Are Your Firm’s Contracts Managed to Survive the Impending Government Shutdown?*

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CSA Federal Government Contracts Management Newsletter

Are you aware that the political stalemate in Washington D.C. seems more and more likely to lead to a Government shutdown? Despite the two week stay of execution of the current continuing resolution which was due to expire on March 4th, the Government will be out of money and be forced to shut down if our leaders cannot reach a compromise. While the total ramifications of a Government shutdown are difficult to predict, it is certain that a shutdown will adversely affect Government contracting. As a result, your firm should develop a shutdown contingency plan to minimize the effect on your current Government contracts should the shutdown indeed occur.

Unfortunately, there is not a single “one size fits all” approach to dealing with a shutdown. The Federal Acquisition Regulation (FAR) and its corresponding FAR clauses do not specifically address a contractor’s rights and obligations in the event of a Government shutdown. A company must determine the appropriate course of action on a contract by contract basis. In other words, your firm’s shutdown contingency plan must address each contract individually.

While the impacts of the shutdown on individual companies will vary, it is fair to say that the industry as a whole will encounter delays in completing contracts and receiving new awards, incur both direct and indirect expenses that may or may not be recouped, lay off or furlough employees that may or may not return, and encounter subcontractor management issues.

In order to minimize the risk to your firm during this time, you should prepare a contracts management contingency plan and consider implementing the following steps:

• 1. Review and classify your contracts based upon those that are mission essential (exempt from shutdown), those eligible for stop work orders or terminations for convenience (allowing your firm to be reimbursed for all current expenses), contracts that are at risk but still possible to perform, and those contracts that will be impossible to perform as a result of the shutdown.
• 2. Contact your Contracting Officer for guidance relating to the shutdown, explain the impacts of the shutdown on your contract performance, and obtain the most specific possible direction. Your company should record all specific direction received and the fact that it was followed in writing, as this will strengthen your case to request reimbursement for costs associated with the shutdown once it is over.
• 3. Separately account for costs directly incurred as a result of the shutdown and why the costs were incurred. This will also increase the likelihood of the Government accepting your company’s reimbursement request for costs incurred due to the shutdown.
• 4. Consider reallocating employees to other taskings. Since firms are not likely to be reimbursed for wages paid to idle employees, you should try to relocate employees to locations where then can perform the work or reassign employees to other projects that are funded.
• 5. Complete as many actions as possible such as getting modifications issued, task orders awarded, and outstanding invoices paid prior to the shutdown.
• 6. Communicate and provide appropriate direction to your subcontractors as a result of the shutdown.

The importance of having a contingency plan in place as a result of the possible Government shutdown underscores the necessity of your firm having a proactive contracts management policy to both minimize risk and to ensure compliance with the requirements of each of your company’s Government contracts.

To find out more about preparing a shutdown contingency plan and how your firm may create and implement an effective contracts management policy, please contact CSA at clientresults@csaassociates.com.

*Portions of this newsletter were taken from ArsonsonBlogs.

About CSA Contracts Management Services

CSA is a professional services firm providing strategic guidance and operational performance solutions to Government and commercial clients. CSA contracts management services are provided to federal and federal Government contractors to help them prepare, manage, and close out Government contracts: Contract Management webpage. CSA services for federal Government contractors can include RFP compliance reviews, on-going and surge support for contract administration needs, bid protest preparation and contract close out services: Contract Management Brochure. For more information about CSA Contract Management services contact CSA at clientresults@csaassociates.com.

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