National Association of Government Contractors

Considerations for Another Shutdown Part 1

Although, the federal government shutdown that began on Jan. 20, 2018 is not over, the impasse that led to it -- is not. With the short-term funding extension enacted by Congress expiring on Feb. 8, 2018, many federal contractors remain uncertain regarding government contract, labor and employment, and other laws. The interval of funding however, gives them a chance to prepare for the next shutdown.

Below are some of the critical issues federal contractors should consider to ensure they are in a position for another government shutdown.

Government Contracts

Funding and required performance for existing government contracts generally do not stop just because the federal government has shut down. An existing federal contract with a remaining period of performance and obligated funding remains in effect and should be performed during a shutdown: unless the contract is terminated or placed on stop-work status by the contracting officer, or until obligated funding is exhausted.

Work On-Site at Government Facilities

During a shutdown, only defined "essential personnel" are authorized to work on-site at U.S. government facilities. Depending on their individual roles, contractor employees may not qualify as essential personnel. As a practical matter, contractor employees may have difficulty getting to work on U.S. government facilities since certain security offices, installation access points, and buildings may close during a shutdown.

If contractor personnel are deemed "essential" to continuing work during a shutdown, seek to have this determination made in writing by the contracting officer, identifying specific employees by name or by labor category, where possible.

Some contractor employees may be permitted to work during a shutdown from alternate locations, such as from a contractor-owned facility. Whether an employee can continue to be productive, can work with little or no supervision, and has the necessary equipment to perform necessary tasks may be a case-by-case determination that should be discussed with the contracting officer or the contracting officer technical representative (COTR). 

Contractors with employees working on-site at U.S. government facilities should coordinate with contracting officers and COTRs to determine whether contractor personnel will be permitted to access the facilities (and whether government property and equipment will be available for use). Additionally, contractors should determine whether government personnel will be available for tasks such as supervising, approving, or testing contractor work.

Other Contract Considerations

Because many government employees will be furloughed, and unable to conduct normal business during a federal shutdown, contractors should anticipate that contract options will not be exercised, no new contract modifications will be issued), pending or new invoices will not be paid, and ongoing procurement activities will be delayed.

Contractors should determine when and if obligated funding will run out. Contractors should also (a) pay close attention to any obligations to notify the federal government of the status of funds remaining on individual contracts, and (b) send "75% letters" even if a contractor does not believe that the recipient of such notices will be working.

If funding on a given contract is exhausted during a shutdown, it will be up to the contractor to determine whether to stop work (or to continue working at-risk, in anticipation of receiving reimbursement after a shutdown is concluded).

Further, considerations for contractors, in the event of another shut-down will be discussed in Part 2 of this article.

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