Government Shutdown: What’s a Contractor to Do?


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Image by Mr. Physics via Flickr

While we are still optimistic that a federal government shutdown can be avoided, the threat is nevertheless real.  How will such a rare event impact contractors?

An article in Washington Technology poses the question to some people in the know.

John Cooney, the general counsel at the OMB during the 1995 shutdown was quoted as saying, “A company may have to shift employees to avoid working on a project that isn’t funded. The government is banned from accepting voluntary work.  In fact, agencies are required to keep people from working.”

Here are some key points for contractors dealing with a government shutdown should one occur:

  • Provide training for employees or assign them to work on another project that isn’t affected by the shutdown.
  • Contracts paid for with fiscal 2010 money are still in operation, but invoices might be paid late because of a shutdown.
  • Contracts providing services will be hit harder. Companies offering products will face changes in when and where they would make deliveries, but the government likely will have already paid the companies for those products. However, services aren’t paid for when the contract is signed.  As a result, a shutdown would have a greater impact on service businesses.
  • To deal with a shutdown, talk with your contracting officer about what’s ahead. In preparation, companies should analyze the possible circumstances and make plans in case of a shutdown.
  • Track costs related directly to the shutdown as best as possible as some of these may be recoupable.
  • Be patient with the contracting officer as they likely will not know what is going on at the highest levels any more than you do.

It is likely a budget compromise will be reached soon, or if a shutdown does occur, it will be short-lived.  However, contractors and their salespeople should consider the impact of such an event on their business.

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