Page 17 - COVID Executive Order Survival Guide Brochure

I Could Have To Terminate A Significant Number Of Employees. What If This Renders Me Unable To Perform My Contracts?
We’ve heard from many clients that the new rule will result in significant termination of personnel. One client estimates it will have to terminate 20- 40% of its service technicians due to vaccination refusals. This is not a Chicken Little fear. According to the Harvard Kennedy School, as of June 2021, fully 1⁄2 of services sector employees still had not been vaccinated.1 A Carnegie Mellon Study earlier in the year found that “vaccine hesitancy” ranged widely depending on occupation. For example, 42% of service employees working in the installation, maintenance, and repair sector responded they were hesitant to receive the vaccination, and over 46% of service employees in construction/ extraction said the same thing.2 (As a comparison, hesitancy among educators was less than 10% in the life, physical, and social sciences.) In short, there is good reason to believe substantial terminations in certain occupations will follow the implementation of the new clause. And those terminations could make it harder for some companies to meet their contractual obligations.
To prepare for this possibility, contractors quickly should become familiar with their contracts’ excusable delay clauses. The FAR includes a number of different delay clauses, tailored to different contract types, including:
• FAR 52.249-14 – Excusable Delay
• FAR 52.212-4(f) – Excusable Delay (commercial items) • FAR 52.249-8(c), -9(c), -10(b) – Default
Each clause is slightly different, but they all more or less serve the same purpose — excusing the contractor from a delay in performance caused by events beyond its control. FAR 52.249-14, for example, provides (in relevant part) as follows:
(a) Except for defaults of subcontractors at any tier, the Contractor shall not be in default because of any failure to perform this contract under its terms if the failure arises from causes beyond the control and without the fault or negligence of the Contractor. Examples of these causes are (1) acts of God or of the public enemy, (2) acts of the Government in either its sovereign or contractual capacity, (3) fires, (4) floods, (5) epidemics, (6) quarantine restrictions, (7) strikes, (8) freight embargoes, and (9) unusually severe weather. In each instance, the failure to perform must be beyond the control and without the fault or negligence of the Contractor. Default includes failure to make progress in the work so as to endanger performance.
48 C.F.R. § 52.249-14 (emphasis added). To take advantage of the “excuse” these clauses provide, the contractor must be able to link the excuse to the delay. This effort will require the contractor has maintained meaningful documentation.
There is a lot more to talk about in this context. We provided a more robust discussion of cost recovery issues in our first COVID Survival Guide, which you can find HERE.
1 https://shift.hks.harvard.edu/wp-content/uploads/2021/06/Vax_Brief_6.28.21-2.pdf. 2 https://www.medrxiv.org/content/10.1101/2021.04.20.21255821v2.full.pdf.
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