Bradley recently published articles discussing how government contractors should prepare for and deal with a shutdown and how contractors can recover costs and seek time extensions as a result of a shutdown.
Below are key actions government contractors should consider once the government eventually reopens.
Link to 1. Confirm Contract Status and Performance Schedules 1. Confirm Contract Status and Performance Schedules
- Contact the contracting officer (CO) to confirm whether performance has resumed and whether there are any revised timelines or priorities.
- Request written confirmation of any new deadlines, modified delivery schedules, or changed milestones.
- If a stop-work order was issued, ensure you receive a written notice to proceed before restarting work.
Link to 2. Document Costs and Delays 2. Document Costs and Delays
- Maintain detailed records of costs incurred during the shutdown, including idle labor, demobilization/remobilization, and overhead.
- Document lost productivity and schedule disruptions. These records may support requests for equitable adjustments or claims later.
- Ensure subcontractors are providing their own cost and delay documentation so you can flow these through to the government if appropriate.
Link to 3. Evaluate Recovery Options 3. Evaluate Recovery Options
- Depending on your contract type, you may be entitled to a contract extension or equitable adjustment for increased costs caused by the shutdown.
- Review FAR clauses such as the Suspension of Work Clause (FAR 52.242-14) or Government Delay of Work Clause (FAR 52.242-17) to determine whether relief may be available.
- Consult experienced government contracts counsel before submitting requests for equitable adjustment (REAs) or certified claims to ensure compliance with statutory and regulatory requirements.
Link to 4. Communicate with Subcontractors and Vendors 4. Communicate with Subcontractors and Vendors
- Clarify and coordinate the path forward with subcontractors — when to restart work, revised schedules, and expectations regarding payment.
- Ensure you understand and manage any claims from subcontractors impacted by the shutdown.
Link to 5. Assess Cash Flow and Financing Needs 5. Assess Cash Flow and Financing Needs
- Shutdowns often disrupt billing cycles and payments. Review your outstanding invoices and confirm whether the government will accelerate processing once reopened.
- Explore bridge financing options or negotiate payment terms with subcontractors to help smooth cash flow during the restart period.
Link to 6. Update Internal Compliance and Risk Management Processes 6. Update Internal Compliance and Risk Management Processes
- Incorporate lessons learned from the shutdown into your company’s contingency planning.
- Review your contracts portfolio to identify which agreements are most vulnerable to future funding interruptions.
- Train project managers and contract administrators on how to respond to stop-work orders, funding gaps, and communication breakdowns.
Link to 7. Preserve Rights for Potential Claims 7. Preserve Rights for Potential Claims
- If the shutdown caused you financial harm or schedule disruption, timely notify your CO in writing.
- Pay close attention to deadlines under the Contract Disputes Act and contract-specific notice requirements.
Link to Conclusion Conclusion
Once the current government shutdown eventually ends, the impacts on federal contractors can linger for months. By promptly addressing contract status, documenting costs, coordinating with stakeholders, and considering avenues for recovery, contractors can both minimize losses and strengthen their position going forward.
Contractors who take these steps will not only recover more effectively but will also be better prepared if another funding lapse occurs.
If you have any questions about any of the foregoing, please feel free to contact Aron Beezley or Nathaniel Greeson.