Preparing for a Government Shutdown as a Government Contractor

September 22, 2023

With the rumors looming in the news (and throughout the virtual hallways), government contractors are now bracing for an untimely stoppage of work. Contractors, who are responsible for executing nearly $600 billion worth of government work each year, have been here before. Many have experienced this political battle in the past. But for some, this may be the first time they have experienced this level of uncertainty.

According to reports, in 2019 a five-week shutdown left nearly 800,000 federal workers furloughed or working without pay, and affected an untold number of contractor employees. This can be worrisome. Weathering through a stoppage of revenue can hurt firms of all sizes, especially the smaller ones.

The House is facing pushback on a short-term continuing resolution (CR) it proposed and passing a full appropriations package is very unlikely it seems. Even if a CR is passed, historically they have been known to also create pauses, stoppages, and delays as it limits available funds and forces agencies to rethink allocations. However, if you’re fortunate, your contract may involve critical work or services and is prioritized to continue with limited funding.

No matter what your contract type is, it is better to prepare and complete the precautionary contractor checklist.

Precautionary Contractor Government Shutdown Checklist

  • Review your contracts – During a government shutdown, your work on contracts may or may not be interrupted depending on finding categories and/or priority deadlines. Keep an eye out for any “stop-work” notices from your agency, which may be issued on the shutdown’s first day or a day later (including weekends). Also, review the option periods in your contract. Some may expire on September 30, while others may continue until later. Don’t hesitate to reach out to your contracting officer to get ahead of any notices to help you prepare.
  • Communicate – President and CEO, I strongly encourage you to communicate will ALL staff. Employees need to feel informed and prepared during this time. So, share as much information as you can; as frequently as possible. Additionally, communicate with your subcontractors as they do not have direct contact with agencies and may feel lost or forgotten at this time. Lastly, be sure you are in constant contact with your client. A shutdown may force a pause in work which affects timelines and deadlines. You want to make sure that all parties are aware of that potential implication.
  • Check-in on your contingency plan – Every government contracting firm should have a government shutdown contingency plan. If you don’t, it’s okay! Create one now! In this plan, you should address the impact on materials, clients, employees, and the overall production process. Additionally, you should assess staffing needs, consider any subcontractor arrangements, establish communication protocols, anticipate cash flow interruptions, and implement accounting measures to account for shutdown-related costs (or loss). Also note that when there is a government shutdown, certain government-run offices and services will be offline or closed.
  • Look at the cost of impact – Speaking of cost, you should have a separate plan or protocol specifically looking at finances. Have a meeting with your finance department and also if you deem necessary discuss the shutdown with your financial institutions (especially if you run primarily on government funding).

These are just some checklist items my office (Civility Management Solutions) and I am going through at the moment and have researched over the years to ensure that we are prepared for whichever way this concludes.

Be on the lookout for a blog post from our Vice President of Business Development Calvin Mickens in the coming weeks as he discusses how we have transformed from seeking small business to now seeking larger contracts.

Thanks for reading.


Original post on LinkedIn