Preparing for a Government Shutdown

A US government shutdown on October 1 remains an ever-present risk for government contractors.

A US government shutdown on October 1 remains an ever-present risk for government contractors. Many contractors are rightfully concerned about the status of negotiations on the Hill and the potential length of a shutdown and impact on current and future contracts. Although there have been talks of a continuing resolution, contractors should take proactive measures to prepare for the shutdown and understand the potential impacts on their business.

Government contractors can take several actions to mitigate the impacts of a potential shutdown:

  • Evaluate current government contracts. Contracts can be impacted differently by a government shutdown depending on the contract type, funding agency, and pending modifications or contract options. Be aware of period performance end dates, option or renewal dates, and task or delivery order dates. Proactively address near-term milestones in the event of a protracted shutdown period.
  • Evaluate your financial position. Assess financial metrics such as cash flow and indirect expense spend. Consider whether existing credit obligations may be impacted. Determine how long you can continue current operations without reimbursement, and attempt speedy billings/letter of credit drawdowns.
  • Review agency contingency plans. Agency contingency plans published by the Office of Management and Budget contain guidance for operations in the absence of available appropriations, specific to each funding agency. (see link below)
  • Talk to your contracting officers. Questions regarding new or existing contracts that you believe may have unique requirements during a shutdown should be directed to your contracting officers. Additionally, it is important to understand how to contact your contracting officers and other agency contacts during a shutdown.
  • Inform your employees. Apprise your employees and subcontractors of expected or potential changes to performance of work on contracts or payment of wages.
  • Prepare for the slowdown on open solicitations and submitted proposals. During a shutdown, movement on pending awards stops unless explicitly provided for in an agency contingency plan or other agency guidance. Additionally, even after a shutdown ends, it may take time for contracting officers to work through the shutdown backlog. Revisit your short- and mid-term business plans and contract backlogs for potential lags.

Pay special attention to newly issued agency guidance or communications from your contracting or agreement officers. Being proactive can help you mitigate potential impacts of a government shutdown on your business.

Agency contingency plans on the White House website can be found here:  Agency Contingency Plans

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