. After the videos are assessed and approved for the marketplace, they will be made available through Other Transaction Agreements or more standard Federal contracts.

GSA Allows Agencies to Extend Networx Contracts by One Year

Federal News Network reported that 116 companies have signed on to extend their current Networx telecommunications contracts for another year. GSA allowed agencies to sign a memorandum of understanding (MOU) by September 30 to continue using Networx while they transition to the Enterprise Infrastructure Solutions (EIS) contract. According to GSA, the transition to EIS has been slow for multiple agencies. In a blog, Laura Stanton, Assistant Commissioner for the Office of Information Technology Category (ITC), wrote that 5.3 out of 9 million legacy services governmentwide were still in use. GSA’s ITC prompted agencies to complete 100 percent disconnection of services by September 30, and assess the possibility of not completing the EIS transition by May 30, 2023. The blog added that “those who need more time to transition must sign a MOU to be authorized to use the continuity of service (CoS) period from June 1, 2023 to May 31, 2024.” GSA’s goal was to have 90 percent disconnection governmentwide by March 31, 2022. As of July 29, the disconnection rate was 62.8 percent.


Agencies that do not sign the MOU will be removed from the Network Authorized User List (NAUL). Contractors will then disconnect them starting in November 2022.

The Coalition Responds to GSA ANPR on Single-Use Plastics and Packaging

Based on the feedback we heard at last month’s Green Committee meeting and further conversations with our members, the Coalition has submitted comments to GSA’s Advance Notice of Proposed Rulemaking (ANPR) on Single-Use Plastics and Packaging. The ANPR sought information to help inform the creation of “requirements and reporting mechanisms for reducing unnecessary single-use plastic, to include plastic packaging and shipping materials.” The GSA’s ANPR is the first step to the agency meeting its obligations under Executive Order 14057, which asks agencies “to reduce waste to include supporting a recycled content market and circular economy approaches.” The Coalition expressed its support for GSA’s efforts to make procurement more sustainable and made six recommendations for GSA to consider as it pursues rulemaking:

  • Engage with key Federal agencies, especially the U.S. Environmental Protection Agency (EPA), the Council on Environmental Quality (CEQ) and the Federal Acquisition Regulatory Council (FARC), on a government-wide approach to reducing waste;
  • Ensure that any requirements are consistent with the EPA’s Environmentally Preferable Purchasing (EPP) program;
  • Ensure that any single-use plastics and packaging requirements harmonize with existing Federal agency packaging requirements or plastic-reduction efforts;
  • Exercise caution in restricting particular single-use plastic and packaging items;
  • Consider the potential effect of this regulation on small businesses; and
  • Ensure that efforts to reduce single-use plastic do not impose new costs during the current inflationary period.

The Coalition’s full comments can be found here.

GSA Extends Deadline for Single-Use Plastics and Packaging ANPR

GSA has extended the deadline to submit comments to its Advance Notice of Proposed Rulemaking (ANPR) on Single-Use Plastics and Packaging until September 27. The goal of the ANPR is to gather information about the use of single-use plastic and packaging, in preparation for an addition to the GSAR that will reduce unnecessary single-use plastic in GSA procurements. The Coalition has already submitted comments to the ANPR, but we encourage members to submit comments that reflect their individual experiences with single-use plastic and opinions about how to improve sustainability in procurement. GSA is particularly interested in responses to the fourth section of the ANPR, which requests economic and consumer data about the estimated costs, risks and benefits of switching from single-use plastic to other packaging.

VA CIO Looks to Raise Cybersecurity Bar in ATO Process

                                     
Federal News Network reports that Kurt DelBene, the Assistant Secretary for the Office of Information and Technology and Chief Information Officer at the Department of Veterans Affairs (VA), has provided some insights into the VA’s new approach to the authority to operate (ATO) process. The ATO process is a continuous process by which agencies assert that a product meets the security standards necessary to function within their network. The VA’s goal is to move towards a holistic approach regarding cybersecurity by creating new check points. At the 930Gov conference a few weeks ago, Delbene stated that, “What I found in VA so far is that we’re really good about doing the required procedures to get all the documentation together. But what we have an opportunity to do is have more of that last look of saying, if I look at everything in aggregate, do I feel good about the overall security of that system? Or should I say ‘no, these are the three things that I actually don’t feel good about,’ and they can be three initiatives that we’ve got in terms of things like zero trust, for instance. As a result, we’re going to say, you’ve got to come back and a certain period of time, even if we grant the ATO now, it’s for a much shorter period of time, and we want these things remediated.” DelBene emphasized that the new process may lead to six month ATOs as opposed to annual. DelBene sees the increasing demands on the VA for care driving the need for cyber modernization.

Federal Government Receives an “A” in Small Business Procurement

The Small Business Administration (SBA) released its FY 2021 Small Business Procurement Scorecard with the total grade being an A. For comparison the VA and DoD also received an A and the DHS and GSA both scored an A+. The largest factor in the grade was the percentage of prime contracting dollars going to small business with an increase of 26.02 percent to 27.23 percent from fiscal year 2020 to 2021. The small business categories in which the Federal Government did not achieve their goals were Woman Owned Small Businesses and HUBZone Small Businesses. (See figures below)



One area of note is that despite meeting metrics as a percentage of dollars, when viewing the total numbers of small business prime contractors, it is apparent that while the dollars allotted to this group rose from 2020 – 2021 there was a reduction in the total count of small business contractors. Overall, there was almost a 6 percent reduction in the total number of small businesses working with the Federal Government. There was also a drop in the total number of women owned small businesses and small disadvantaged businesses contracting with the Federal Government. (See figure below)

NASA Releases Draft RFP for Consolidated IT Services Contract

FCW reports that the National Aeronautics and Space Administration (NASA) has released a draft RFP for its Consolidated Applications and Platform Services (NCAPS) contract that will provide the agency’s enterprise IT services. These services will include “information security; application, web, and platform services; information and data analytics; IT services for automation; and IT innovation across NASA’s centers.” The NCAPS core is valued at 1.3 billion dollars, with a contract ceiling of around 2 billion dollars. It is set to run for eight years starting in the summer of 2023. NCAPS will be awarded through the Alliant 2 Governmentwide Acquisition Contract, and the contract will have both “firm, fixed-price (FFP) and cost-plus-fixed-fee (CPFF) elements” and “indefinite-delivery, indefinite-quantity (IDIQ) task orders.” NASA plans to evaluate proposals based on mission suitability, past performance and price, with the first two factors being “significantly more important” than the last, and it has set a goal of 32 percent of the contract’s value going to small businesses through subcontracting. Comments on the draft RFP from potential offerors are due September 19, and the final solicitation is expected around October 12.

GSA publishes RFI on Application Security Testing

GSA has published a Request for Information (RFI) seeking responses from firms that provide Application Security Testing (AST) products and services. The goal of the RFI is “to determine the availability of Application Security Testing (AST) capabilities in the marketplace that analyze the security of new or existing information communications technology applications, software, or specialized utility programs and provide actionable results.” Responding firms do not need to answer all the questions in the RFI for their response to be considered, and GSA encourages submissions from “niche services.” Contractors should be aware that GSA “reserves the right to issue all future requests for quotes directly” to only those firms that responded to the RFI if the RFQ is related to a Schedules contract. The deadline to respond to the RFI is September 30.

GSA SAM.gov Entity Validation Training, September 14

In response to ongoing challenges with entity validation, GSA will be hosting its third training on the subject. This training will address questions related to the entity validation process and is meant to answer questions on the general process and not on specific incidents. The training will be held on September 14 from 1 – 2 pm ET and you can registerhere. You may attend by computer or conference call but all communication from the audience must be submitted through the written question and answer log. Registration will remain open until the start time. However, if you want to submit any questions before the training then you must register by noon on September 13.

GSA Acquisition Policy Federal Advisory Committee Meeting, September 22

GSA announced this week that its new Federal Advisory Committee focused on sustainable procurement will hold its first meeting on September 22.  GSA established the GSA Acquisition Policy Federal Advisory Committee (GAP FAC) to serve as an advisory body to GSA’s Administrator on how GSA can use its acquisition tools and authorities to target the highest priority Federal acquisition challenges. The initial focus for the GAP FAC will be on driving regulatory, policy, and process changes required to embed climate and sustainability considerations in Federal acquisition.

GAP FAC Public Meeting #1 
Virtual
September 22, 2022
1 –  4PM EDT

For more information about the agenda and registration, visit https://public-inspection.federalregister.gov/2022-19330.pdf

Legal Corner: Just When You Thought It Was Safe To Go Back In The Water . . . The 11th Circuit Revives Executive Order 14042

By Jonathan Aronie & Ryan Roberts; Sheppard Mullin

With apologies to Jaws II, just when you thought it was safe, the U.S. Court of Appeals for the 11th Circuit has released a shark back into the EO 14042 waters.

On Friday, August 26, the 11th Circuit published a 66-page decision affirming the injunction against the Federal Government’s Code-19 Vaccine Mandate issued by the U.S. District Court for the Southern District of Georgia, but limiting the previous nationwide scope of the injunction. To quote the decision:

“We agree that the plaintiffs’ challenge to the mandate will likely succeed and that they are entitled to preliminary relief. Even so, because the injunction’s nationwide scope is too broad, we vacate it in part.”

What this means is that the 11th Circuit injunction, which previously applied to every contractor everywhere across the U.S., now applies only to the plaintiffs in this particular case: Seven states and the members of one industry association (Associated Builders and Contractors). Putting it in the affirmative, EO 14042 may be back in play for Federal contractors that, until last week, likely believed compliance with the federal vaccine mandate was behind them.

We should note at the outset, though, that following the issuance of the 11th Circuit’s opinion, the Office of Management and Budget announced its view that the injunction was still in place. As reported by Government Executive Magazine, OMB said

“At this time, the nationwide injunction remains in effect, and thus agencies should continue not to take any steps to enforce Executive Order 14042.”

As a factual matter, OMB is wrong. The nationwide injunction does not remain in effect. We assume what OMB meant to say is that the Administration will continue voluntarily not to enforce the Executive Order for the time being. This should come as some comfort to contractors trying to navigate the new enforceability map, which we affectionately call the SheppardTracker (see below). But unlike an injunction, a voluntary non-enforcement decision can disappear overnight.

In any event, now that the 11th Circuit has narrowed the scope of the District Court’s injunction, let’s discuss the question you all are asking: What does the decision mean to me?

The Current State Of 14042 Vaccine Mandate (Notwithstanding OMB’s Non-Enforcement Statement)

Most importantly, EO 14042 no longer is enjoined nationwide. In other words, the Federal Government could begin enforcing EO 14042 (via FAR 52.223-99 and agency deviations) in more than half of the United States (35 states to be exact). As a refresher, FAR 52.223-99, Ensuring Adequate COVID-19 Safety Protocols for Federal Contractors is a clause developed by the FAR Council to support agencies in meeting the applicability requirements and deadlines set forth in EO 14042.

In the absence of a nationwide injunction, the scope of each individual district court injunction once again has become relevant. Here’s a high-level summary of the existing injunctions.

  • Georgia Injunction (clarified by 11th Circuit Decision): The injunction now applies only to the state plaintiffs acting as contractors, and, therefore, has no impact on private companies. Accordingly, the Federal Government now is permitted to enforce FAR 52.223-99 against Federal contractors in Georgia, Alabama, Idaho, Kansas, South Carolina, Utah, and West Virginia (the plaintiff states). (See blue states on the map below.)
  • Kentucky Injunction (appeal pending in the 5th Circuit): The Federal Government is enjoined from enforcing FAR 52.223-99 “in all covered contracts in Kentucky, Ohio, and Tennessee.” (See red states on the map below.)
  • Florida Injunction (appeal pending in the 11th Circuit): For now, the Federal Government is enjoined from enforcing FAR 52.223-99 “within Florida.” However, given the 11th Circuit’s decision on the Georgia injunction, we suspect this injunction, too, will be narrowed, to permit the Federal Government to enforce FAR 52.223-99 against Federal contractors in Florida. (See red states on the map below.)
  • Missouri Injunction (appeal pending in the 8th Circuit): The Federal Government is enjoined from enforcing FAR 52.223-99 “for federal contractors and subcontractors in all covered contracts in Missouri, Nebraska, Alaska, Arkansas, Iowa, Montana, New Hampshire, North Dakota, South Dakota, and Wyoming.” (See red states on the map below.)
  • Louisiana Injunction (appeal pending in the 5th Circuit): The injunction applies only to the state entities acting as contractors, and therefore has no impact on private companies. The Federal Government is permitted to enforce FAR 52.223-99 against Federal contractors in Louisiana, Mississippi, and Indiana. (See green states on the map below.)

We also have updated our SheppardTracker to reflect what we believe to be the current state of play:

In short, the Federal Government may choose to begin enforcement of FAR 52.223-99 against contractors performing in the 35 states NOT shaded red.

Also, do not forget, at least one state has passed anti-vaccination-mandate legislation the enforceability of which hinges to some extent on the viability of the various federal injunctions. With the nationwide injunction no longer in place, the Preemption Doctrine could dictate that EO 14042 overrides contradictory state law.

Whether the Federal Government chooses to resume incorporating FAR 52.223-99 into contracts, or begins enforcing its requirements, however, is yet to be determined; although OMB’s recent statement to Government Executive Magazine provides at least some clue to this mystery in the short term. We suspect the Task Force will publish updated guidance shortly detailing the path forward. The Biden Administration has rolled back many COVID-19 initiatives and restrictions in recent months, and, therefore, its appetite to restart enforcement of EO 14042 is an open question. Time will tell.

In the meantime, there are additional threats circling in the 14042 waters. For instance, other district courts still have not ruled on the Motions for a Preliminary Injunction originally filed in their jurisdictions back in 2021 (e.g., the judge in the Southern District of Texas stayed litigation there once the nationwide injunction was issued by the Southern District of Georgia). Additionally, the other Circuits with appeals pending could overturn the preliminary injunctions previously granted by the lower courts (or severely limit their scope, as the 11th Circuit did), which would add to the 35 states in which the Federal Government could enforce EO 14042. We’ll continue tracking the various pieces of litigation and alert you of any notable developments.

While we eagerly await updated Task Force Guidance, for now, it seems many Federal contractors may be back to having to comply with the requirements of EO 14042 to some extent. Accordingly, everyone should keep a close eye on the Task Force website, the OMB website, the GSA 14042 page, and the specific terms of your solicitations and contracts.

Finally, we would be remiss if we did not point out two confusing points in the 11th Circuit’s decision:

  • Who Are The Plaintiffs? According to the 11th Circuit, the injunction now is limited to “the seven plaintiff States and their agencies” (and members of the plaintiff industry association). This language is not a model of clarity regarding whether the Court is referring to the States themselves (e., situations in which the state is a federal contractor) or whether the Court is referring to all contractors within those states. While the Court’s explicit language seems to limit the injunction to the state agencies only – and that’s how we read it – the fact that several of the states brought the suit on behalf of their citizens (and presumably their contractors) could mean that those citizens and contractors could be considered plaintiffs. As we said, we think the better reading is that the injunction applies to the states as contractors only (and not all contractors in those states), but we have to acknowledge the possibility of a contrary interpretation.
  • How Does It Apply To Solicitations? The decision includes an interesting statement about the Federal Government including FAR 52.223-99 in solicitations. The 11th Circuit stated: “we leave the injunction in place to the extent that it bars federal agencies from considering the enforceability of the mandate when deciding who should receive a contract, if any plaintiff belongs to the pool of bidders.” Unless every Federal contractor in the United States becomes a member of the Associated Builders and Contractors overnight, this exception appears to be very limited in scope, but the Task Force’s interpretation here will be key. More on this topic below.

Now, let’s take a deeper dive into the 11th Circuit’s decision.

Georgia v. Biden In Greater Detail

Let’s begin with a bit of history.

On December 7, 2021, the U.S. District Court for the Southern District of Georgia enjoined enforcement of EO 14042 nationwide (discussed previously here). This decision resulted a complaint by the states of Georgia, Alabama, Idaho, Kansas, South Carolina, Utah, and West Virginia. The Court permitted the Associated Builders and Contractors, Inc. (ABC), a nationwide trade association, to intervene as a plaintiff. ABC’s intervention proved to be of particular importance because the Court relied on ABC’s national membership as the basis for applying its injunction nationwide.

District Court Judge Baker’s decision focused on preserving the rule of law and ensuring “all branches of the government act within the bounds of their constitutionally granted authorities,” even in times of crisis. In order to do so here, Judge Baker determined that granting plaintiffs motion for a preliminary injunction was necessary. After determining that the plaintiff States and ABC all had standing to challenge EO 14042, Judge Baker focused his decision on the likelihood of success on the merits prong of the injunctive relief standard. Judge Baker noted that plaintiffs “need only show a substantial likelihood of success on the merits on one claim” (emphasis added), and went on to examine the plaintiffs’ contention that EO 14042 exceed the authority granted to the President by the Procurement Act (40 U.S.C. § 101, the Federal Property and Administrative Services Act).

According to Judge Baker, the question before the Court was whether Congress “clearly” authorized the President to use the Procurement Act to issue the directives contained in EO 14042. Judge Baker answered that question in the negative, finding the actual purpose of the EO to be the “regulation of public health.” As explained by Judge Baker, the purpose of the Procurement Act is to promote economy and efficiency in the federal procurement process. Although the Procurement Act affords the President significant deference to achieve this goal, Judge Baker found there was an insufficient nexus between the Procurement Act and EO 14042 and concluded that the Procurement Act “did not clearly authorize the President to issue the kind of mandate contained in EO 14042, as EO 14042 goes far beyond addressing administrative and management issues in order to promote efficiency and economy in procurement and contracting, and instead, in application, works as a regulation of public health, which is not clearly authorized under the Procurement Act.” Because substantial likelihood of success on a single claim was enough, according to Judge Baker, the Court did not examine the other challenges raised by the plaintiffs, such as arguments centered on the Administrative Procedure Act and the Non-Delegation Doctrine.

Regarding the remaining prongs of the injunctive relief standard, Judge Baker found that plaintiffs likely were to be irreparably harmed if the EO was permitted to remain in force and found the balance of harms favored plaintiffs. As such, Judge Baker granted injunctive relief in favor of plaintiffs and ordered the United States enjoined “during the pendency of this action or until further order of this Court, from enforcing the vaccine mandate for federal contractors and subcontractors in all covered contracts in any state or territory of the United States of America.”

The Court’s decision subsequently was appealed to the 11th Circuit. During the pendency of the appeal, the United States Government moved the district court to clarify whether the injunction applied to the entire EO or just the vaccine mandate. The Court clarified that its injunction was intended to enjoin only the vaccine mandate, meaning it did not enjoin the masking or physical distancing requirements of EO 14042 (discussed previously here).

The Court of Appeals Decision

The three-judge 11th Circuit Panel began its analysis by identifying the two questions before it:

  • First, whether the challenge to the vaccine mandate is likely to succeed.
  • Second, whether the scope of the district court’s injunction was too broad, which would suggest an abuse of discretion by the lower court.

Notably, the language of the 11th Circuit’s decision strongly suggests the Court is considering only the vaccine mandate, and not the entirety of EO 14042.

Likelihood of Success

The core question before the Court, in its view at least, was whether Congress, in vesting the President with broad procurement powers under the Procurement Act, authorized the President to improve efficiency through a vaccine mandate. Put another way, did Congress delegate to the President “the power to require widespread vaccination through the Procurement Act.” As the Court put it, “the question is not whether Congress could authorize the President to make procurement agreements continent on COVID-19 vaccination. It is whether Congress did so in the Procurement Act.”

While acknowledging that the Procurement Act confers broad authority on the President, the Court – like the District Court below it – emphasized that the Procurement Act’s delegation to the President is not unlimited. “The Act confers broad but not unbounded authority.”

Limiting its analysis to the Procurement Act (as apparently the Federal Government’s lawyers did before the Court), the Court noted that “the President cannot issue policies that require [federal officials] to take steps outside the Act or contrary to the Act – however useful such steps may appear.” Citing Supreme Court precedent, the Court emphasized that the Procurement Act empowers “the President to carry out the Act’s specific provisions – but not more.” In a more poetic moment, the Court put it this way: The Procurement Act “is not an ‘open book’ to which contracting agencies may ‘add pages and change the plot line.’”

In the end, the 11th Circuit agreed with the District Court that nothing in the Procurement Act confers upon the President the power to mandate vaccines for all federal contractors: “Nothing in the Act contemplates that every executive agency can base every procurement decision on the health of the contracting workforce.” The Court emphasized that the power to create and maintain an “economical and efficient” procurement system is “worlds away” from establishing health standards for all contractors’ employees. “No statutory provision contemplates the power to implement an across-the-board vaccination mandate. It follows that the President likely exceeded his authority under the Procurement Act when directing executive agencies to enforce such a mandate.”

The Court founded its view upon a well-settled principle of statutory interpretation: Congress is expected to “speak clearly when authorizing an agency to exercise powers of vast economic and political significance.” In other words, if Congress had wanted to give the President the power to use its procurement powers to set health policy, Congress would have said so.

Interestingly, reading between the lines, the Court implied that a given Agency could employ a vaccine mandate if it had a compelling reason to do so. “We cannot say that when Congress passed the Procurement Act, it meant to delegate authority to set baseline health and safety qualifications for contractors – standards that would apply regardless of the specific needs in a given project.”

Scope of Injunction

After concluding that the Administration likely would lose its case against the seven plaintiff states (and trade association), the Court set about evaluating the scope of the District Court’s injunction. Remember, the District Court enjoined enforcement of the vaccine mandate “against any contractor, anywhere in the United States, plaintiff or not.” The 11th Circuit began its analysis by commenting “we are both weary and wary of this drastic form of relief.”

The Court then undertook a cogent discussion of the advantages of differences of opinion coming from the various lower courts and the dangers of judicial overstepping that puts those advantages at risk. The Federal court system was designed to “allow courts to reach multiple answers to the same legal questions,” wrote the Court. A nationwide injunction, the Court continued, “gives a single district court an outsized role in the federal system.” “By cutting off parallel lawsuits, nationwide injunctions frustrate foundational principles of the federal court system.”

Against this background, the 11th Circuit found the lower court’s injunction “overbroad.” Accordingly, the Court vacated the lower’s courts injunction “to the extent that it bars enforcement of the mandate against nonparty contractors through new and existing contracts.” In contrast, the Court affirmed the injunction to the extent it “blocks federal agencies from enforcing the mandate in contracts with any plaintiff State or member of the plaintiff trade association.” “As a result,” wrote the Court, “plaintiffs need not comply with the vaccination requirement in their capacity as contractors, and they are not responsible for including that requirement in lower-tier subcontracts.”

One Complicating Factor

While the Court clearly was bothered by the nationwide scope of the injunction, it recognized a complication regarding solicitations. “Unlike procurement contracts, solicitations are generally issued by the federal government to many bidders, who are then expected to comply with the solicitation’s terms to remain eligible for the contract award.” Because a plaintiff could be prejudiced by an agency’s consideration of who is subject to the mandate and who is not, the Court decided to leave “the injunction in place to the extent that it bars federal agencies from considering the enforceability of the mandate when deciding who should receive a contract, if any plaintiff belongs to the pool of bidders.”

This carve-out presents quite a logistical hurdle for procuring agencies that now will have to change the rules of their procurements based upon who is bidding on those procurements. Although unlikely, perhaps we’ll see bidders convincing members of the plaintiff industry association to submit bids simply to knock the EO 14042 provisions out of the solicitation. . . . unlikely, but interesting to think about.

Conclusion

As we continue to monitor how the Administration and Task Force decide to proceed in light of the 11th Circuit’s decision, it likely makes sense to dust off your preexisting EO 14042 compliance plans. Our existing resources are linked below.

Resources

About The Authors

Jonathan and Ryan are Governmental Practice partners in Sheppard Mullin’s DC office. Jonathan leads the firm’s Governmental Practice and co-founded the firm’s Organizational Integrity Group. Ryan leads the Governmental Practice’s Commercial Products & Services Team and the Group’s EO 14042 Task Force. Jonathan can be reached at jaronie@sheppardmullin.com. Ryan can be reached at reroberts@sheppardmullin.com.

Important Note

This blog is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. As you are aware, things are changing quickly. This blog does not reflect an unequivocal statement of the law, but instead represents our best interpretation of where things currently stand. This blog does not address the potential impacts of the numerous other local, state, and federal orders that have been issued in response to the Covid-19 pandemic, including, without limitation, potential liability should an employee become ill, requirements regarding family leave, sick pay, and other issues.

Tim’s Take

The Hill’s Bumpy Road to the End of the Fiscal Year

This column features guest author Tim Cook, Executive Director, of the Center for Procurement Advocacy. The comments herein do not necessarily reflect the views of The Coalition for Government Procurement.

Anyone following reports from Capitol Hill knows there is much to do before the start of fiscal year 2023, which commences on October 1. Although the details about legislative actions are slow to unfold, lawmakers clearly are facing a full schedule before they go into recess for Rosh Hashanah, which takes place from the evening of September 25 through the evening of September 27.

House and Senate leaders are eyeing action on judicial nominations and policies related to environmental permitting; election rules; and US-China competition and trade issues. Before tackling those issues, however, Congress must assure funding of the government into the new fiscal year through a Continuing Resolution (CR), or the government faces a shutdown. That funding may not come easily, as there are issues attendant to its passage.

For instance, readers may recall that Senator Joe Manchin (D-W.VA) provided the key support necessary to pass the so-called Inflation Reduction Act, which contained a number of provisions addressing climate, taxes, and healthcare. The senator’s support reportedly came with an understanding that key energy permitting language would be added to the CR. So far, such language has not been released, leaving its impact on the CR an open question. Also complicating matters are reports that Senator Bernie Sanders (I-VT) has said he will not support the funding measure if it contains the permitting language. The White House has indicated its support for the language, but a path forward remains under discussion.

The House and Senate have 20 days to agree on and pass a CR, and as we understand the circumstances at present, the House is aiming to pass their CR either next week or during the week of September 19. The Senate hopes to follow suit by passing a CR by September 22 and then recessing until after the midterm elections (November 8). In addition to the permitting language, other issues could delay CR negotiations. These issues include more policy riders that could advance with the CR, like aid to Ukraine, disaster relief, a possible response to Monkeypox, and a $20B-plus supplemental COVID funding request from the Administration. Regarding COVID funding, past requests have been controversial, with Republicans calling for the use of unused aid already in place.

Once enacted, it is anticipated that a CR should carry funding for the government through mid-December. Although such funding would avoid a government shutdown, it should be remembered that “government by CR” is not an ideal business process. A CR typically carries funding at the levels of the prior fiscal year and limits new program starts. These restrictions impede the orderly performance of programs. Moreover, depending how CR negotiations unfold, agencies and vendors may have to engage in “just in case” preparations for a shutdown, which is wasteful and disruptive, as well.

Against the backdrop of the foregoing packed agenda, we cannot lose sight of the National Defense Authorization Act (NDAA) for fiscal year 2023. Traditionally viewed as “must pass” legislation, the NDAA has been enacted consistently on an annual basis for over 60 years. The House passed its version of the NDAA in July. The Senate is a little behind the House, only having passed its NDAA out of the Armed Services Committee. It is anticipated that the Senate will bring its bill to the floor for a vote after the midterm elections with an eye toward working through conflicts with the House for final enactment by the end of the year.

If you need further details on the status of the CR or the NDAA please contact Tim at 434-446-5560 or tcook@thecpagroup.org. 

The CPA offers a forum for regular stakeholder engagement to promote government-industry collaboration in service to the nation. An independent, nonprofit organization affiliated with the Coalition, the CPA provides a venue for its members to develop consensus-based Federal procurement law and policy positions and works with key stakeholders in the Executive and Legislative Branches to advance those positions, to help facilitate the government’s mission, and to foster a healthy and robust government industrial base. To learn more about CPA and the benefits of joining, contact Heather Tarpley, Vice President of Business Development & Sales, at htarpley@thecpagroup.org.

Off the Shelf: Procurement & the Acquisition Workforce

                                  
This week on Off the Shelf Jeff Koses, Senior Procurement Executive at the General Services Administration provides an update on the acquisition workforce, transactional data reporting (TDR), sustainability in procurement, and the U.S. AbilityOne Commission.

Koses discusses the role of the Office of Acquisition Policy at GSA focusing on the training and development of the workforce across the agency.

He also talks about the Multiple Award Schedule (MAS) program’s TDR pilot and the progress to date and shares an update on sustainable acquisition and how his office is moving forward to support greener procurement.

Koses serves as the Chairperson for the AbilityOne Commission, and he provides an update on its operations and recent policy developments.

Listen to the podcast here.

GAO Releases Report on the Office of National Cyber Director

GAO released a report this week on the Office of the National Cyber Director. The office was created in 2021 to lead the nation’s cybersecurity initiatives and the report summarizes the office’s strategic statement and the goals of the office in developing a national cybersecurity strategy. The office intends to implement the administration’s agenda by ensuring federal coherence, improving public-private collaboration, aligning resources to aspirations, and increasing present and future resilience. As of August 2022, the development of a national cybersecurity strategy by the office is ongoing. GAO concludes that in order to address this high-risk area the Federal Government needs to fully develop and implement a comprehensive national strategy to provide a clear path to overcoming this challenge.

GSA Publishes Final Rule Allowing Unions to Solicit Contractors in Federal Buildings

A final rule published by GSA on September 2 allows union organizers to educate employees of private sector contractors working in GSA-owned facilities about the benefits of organizing, collective bargaining, and union membership. Specifically, the rule provides an exception to the general prohibition in the Federal Management Regulation on soliciting, posting, and distributing materials on Federal property under the jurisdiction of GSA for activities related to labor organizing and collective bargaining for contractor employees. Before this rule, organized labor was already granted an exception for activities related to union organizing among Federal employees. The final rule does not change existing restrictions in areas that require a security clearance. The rule is effective as of September 2. Interested parties are able to submit comments by November 1 here.