“Government shutdown” is pretty much a fancy way of saying that the folks on Capitol Hill cannot agree on how to fund federal operations or agencies. It is not an automatic stop work order. Politicians rally, the media gets in a frenzy, and a hot potato of blame usually gets thrown around. Let’s forget about the Poli Sci and opinions for a moment. Here, we’re just going to focus on one thing:
As a government contractor, how do you handle shutdowns?
Spotting the Signs
Government shutdowns hardly ever come by surprise. If you keep a tab on current events, you should know when the next one will hit. Since 1976, there have been a total of 22 shutdowns with three occurring in 2018. The longest shutdown occurred for a duration of 21 days between December 5, 1995 and January 6, 1996. During government shutdowns, federal employees and contractors may get furloughed.
It all depends on if the services they provide are considered to be “essential” or “nonessential.” Airports will still be up-and-running, active military operations will go on, and even NORAD continued to track Santa on Christmas Eve. The majority of employees at agencies such as The National Park Service, Department of Urban Housing and Development, and NASA will get furloughed. The Smithsonian National Zoo’s Giant Panda Cam will also be down. Some government workers will not clock-in for the time being or they may be expected to work without pay. The same may apply to contractors.
When a Government Shutdown is Looming…
1. Review Your Contracts
If you are currently performing on a contract, there should be a section that mentions what will happen if a Stop Work Order is placed. Being aware of this ahead of time can prevent you from carrying out work that you won’t get paid for doing.
2. Keep Your Contracting Officer Close
Who’s the best person to contact during a shutdown? Your contracting officer. Again, right after getting awarded, you should ask your contracting officer what to do if a shutdown occurs.
3. Have a Plan for Your Team
If your team is put to work during a Stop Work Order, there is a chance you will not be paid for their work, hence not have the funds to pay them. Find out if you will be compensated for any work you complete during the shutdown.
This also applies to your subcontractors. Ensure the subcontract includes the Limitation of Funds clause. This will protect you from the risk of having to complete performance when funds are insufficient.
What to Do (or Not to Do) During a Government Shutdown
Stay Aware of Developments with Federal Customers
Different agencies may take different approaches to the shutdown. Take the time to figure out what’s going on in the agency that you’re working with. Do they offer essential or nonessential services?
Check Agency Websites
This is the quickest way to check the status of the agency you’re working with.
Check the Specific Terms of Your Contracts
If a Stop Work Order is issued, you may need to stop work on minimized costs or be offered a cost-reimbursement for the adjustment in the delivery schedule (FAR 52.242-15).
Document Everything Thoroughly
Poor communication could mean that you are working through a Stop Work Order. Keep everything documented to give yourself a better chance of being reimbursed.
Stop Work Immediately
Only stop working if your contracting officer issues a Stop Work Order. If a Stop Work Order is placed, you have 30 days to submit a request for an equitable adjustment for costs attributable to the stop work order.
Assume Communications Were Received
Never assume that the contracting officer has recieved your email or voicemail. It is very well possible that they’re not at work and won’t be back to answer any questions until this whole ordeal is wrapped up.
Complain to Your Contracting Officer
They are just as confused as you are and are likely facing a furlough. Shutdowns happen. Don’t let them hinder your relationships with federal agencies.
Keeping the Bigger Picture in Mind
Government shutdowns cause a lot of confusion and they can be frustrating. At the end of the day, it’s all about communicating, reviewing the fine print, and staying patient. Throughout this period, remember what got you into government contracting. You entered this sector because you sought an extra stream of revenue. You got into this because you know that although there may be some hiccups, Uncle Sam does have the money to pay his customers.
Remember, this is a longterm investment. It’s not just about what’s happening in these few weeks or just this month. It’s about where your business is going to be within the next 10, 15, or 20 years. Hold on, and it will all be over soon.