With a Government Shutdown Looming, What You Should Know

By Wally Irvin | January 19, 2018

With a Government Shutdown Looming, There are a Few Things Contractors Should Know

The failure of Congress to reach an agreement on a short-term spending bill before the end of the day will cause the United States to start the weekend with a government shutdown.  Needing 60 votes to advance the spending bill in the Senate, Republicans face opposition to the current bill because it fails to offer protections for young undocumented immigrants or address other Democrat priorities.  Regardless of which side of the aisle you fall, there are a number of things to know regarding a government shutdown.  The Associated General Contractors of America released a guide to government shutdowns Thursday.

First, ongoing, direct agency contracts that are not funded by 2018 fiscal year appropriations will be largely unaffected.  This is because these projects were previously funded and awarded on a fixed-price basis.  Similarly, State DOT projects will also be largely unaffected, at least in the near-term, due to Congress enacting the Highway Trust Fund, which has a positive balance and will continue to process state requests for reimbursement.  AGC notes some programs, such as the TIGER grants or TIFA loans, could be impacted, though the effects on these programs are not immediately clear.

Even if funding is available, contractors face a number of obstacles to performance.  For instance, if a federal facility is locked or unavailable, performance may be impossible.  Where delays or disruption are encountered, contractors must accurately track and account for all costs incurred as a result of the shutdown.

Finally, communication is key.  Contractors should contract their contracting officers to determine whether the officer intends on issuing a stop-work order or providing any other guidance.  During the shutdown, routinely notify the contracting officer in writing of all actions taken to continue performance during the shutdown, if possible, and of any costs incurred because of the shutdown.  Also note all efforts taken to mitigate these costs.

Once the shutdown ends, which it will, contractors may recover some, but not all, of their costs.  For fixed cost contracts, recovery of costs will depend upon whether the contract provides for an equitable adjustment under the circumstances.  For cost reimbursement contracts, costs will likely be recoverable, though it is imperative to check the terms of each contract.  As with any construction project, proper documentation of costs is of utmost importance.

A government shutdown is just another challenge in the life of a contractor.  Just remember: This too will pass.

Photo: Phil Roeder

About Post Author

Share this:

WP Post Author