Government Shutdown Survival Checklist

What should your organization be thinking about, and do you REALLY understand your rights?

Introduction

Federal. Government. Shutdown. Three words that are likely to stir fear and uncertainty in the heart of any government contractor, as well as raising several pertinent questions.

• Will I be paid during the shutdown?
• Do I have to continue to perform work?
• What about costs and delay impacts my company is incurring?
• What kinds of recourse will I have when the shutdown finally ends, if any?

All of these questions are perfectly valid and likely to be at the top of the mind of anyone managing a government contract. Thankfully, Excell Consulting International has put together this informative guide, meant to answer exactly those questions and more. 

What does the “Shutdown” mean?

First and foremost, it is important to understand exactly what a government shutdown is, why it occurs, and what happens to contractors as one plays out. Thankfully (or perhaps unfortunately), our government has a history of shutting down over various political disagreements, so there is a well-established record of what impacts a contractor can expect a shutdown to have on their business.

A “shutdown” such as the one currently proceeding into its third week, results when the legislative powers within our government are unable to pass the necessary bills detailing how, where, and when federal funds will be spent.

Without these bills passing Congress and being signed into law by the President, the various governmental departments that allow the government to function properly do not receive the funding that they rely on to remain operational. Without this funding there can be no new procurements, no payouts of obligated debt to contractors performing work for the departments, and sometimes the entire department itself is forced to furlough (temporarily layoff) its own employees, meaning there may or may not even be an employee available to answer contractor’s questions about the status of their contracts!

Obviously, this throws a huge wrench into the gears of any contractual work being performed by contractors on behalf of these departments. So, perhaps the first question should be: Is the Department responsible for my contract still operational during the shutdown, and are they responsible for any negative impacts to my organization?

Who is affected? What departments?

There are 12 “Appropriations” bills that need to be passed to fully fund each Department within the government, and as of the date of this article, five have been passed. These bills have funded the Departments of Defense and Energy, and the Government Accountability Office, among other lower agencies. Departments that have not yet received funding include the Departments of Homeland Security, Commerce, Interior, Housing and Urban Development, State, Justice, Transportation, Treasury, the Food and Drug Administration, and NASA.

If any of these Departments are responsible for a contract or contracts that your company is involved with, you will be very likely to experience some sort of impact from the shutdown. Thankfully, contractors can be sheltered from many of the nastier impacts of shutdowns, so long as they take several very important steps with regards to their contracts.

What should you do RIGHT NOW?

Excell Consulting has compiled a list of five crucial actions that contracting companies should take to protect themselves during a government shutdown:

1. Check your contracts for certain clauses. Each of these clauses represent an area of possible recovery in the event of a government shutdown. If you have been negatively impacted by the shutdown AND your contract includes any of these clauses, you very well may have grounds for recovery.

FAR 31.205-33                  Professional Consultant Service Costs

FAR 52.213-1                    Fast Payment Procedures

FAR 52.216-2                    Economic Price Adjustment (all subparts)

FAR 52.216-7                    Allowable Cost and Payments (all subparts)

FAR 52.216-23                  Execution and Commencement of Work

FAR 52.217-8                    Option to Extend Services

FAR 52.217-9                    Option to Extend Term of Contract

FAR 52.222-7                    Withholding of Funds

FAR 52.228-15 & 16         Performance and Payment Bond Requirements

FAR 52.232-5                    Payments Under Fixed-Price Construction Contracts

FAR 52.232-16                  Progress Payments

FAR 52.232-17                  Interest

FAR 52.232-25                  Prompt Payment

FAR 52.232-27                  Prompt Payment for Construction Projects

FAR 52.236-1                    Performance of Work by the Contractor

FAR 52.242-14                  Suspension of Work

FAR 52.242-15                  Stop-Work Order

FAR 52.242-17                  Government Delay of Work

FAR 52.243                        Changes (all subparts)

2. Get everything in writing from the Contracting Officer. This includes stop work orders and NTPs, as well as any official orders to work without pay. Keep in mind that no instructions concerning work should be taken from anyone other than designated CO. If someone who is not the designated CO is giving orders to stop or start work, kindly request the same instructions to be repeated, in writing by the official CO. If that is not possible, you are under no obligation to follow the given instructions (i.e. becoming a “volunteer”). Be 100% positive that you and your staff understand your legal NOTICE REQUIREMENTS as set forth in your respective contracts!

3. Track ALL costs associated with issues related to the shutdown. This includes any expenses associated with mobilization or demobilization of your work force, equipment rental costs expended during periods of shutdown-related non-performance, loss of manpower costs, and learning curve impacts.

4. Track and document ALL delays including work site accessibility issues and problems with government responsiveness due to potential staff shortages.

5. Continue to meet all submission and/or reporting deadlines. This includes administrative, construction, and litigation deadlines. Note: Failure to do so can impact a contractor’s ability to recover valid costs or can result in having their cases dismissed (if currently under litigation)!

Conclusion

All told, the government shutdown is something that a contractor should be aware of, and any affected contractor should take steps to mitigate its effects.

The list above is merely a starting point and Excell highly recommends that any potentially affected contractors take these actions immediately if they have not done so already. Taking these relatively simple steps now can and will save contractors countless hours of headache and significant sums of money in the long term during times of a government shutdown.

And of course, should any government contractor continue to experience issues with their impacted contracts, or if they may have any questions concerning the proper course of action with regards to their specific situations, the professional consultants at Excell are available to assist, so reach out today. And remember, simple consultation calls to Excell are always FREE!

EXCELL CONSULTING “HERE TODAY FOR YOUR TOMORROW”

Author’s note: The information contained in this article is for general informational purposes only. This information does not constitute legal advice, is not intended to constitute legal advice, nor should it be relied upon as legal advice for your specific factual pattern or situation. – John G. Balch, CEO, MA, CPCM and Jake Hanrahan, Contracts Administrator