Contracts resulting from federal government solicitations issued on or after Jan. 1, 2017, and contracts awarded outside the solicitation process on or after Jan. 1, 2017 (collectively, “new contracts”) may be subject to the federal sick leave Executive Order (“EO”) 13706. As for the federal contracts without the federal sick leave EO clauses, that is a complex issue. The sick leave requirements are being phased into new contract awards, extension of contracts, cardinal changes, and where the agency just decide to modify the contract. But existing multiyear contracts awarded prior to Jan. 1, 2017 are grandfathered out of the sick leave EO requirement. Accordingly, we have a few years for those multi-year contracts to run their course, and not every option exercise will trigger a new sick leave EO requirement.

But even for noncovered contracts, contractors need to vigilantly monitor contract modifications. The sick leave EO encourages contracting officers to include the clause even in otherwise noncovered contracts. As a result, a contracting officer may try to slip the EO sick leave requirements into the contract option year renewal surreptitiously in a modification. If that happens, the contractor should object, and refuse to sign any bilateral modification which may waive its rights. Where the sick leave EO is added to an option year exercise, the contractor needs to notify the government this is a change to the contract and submit a price adjustment request for the extra sick leave costs that will be incurred. That price adjust should be a full equitable adjustment, including overhead, G&A and profit.

Accordingly, it makes sense for contractors to train their in-house contract administration staff (both prime and subcontract) to spot these kinds of issues. They need an understanding of the sick leave EO requirements. As do your contract “capture team” who prepare cost proposals in responses to government solicitations, task orders and modifications. Don’t get trapped into thinking this is just an Human Resources (“HR”) or fringe benefit issue.