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Day 35 of the Government Shutdown: Five Contractor Considerations

Published: January 25, 2019

BudgetBusiness DevelopmentPolicy and Legislation

Today marks day 35 of the longest government shutdown in government history, with no clear end in sight. As this drags on, contractors should prepare for new challenges to emerge as the shutdown continues, as well as when it ends.

Five things contractors should be doing:

  • Heed pre-shutdown deadlines. Whether it’s bid protest deadlines, RFP and RFI response dates, and program deliverable deadlines, contractors should operate as though the government is operating.  Submit everything on time and document all attempts to do so. Monitor GovWin and FBO for updated timelines should they become available. For example, on January 17, DHS Chief Procurement Officer Soraya Correa issued a Notice to Industry providing insight into how DHS will handle missed deadlines.
     
  • Document EVERYTHING. Contractors may have some recourse for reimbursement for costs incurred due to the shutdown or those incurred to restart stopped work. It’s also important to document attempts to stick to program milestones, especially those for excepted activities that continued but were severely hamstrung by the lack of access to government POCs.
     
  • Maintain frequent communication with POCs still on the job.  Some affected agencies are continuing to operate by leveraging alternate funding streams (such as carryover funds from previous appropriations and collected fees) to continue operations. However, those funds can only go so far. As that funding dries up, agencies may choose to allow the employees paid with those funds to continue working unpaid, or execute furloughs. Make sure you’re aware of changes in the status of employees you rely on to continue working.
     
  • Be ready for a contracting uptick AND delays when the shutdown ends. Shutdowns create obvious contracting bottlenecks that affected agencies will try to mitigate when funds become available. They’ll be working to get planned RFPs out the door quickly so they can get them awarded within the current fiscal year (or possibly face the impact of, at minimum, a continuing resolution for FY 2020 appropriations). They will also be doing cleanup – assessing the expected and unexpected impacts of the shutdown on program milestones and budgets, activating option years that came into play but weren’t executed during the shutdown, and possibly reevaluating acquisition strategies.
     
  • Be ready to move quickly to mitigate internal damage. Contractors will also have significant work to do – submitting invoices for work completed (and funded) but unpaid, recalling employees moved to other projects, assessing the shutdown’s impact on Bid & Proposal (B&P) resources, and dealing with subcontractors who may have experienced financial distress that affects their ability to continue the work.

It seems highly likely that contractors may also take a much harder look at their customer mix after the dust settles. Some may decide to pursue more work on the defense side of the house, given DOD’s more solid budgetary footing with this administration. Whatever the path chosen, the contractor community will feel the impact of this shutdown for a long time.