The Government has shutdown.  Here we go again. This is at least the second time this calendar year.   How does this impact my government contracts?  That all depends on what Agencies you have contracts with.  The Department of Defense (DoD) is partially funded.   So, depending on the whether the DoD activity is directly related to the warfighter will determine if the contract will continue or a stop order issued.  Let’s see the affected agencies, shall we?

Agencies Affected by the Shutdown?

The following Agencies are impacted by the Government shutdown.  Each agency will have to determine which employees are essential during the shutdown.  These employees will work for no pay while their coworkers are at home.

  1. Internal Revenue Service (IRS)
  2. Health and Human Services (HHS)
  3. Justice Department
  4. U.S. Intelligent Agencies
  5. Department of Homeland security (90%) operational, only 10% Furloughed
  6. Department of the Interior (DOI) (Campgrounds, full-service restrooms and concession impacted)
  7. Department of Transportation (DoT) will mostly be opened with impact on issuance of new pilots’ licenses, medical certificates, research and development stopped.
  8. National Institutes of Health – will impact research
  9. Environmental Protection Agency will be working but unable to determine for how long and what the extent impacted.
  10. U.S. Small Business Administration – locally offices will be shutdown.

Why Can’t My Contract Continue During the Shut Down?

Contractors cannot continue to work during a Government shutdown because of the Antideficiency Act.  Congress created this act in 1884 with major amendments to the act in 1950 and again in 1982.  This law prohibits the federal government from entering into a contract that is not “fully funded”.  So, without the appropriations the government is forced to stop work.  For more information on this Act please see Pub.L. 97-258.   The Act also does not allow the volunteering of services either.

Are there Exceptions?

Contractors can continue to work if their contract falls into one of the exceptions.  Exceptions include emergency risks to property or human health like a hurricane.  If the Agency funded your contract on a multi-year appropriation or no-year appropriations.

What can a Contractor do?

The best thing that a contractor can do is keep in constant contact with your contracting officer.  The contracting officer will provide contractors with updates on when work officially stops, starts, or the status of contracts throughout the shutdown.

Contractors must review their contracts prior to the shutdown and understand which contracts are key to the government.  Make sure to communicate with your employees, partners, and subcontractors once there is a hint of a government shutdown.  Keep communicating once a shutdown has been ordered and throughout again until things return to normal.  It is better to over communicate during this time period.

Do Not stop Work Until a Stop-Order is Issued

Whatever you do, do not stop working on a contract. Until the Agency. Representative has notified you to stop working by issuing a stop-work order.  Until you receive this order continue to keep working.

Your first and only response should be I am required to continue work on the contract until the Government issues you a piece of paper stating “Stop-Work Order” on it.

The stop work order must come from the Contracting Officer not from anyone else including technical staff.

Fully funded contracts can continue unless it requires engagement with a government official for the work to be done or the government specifically denies contractors access to its facilities.  Thus, requiring you to stop working.  If this happens reach out to the contracting officer and DOCUMENT EVERYTHING.  Document all work and expense you accrue before, during and after a shutdown occurs.

Why Document?

The government will reimburse contractors for certain expenses once a shutdown ends.  You will file this separately for any chance of getting reimbursement from the Government.  Document everything.

Contract Employees

Do you pay your employees that work on a contract during a shutdown knowing that the government is not going to reimburse you?  This is a business decision that you will have to make.  If you can have them work on something else in the meantime that would be great.  If not, and you elect to not pay them during this timeframe.  How will this impact employee loyalty?   Can you afford to pay employees without affecting current contracts?  That is the decision that you must make

We hope that the government shutdown will be short lived but be prepared.  That is the best anyone can do under these circumstances.  For other articles, or if you prefer we have a Podcast and YouTube channels for you.  Register to be notified when new blogs are released.