2025 Shutdown: Contract Activity Update

While new solicitations have largely paused and thousands of contractors face stop-work orders, significant contract activity continues across some agencies—from fully-funded projects that secured obligations before the funding lapse to mission-critical work deemed essential to national security and public safety.

Contracting Activity During the First Week

Federal contracting activity continued at a reduced but steady pace during the shutdown's opening week. From October 1-8, agencies obligated $1.7 billion across 7,969 transactions representing 5,828 distinct contracts—clear evidence that pre-funded work and essential operations are proceeding despite the appropriations lapse.

On the opportunities side, the pipeline remains active but constrained. During the first week of the shutdown, there were 45 new solicitations among GovWin’s tracked opportunities and agencies issued 1,821 task orders under existing vehicles. This suggests that while new competitive procurements have slowed significantly, agencies with available funding continue leveraging pre-existing contract vehicles to meet immediate mission needs.

As expected, the departments deemed essential or have sources of alternative funding reported some contract obligations and continued issuing solicitations during the first week of the shutdown.

What Can We Learn from the FY 2019 Shutdown?

As federal contractors navigate the current government shutdown, the ghost of shutdowns past offers a roadmap—and reason for cautious optimism. The 35-day partial shutdown that stretched from December 2018 into January 2019 remains the longest in U.S. history, and while it inflicted real financial pain on contractors who never received back pay, the aftermath revealed important silver linings. Agencies prioritized catching up on contractor payments once funding resumed, the economy and markets recovered robustly, and the experience sparked meaningful legislative reforms. Perhaps most importantly, contractors emerged with hard-won lessons about cash flow management, documentation practices, and contingency planning that have made the industry more resilient.

• Government Eventually Prioritized Contractor Payments. After the 2018-2019 shutdown ended, the Office of Management and Budget directed agencies to make contractor payments a top priority. Although processing was uneven and slower than for federal employees, agencies actively worked to move payments along as quickly as possible. It took time, but most contractors were able to recover.
• Work Resumed and Projects Caught Up. When shutdowns end, agencies face compressed timelines and increased urgency, creating advantages for prepared contractors who can rapidly respond to catch-up requirements and urgent acquisitions for immediate needs. The backlog of work needs to be completed, which can create opportunities. When the dust settled on FY 2019, the government ultimately spent $600B, a 6% increase over FY 2018.
• Contractors May Be Able to Recover Shutdown Costs. Expenses incurred as a result of a shutdown should be recoverable through Stop-Work Order and Changes contract clauses, with proper documentation and cost mitigation efforts. Contractors who diligently documented impacts, delays, and additional costs were in a much better position to seek equitable adjustments.
• Industry Learned and Adapted. Many contractors emerged with better contingency plans for future disruptions. Some companies developed detailed, week-by-week strategies to protect their workforces and manage cash flow, so they are potentially better prepared for the current shutdown.

The data underscores a critical reality for contractors: the shutdown hasn't eliminated federal buying activity—it's redirected it toward previously obligated funds and streamlined procurement mechanisms that don't require new appropriations authority.

While the 2018-2019 shutdown was painful for contractors—particularly those without back pay—the government did ultimately reopen, work resumed, payments were eventually processed, and the economy recovered. One important distinction to make, however, is that the impact of the current shutdown is compounded by the numerous acquisition reforms and White House actions that preceded it. There are no clear tea leaves here, so the best course of action is to stay informed, meet government deadlines and keep tight control on costs.