Hospital Corpsman 2nd Class Mark Perez  administers the first dose of the Moderna COVID-19 vaccine to a Master Laborer Contractor employed onboard Naval Air Facility Atsugi June 18.

Hospital Corpsman 2nd Class Mark Perez administers the first dose of the Moderna COVID-19 vaccine to a Master Laborer Contractor employed onboard Naval Air Facility Atsugi June 18. Mass Communication Specialist Rafael Avelar

Biden Administration Delays Contractor Vaccine Mandate Until Jan. 4

Defense firms had warned of layoffs and weapons-manufacturing delays.

Updated, 10:41 a.m. to add comments by Navy Secretary Carlos Del Toro.

The Biden administration is pushing the COVID-19 vaccination deadline for federal contractors from Dec. 8 to Jan. 4, a move that could prevent thousands of employees from losing their jobs amid the holiday season.

The delay comes as companies have spent the past two weeks warning they might have to let go of thousands of workers who refuse to get vaccinated, further delaying weapons manufacturing already slowed by supply chain woes. 

The new contractor vaccination deadline is the same day as new federal vaccination rules for all businesses with more than 100 employees goes into effect, according to a senior administration official, who spoke on the condition of anonymity in advance of Thursday’s announcement. Unlike the federal contractor mandate, the Occupational Safety and Health Administration rules for all companies require vaccination or weekly testing.

Previous White House guidance said all contractors had to be vaccinated by Dec. 8. The only way for a worker to comply with that date is to receive the single-dose Johnson & Johnson vaccine by Nov. 24, the day before Thanksgiving. Wednesday was the last day to get the Pfizer vaccine which requires two-does and a total of five weeks before a person is considered fully vaccinated. The deadline to receive the two-dose Moderna shot was last week since it requires six total weeks to reach full vaccination.

The new guidance announced Thursday says contractors must receive the final dose of a vaccine by Jan. 4, the senior administration official said.

There have been vaccine mandate protests at defense factories across the United States, in recent days. Some companies are reporting an uptick in worker vaccination levels, but are also asking for flexibility since no firms expect to reach 100 percent.

About 77 percent of workers at Ingalls Shipbuilding in Pascagoula, Mississippi, are “fully or partially vaccinated,” according to a post on the company’s official smartphone app. That’s up from about half of the workers at the site, which builds Navy destroyers and other large warships, as of last week, industry sources said.

Navy Secretary Carlos Del Toro said he is not concerned the delayed mandate is a major issue for the shipyards.

“I think this is something that we'll be able to very effectively work through. It's a little bit more complicated, obviously in the private sector for our contractors and our shipyards, but I think that they're really making great attempts to try to educate their workforce that it just simply makes sense to get vaccinated. It's a matter of health security for themselves, and the health security of our own Department of the Navy workforce as well too,” Del Toro said Thursday during the 2021 Aspen Security Forum in Washington, D.C.

Leidos, a technology company of about 43,000, says its employee vaccination rate is in the “mid-90s” percentile, CEO Roger Krone said Tuesday on quarterly earnings call. 

“We worry about a small percentage number of people who won't apply for an exemption [and] won't get vaccinated,” Krone said. “We think that number is in the single-digit percentages.”

Krone, like other defense CEOs last week, warned that losing workers who refuse vaccination could lower the company’s revenue projections.

“It is unlikely that we would involuntarily separate employees early, but there is a possibility that at some point, we're going to have to lay off some people because they don't get vaccinated,” he said. “We don't want to do that and we're working with the legislators and with the White House on a sensible implementation of executive order.”

White House officials held a call with contractors earlier in the week after posting updated implementation guidelines, which appear to give companies more flexibility, industry sources said.

Still, Republican lawmakers have warned disruptions to weapons manufacturing could decrease military readiness. Sen. Jim Inhofe, R-Okla., said the Pentagon has not responded to his questions about the readiness impact.

“We are searching for an alternative to how we can correct this disaster our military and states are facing,” he said.

Wall Street is warning about workforce disruptions too.

“We see the potential for this declaration to bring about risk to the aerospace recovery for OEMs,” Morgan Stanley analyst Kristine Liwag wrote in a note to investors last week. “We’ve heard management commentary which puts labor on the forefront of an aerospace recovery as OEMs will need to hire back or find new employees to make up for the lost labor throughout the Covid-19 pandemic."

Don't miss: