Mitigating the Impact of a Government Shutdown

Introduction

Most eyes and ears are on Capitol Hill today as we wait for a spending bill to be approved ahead of midnight tonight, to prevent a government shutdown.

If the government shuts down, it will impact government contractors. In this brief eAlert we discuss what to expect during a shut down and how to prepare to minimize its impact.

Some of What to Expect

1. During a shutdown, contracts about to expire cannot be renewed.
2. Solicitation and award of new contracts will likely be put on pause.
3. Contract options cannot be exercised.
4. Modifications of contracts cannot be issued.
5. Unless the contracting officer issues a Stop Work Order, funded contracts are expected to be performed.
6. Payment of invoices will be delayed.
7. Many government employees, including contracting officers, will be furloughed and will not be permitted to use government provided devices such as phones and laptops.

What to Do

1. Communicate with your contracting officer; know what you can expect.
2. 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.
3. 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.
4. 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.
5. 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.
6. Become familiar with contract clauses addressing termination for convenience, government work delay and stop work.
7. Have a contingency plan in place if you need to reassign employees to work on other tasks such as commercial contracts.
8. Remember, it is important to mitigate increased expenses and document such mitigation if you will ask for any equitable adjustments.
9. 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.

Should you have questions, Warner’s team of government contracting attorneys, Mike Stone, Adam Bruski, Aida Dismondy and Bill Warners, are here to help.