WASHINGTON — Huntington Ingalls Industries says it is not forcing out employees who refuse the coronavirus vaccine, putting a major Pentagon contractor at the forefront of a battle over the Biden administration’s COVID-19 vaccine mandates.

The decision by America’s largest military shipbuilder to suspend enforcement of the mandate raises questions for scores of Pentagon vendors who have been grappling with how to both comply with the mandate and retain workers who won’t get vaccinated. Huntington Ingalls chief executive Mike Petters said in a message to his 44,000 employees this week the contractor’s major business segments are exempt because the government customer says the mandate was not a condition of its shipbuilding contracts.

“Importantly, with respect to Ingalls Shipbuilding and Newport News Shipbuilding, our customer has confirmed that our contracts do not include a requirement to implement the mandate,” Petters said in the Nov. 16 memo, adding the exemption applies only in part to its technology-focused business segment. “In light of this development, we are hereby suspending the deadline for vaccination, except where specific Technical Solutions contracts require it.”

The company said workers who opted to submit for retirement or to resign as a result of the federal mandate can now request reversal.

Since the Biden administration has announced sweeping vaccination mandates for government contractors, large employers and military and defense civilians, it’s hit a wave of resistance, particularly in southern states. This week, the Occupational Safety and Health Administration said it would suspend enforcement of the vaccine mandate for large private businesses after a federal appeals court upheld a stay on it last week.

Despite the vaccine mandate’s deadline being softened and delayed from Dec. 8 to Jan. 18, shipbuilders in particular have felt the effects because of their specialized construction process and preexisting labor shortages. In October, the largest union at Bath Iron Works reported the mandate might force out a third of its membership.

About 20% of workers have resisted the vaccine mandate at HII, which makes naval destroyers and amphibious ships in Pascagoula, Miss., and the Virginia-class nuclear submarine in Newport News, Va. It’s a situation that could potentially have sparked cost overruns for multibillion programs and delays to carefully calibrated schedules.

“It’s a huge disruptor to the yards because you have to move people around and figure out what the priorities are,” said HII spokesman Daniel Hernandez. “It messes with the schedules, and if you’re late, it starts to cost money. It would be schedule and cost to the customer that would be impacted.”

When Biden issued the mandate for large employers and contractors in September, the company first urged employees to get vaccinated and later said vaccination would be a condition of their employment. When Petters informed workers he is suspending the mandate, he left open the possibility the situation could change again.

“We are monitoring the fluid situation closely with our shipyard customers, and if the mandate becomes a contractual requirement, we will proceed accordingly,” Petters said, adding the company continues to encourage all employees to get vaccinated.

HII’s apparent exemption raises questions about whether other defense contractors have similar arrangements. But the situation might only last until the shipbuilder gets a new contract, or one of its contracts is amended and the clause is included, according to Dan Kelly, a government contracts lawyer with the National Defense Industrial Association’s New England chapter.

“HII may have worked out with its contracting officer(s) on existing contracts an agreement where the [contracting officer] did not exercise discretion to modify the contracts to include the clause,” Kelly said in an email. “It is hard to believe that this ‘suspension’ can last very long. It will apply as soon as HII gets a new contract or an existing contract is extended.”

Joe Gould is the Congress and industry reporter at Defense News, covering defense budget and policy matters on Capitol Hill as well as industry news.

Megan Eckstein is the naval warfare reporter at Defense News. She has covered military news since 2009, with a focus on U.S. Navy and Marine Corps operations, acquisition programs, and budgets. She has reported from four geographic fleets and is happiest when she’s filing stories from a ship. Megan is a University of Maryland alumna.

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It’s time for the defense industrial base to get vaccinated to ensure our security
This critical industrial base is now being tested in a way not experienced in our lifetime — not from an adversary, but from a virus. The industrial base is becoming our own worst adversary by delaying the research and production of systems vital to our national security due to employees delaying or objecting to protecting themselves and their fellow workers from COVID-19, an enemy that has already claimed more than 775,000 American lives.