Once again, the threat of a government shutdown looms over federal contractors and grantees. If Congress does not pass a continuing resolution or other funding legislation before midnight on Saturday, agencies will lack authorized appropriations to fund their operations. Although regrettable, the risk of a shutdown (or debt ceiling crisis) has been a fairly common occurrence over the last few years.
Here’s our guidance from prior potential funding shortfalls on how contractors can prepare to weather the storm of a government shutdown:
- Surviving a Government Shutdown
- Strategies for Sequestration
- The right to stop work due to inadequate funds
- Contractors get paid even if appropriations are exhausted
- Implications of the Debt Ceiling for Government Contractors
In short: (1) communicate with your contracting officer; (2) address near-term funding issues; (3) assess mitigation options (e.g., reassigning personnel); and (4) quantify and document your shutdown-related impacts. Contractors should also consult their applicable agencies’ government shutdown contingency plans.
While prior shutdowns have historically not lasted very long, the duration of shutdowns has been increasing. Until 1995, all prior government shutdowns lasted less than a week with most being one day or less. In 1995, the government shut down twice, once for 5 days and again for 21 days. The 2013 shutdown lasted 16 days. The most recent shutdown in 2018-2019 lasted 35 days but was only a partial shutdown—Congress had passed at least some funding legislation.
Although the current threatened shutdown looks increasingly likely, it is difficult to predict how long it may last. But the scope of the shutdown and the lack of any appropriations will hopefully prompt quick action in Congress to avoid a lengthy pause in government operations.