The clock winds down to another federal government shutdown as funding is set to expire at midnight on Tuesday, Sept. 30. Unlike the most recent threat of a government shutdown last March, there is a new Congress and new presidential administration. In this brief eAlert, we discuss what to expect during a shutdown and how to prepare for its impact.
New Strategies from the New Administration
Typically, during a government shutdown:
- Contracts about to expire cannot be renewed.
- Solicitations and awards of new contracts will likely be put on pause.
- Contract options cannot be exercised.
- Modifications of contracts cannot be issued.
- Unless the contracting officer issues a stop work order, funded contracts are expected to be performed.
- Invoices payments will be delayed.
- Many government employees, including contracting officers, will be furloughed and not permitted to use government-provided devices, such as phones and laptops. In the past, these measures were temporary and lifted once Congress restored funding.
In addition to these practices, the Trump Administration, through its Office of Management and Budget (OMB), has confirmed a shutdown could trigger a permanent reduction of the federal workforce. In a memo, the OMB directed executive agencies to consider reduction in force notices for all employees in programs, projects or activities where:
- discretionary funding lapses on Oct. 1,
- another source of funding is not currently available and
- the programs, projects or activities are not consistent with President Trump’s priorities.
As a result, during a shutdown, certain federal workers would be sent home. Once the government reopens, agencies could only “retain the minimal number of employees necessary to carry out statutory functions.” It is unclear at this time, which federal agencies, programs, employees and/or activities would be subject to this permanent reduction in force strategy.
How to Prepare
- Communicate with your contracting officer: Know what you can expect.
- Communicate with your subcontractors: Inform them that in the event of a shutdown payment of invoices may be delayed. If a stop work order is received, immediately communicate it to the subcontractors and ask them to stop performing on the subcontract.
- For primes and subcontractors alike: If a stop work order is issued, read it to understand what is expected of you and note any timelines you need to follow.
- Even if no stop work order is issued but you’ll encounter delays in the contract because of the government shut down, keep track of the reasons for delay.
- Also, for primes and subcontractors: Document, document, document. Document your communications (prime – contracting officer; prime – sub; sub – prime). Document your costs, your expenses and the work performed. Make sure your records are accurate.
- Become familiar with contract clauses addressing termination for convenience, government work delay and stop work.
- Have a contingency plan in place if you need to reassign employees to work on other tasks, such as commercial contracts.
- Remember, it is important to mitigate increased expenses and document such mitigation if you will ask for any equitable adjustments.
- Keep a paper trail of tasks impacted by possible government system shutdowns. For example, if you’re hiring new employees, complete a hard copy of the I-9 form if E-Verify is down.
- Monitor notices issued by federal agencies you interact with in case a shutdown triggers a permanent reduction in force.
