The Shutdown is Over: Now What?

 An article by FMA Sr. Principal Research Analyst Christine Fritsch provides an overview of the bill (with special attention to VA, one of the only agencies to get full year funding), but this article focuses on a question I’m sure many contractors have: now what?
 

Based on federal contracting patterns and lessons from past shutdowns, there are a few key areas contractors should consider in this immediate post-shutdown period:

Business Development

• Monitor GovWin for accelerated procurement activity as agencies work to address contract backlogs and obligate funds before the end of the fiscal year
• Be ready to respond to IDIQ task order competitions; agencies are likely to rely on these vehicles for speedier procurement
• Assess position for incremental work; the continuing resolution prohibition on new program starts will push agencies to favor existing contractors for allowable work

Contract Management

• Re-establish contact with contracting officers (COs) and program managers (PMs) to understand revised priorities and timelines
• Initiate conversations with COs and PMs to negotiate contract extensions and equitable adjustments for time lost during the shutdown
• Review contract terms for clauses or provisions related to government-caused delays
• Be visible and responsive – some agencies may re-evaluate contract needs and contractor performance after shutdown disruptions

Financial Management

• Reconcile invoicing for any work performed before or during the shutdown (but be prepared for payment processing backlogs)
• Review documentation of separate shutdown-related costs to prepare for any potential future claims or modifications
• Review and update cash flow projections and financial forecasts to account for delayed payments and revenue gaps

To get a sense of what to expect for the next few months, we have to look backward to the FY 2014 and FY 2019 shutdowns to get an idea of post-shutdown procurement activity. GovWin’s Director of Research Kathleen Sievers analyzed tracked opportunity solicitation releases during and 90 days after the FY 2014 (October 1, 2013 to October 16, 2013) and FY 2019 (December 22, 2018 to January 25, 2019) shutdowns.

Tracked Opportunity Solicitation Release: During Shutdown + 90 days Post Shutdown

The solicitations issued post-shutdown likely included both those delayed from the shutdown period and those originally scheduled for the post-shutdown period.

However, the actual volume did not reflect the full expected number from both periods combined.

Deltek believes many solicitations experienced continued delays for several reasons:

• Required additional time to review and revise scope
• Restarted the approval cycle,
• Staffing limitations meant contracting offices could only process a limited number simultaneously, and
• Cancellations due to funding constraints or changing needs.

 

 

New Contract and Task Order Awards, Shutdown Year vs. Previous Year: During Shutdown + 90 days Post Shutdown

The volume of contract awards during the shutdowns and the 3-month post-shutdown periods were not significantly different compared to the same timeframes the previous year.

However, task orders showed different patterns. Task orders awarded during the FY 2014 shutdown were slightly higher than the volume awarded during the same period the previous year.

With the FY 2019 shutdown, there were more task orders awarded during the shutdown (32% more than previous year) as well as in the 90-day period after the shutdown ended (27% more task orders awarded).

Task orders can be awarded faster as certifications and price points are established through the main contract vehicle. They can be issued and awarded with a much faster turn around than the initial contract.

   

Although the government is back in business, contractors must move forward with dual strategies and mindset: reset and recoup from the shutdown, and plan and prepare for what may come when the current continuing resolution expires on January 30, 2026.