As we approach the fiscal year deadline, the chances of another government shutdown have grown. The most recent federal government shutdown occurred in 2013. It lasted seventeen days, and not many people were happy with the end result. This approach to appropriations may not be the way to “run a railroad,” but FAR & Beyond will leave it to the philosophers to muse on that topic, as some already are doing. Rather, the Coalition will offer some advice to weather the potential storm.
At the outset, FAR & Beyond has one note of caution: don’t panic. Yes, there are heightened emotions over some very serious issues, and yes those emotions could play into the voting in Congress, as well as the Administration’s response to any funding legislation. Remember, however, that the dynamics now are different from those existing in 2013. For instance, controversial matters are being raised in separate bills, and so-called “clean CRs” reportedly are being drafted. Moreover, the popular backlash this time around is predictable and may not be worth any perceived benefit associated with disrupting government funding. In sum, at this point, a shutdown is not a fait accompli.
That said, over the years, the Coalition has provided members with timely information, guidance, and best practices to assist in managing contract and cost risks associated with a potential shutdown, resources from the last shutdown in 2013 can be found here. Please review the guidance, along with this checklist of key practices and questions in preparing for the potential of a shutdown:
- Review your contract-
- What is the contract type? Under certain circumstances contracting officers may require continued performance fixed-price contracts may require continued performance if the contractor has already been paid or funds already have been obligated.
- What is the funding profile? Is the contract fully or incrementally funded? Under certain circumstances funded contracts may continue.
- Does the contract include FAR 52.242-15 which allows for the issuance of a stop-work order?
- Reach out to your contracting officer and ask-
- Is the work performed under the contract deemed an “essential” activity necessary to protecting life and property?
- Should contract performance continue in the event of a shutdown?
- Does the CO plan to issue a stop-work order?
- Will the government facility where the work is to be performed be open to contractors, and what Federal employees are required to provide oversight for contractor performance during a shutdown?
- Plan for additional costs-
- Anticipate potential delays and have a plan in place for potential delays in payment
- Determine whether payment to subcontractors may be delayed if payment from the government has not been received
- Develop internal methods of tracking additional costs associated with shutdown and restart activities to potentially recoup these costs later
- Communicate with your team-
- Create a communication plan for employees and identify alternatives, if practical, for employees impacted by a client shutdown, e.g., if a stop-work order is issued
- Reach out to your subcontractors—does the subcontract include a stop-work clause? Can delivery be deferred and what is the cost impact?
- Meet with internal counsel beforehand to assure that your plans are sound and consistent with your obligations under the contract and the law
In homage to Yogi Berra who, sadly, passed away, although it may feel like deja vu all over again, the prudent contractor will be prepared to mitigate performance and cost risk. In the meantime, the Coalition will keep you appraised as the situation warrants.