As of this writing, the U.S. is scheduled to shutdown at midnight, tonight. One of the first things you learn in government contracting is something called the Anti-Deficiency Act, first enacted in 1870, which says the government can’t obligate expenses unless funding has been appropriated through Congressional action. The Act also prohibits the government from accepting voluntary services not already authorized by law.
Without Congressional action for further appropriation of funds by midnight, the government is prohibited from paying personnel (except Congress, and other officials) and for other services, including grants and contracts. Fortunately, much of the funding provided by the government to our clients has already been appropriated and will continue to be funded.
Below is a list of what we know so far on the latest shutdown.
Payments through WAWF (DoD) could be delayed, however the Prompt Payment Act still applies, so interest penalties will be paid.
Grant draw down systems, such as the DOE’s ASAP and NSF FastLane are expected to be operating.
Contract funding for incrementally funded contracts could be disrupted during the shutdown. If contracts have costs or billings at or near the funded limit, contractors may not be reimbursed for performance during the shutdown period. However, if funding is sufficient, contractors are obligated to continue performance even if there is a government shutdown.
New Contracts and Grants
Contract and grant awards would likely be delayed due to a shutdown. Deadlines for submitting proposals or applying for grant may or may not be extended due to shutdown periods.
Government Support Contractors
Those who provide IT support or other personnel services to the government may be particularly vulnerable to a government shutdown. Support operations may be halted, so a contractor should expect a Stop Work order from their contracting officer. Employees may have to be either furloughed or charge to indirect labor accounts. Government employees typically receive back pay for shutdown periods. However, contractors may not.
Results May Vary
The impact from a government shutdown is wide-ranging. Government agencies have some latitude on what they can continue to fund during a shutdown period. As a government contractor and grantee, the implication for your business may vary widely from others. It’s always best to take up any specific concerns to your contracting officer who at this point is likely the most knowledgeable and your best advocate.
Bear in mind that even if the government avoids a shutdown tonight, continuing resolutions funding the government could be extended day-to-day or week-to-week, making this a chronic risk to contractors and grantees.
Feel free to contact us with your concerns and observations on this latest wild ride.