Though not unusual – having taken place during the Ford, Carter, Reagan, Bush, Clinton and Obama presidencies – government shutdowns seem to be occurring more frequently than ever. Suppliers and contractors need a contingency plan to minimize business impacts during these potentially prolonged events.
A shutdown occurs when Congress and the President fail to pass legislation funding government operations and agencies. If a spending bill is not enacted into law then the Anti-Deficiency Act requires that the government shutdown.
Per Gao.gov “…the fiscal principles inherent in the Anti-Deficiency Act are really quite simple. Government officials may not make payments or commit the United States to make payments at some future time for goods or services unless there is enough money in the “bank” to cover the cost in full. The “bank,” of course, is the available appropriation.” As a government contractor, it’s important to know how you are affected by a government shutdown and what you should do – or not do – if and when it happens.
At a high level, a government shutdown means contracts are not being awarded, RFP’s are not being issued and procurement endeavors come to a halt. However,. Therefore, you must still submit your by the original deadline if you want to be considered for the opportunity when the government does re-open. Have a question or need clarification about a solicitation requirement? Contact the contracting officer as soon as shutdown rumors start swirling because they most likely won’t be accessible once that shutdown occurs. Although, it is best practice to ask questions as soon as you receive a solicitation anyways so that you have plenty of time to .
And don’t forget that federal government shutdowns don’t impact state or local government programs. There will still be thousands of bids posted by states, cities, counties, municipalities, non-profits and even education entities every single day. Translation: You will still have plenty of new business opportunities to pursue during your “downtime.” In fact, it is highly recommended to balance your bid strategy between the federal and state/local levels if your business is heavily reliant on public sector revenue.
Get in touch with the contracting officer as quick as possible for guidance on how the shutdown will impact you specifically. The contracting officer is responsible for letting all contractors know when work stops, starts and the status of all contracts during the shutdown. During a shutdown, your regular contracting officer may be furloughed, however there will be a person designated as a point of contact for all contractors. In most cases an agency will start reaching out to you prior to a shutdown to keep you informed, as there may be situations in which you are still expected to deliver negotiated goods and services in support of medical, security or IT activities.
Even if the threat of a shutdown is looming, you are not entitled to shut down work on your own. You will be required to continue working until you officially receive a Stop-Work order in writing from your contracting officer. It important to note that fully funded contracts will continue unless you are denied access to the work area or the contract requires interaction with government officials.
It is important to keep accurate records and receipts of all work and expenses that take place just prior, during and post a shutdown. The government will reimburse accepted expenses once the shutdown is over.
If you already have a fully-funded contract and are asked to continue working during a shutdown, it can be easy to become a bit laxed without the direct oversight that occurs during full-tempo operation. However, your performance will remain under close scrutiny. In fact, your ability to maintain high quality standards in the face of adversity will surely win you the admiration of the customer and contracting officer, a boon for your performance track record.
Finally, it’s critical that you talk to your team and have a game plan in place in the event of a shutdown. Preemptively figure out who can be reassigned if necessary; are paid vacations available; can your team catch up on training requirements? Having these alternatives in place will help avoid staff confusion. Your team may also include subcontractors and vendors. More than likely your contracts with them will provide steps that need to be taken in the event of a stop-work order. If not, reach out and see what arrangements can be made for delaying deliveries and make sure your contracting officer is aware of any slippage by your suppliers.
The last thing you need is a contract breach due to supply chain disruptions.
If you are asked to stop work, it is critical that you confirm if and how your contract will be modified to accommodate delayed actions. Will delivery or project completion deadlines be pushed back? Will resources still be available when the government does re-open? Must you take measures in advance of the closure to secure unfinished sites during the shutdown?
If an earthquake were to hit a military base during a shutdown and medical services are needed, will contracted providers be called in to provide support? If so, how will it be funded? Are your contracted goods and services are considered “mission critical”? These are all questions to ask in advance so that you can prepare accordingly and keep resources on standby.