Are we at risk of another government shutdown?
There is always the risk of a government shutdown. Right now, the parties in Congress are at odds again and another possible government shutdown may happen as this year comes to an end.
What is a government shutdown?
Congress meets each year to pass a fiscal year budget.
When they cannot agree on a budget, then they will general issue a Continuing Resolution to keep the government going until a budget agreement is reached.
If a budget is not agreed on and the Continuing Resolution ends, then a government shutdown will occur.
What things are NOT impacted by a government shutdown?
Interest payments on the national debt
Who are required to report for duty? (Essential Personnel)
Essential personnel are required to report for duty. Although they do not know when their next paycheck will come.
Active duty military
Federal law enforcement agents/ Border patrol officers
Who are not required to report for duty? (Non-Essential Personnel)
Non-Essential personnel are furloughed and will not be paid.
How are Government Contractors impacted by a government shutdown?
Washington Post reports:
Nearly 10,000 contracting companies impacted by the government shutdown
According to Bloomberg, the shutdown may cost contractors $200 million each day, or almost $1.5 billion per week.
What does this mean for you as a business trying to get into the government market?
It does not impact you much at all, if any.
Delay in RFP/RFQ’s being issue.
Delay in you meeting with potential agency buyers.
Delay in your marketing and capture plans.
What does it mean for you if you are an active government contractor?
If and when there is a shutdown, you may receive a STOP WORK ORDER if your agency or your project is impacted by the government shutdown.
What is a STOP WORK ORDER?
52.242-15 Stop-Work Order.
As prescribed in 42.1305(b), insert the following clause. The “90-day” period stated in the clause may be reduced to less than 90days.
Stop-Work Order (Aug 1989)
1. (a) The Contracting Officer may, at any time, by written order to the Contractor, require the Contractor to stop all, or any part, of the work called for by this contract for a period of 90days after the order is delivered to the Contractor, and for any further period to which the parties may agree. The order shall be specifically identified as a stop-work order issued under this clause. Upon receipt of the order, the Contractor shall immediately comply with its terms and take all reasonable steps to minimize the incurrence of costs allocable to the work covered by the order during the period of work stoppage. Within a period of 90days after a stop-work is delivered to the Contractor, or within any extension of that period to which the parties shall have agreed, the Contracting Officer shall either-
a. (1) Cancel the stop-work order; or
b. (2) Terminate the work covered by the order as provided in the Default, or the Termination for Convenience of the Government, clause of this contract.
2. (b) If a stop-work order issued under this clause is canceled or the period of the order or any extension thereof expires, the Contractor shall resume work. The Contracting Officer shall make an equitable adjustment in the delivery schedule or contract price, or both, and the contract shall be modified, in writing, accordingly, if-
a. (1) The stop-work order results in an increase in the time required for, or in the Contractor’s cost properly allocable to, the performance of any part of this contract; and
b. (2) The Contractor asserts its right to the adjustment within 30days after the end of the period of work stoppage; provided, that, if the Contracting Officer decides the facts justify the action, the Contracting Officer may receive and act upon the claim submitted at any time before final payment under this contract.
3. (c) If a stop-work order is not canceled and the work covered by the order is terminated for the convenience of the Government, the Contracting Officer shall allow reasonable costs resulting from the stop-work order in arriving at the termination settlement.
4. (d) If a stop-work order is not canceled and the work covered by the order is terminated for default, the Contracting Officer shall allow, by equitable adjustment or otherwise, reasonable costs resulting from the stop-work order.
(End of clause)
HOW ARE YOU IMPACTED AND WHAT YOU SHOULD DO?
A stop work order means to stop work and stop incurring cost.
You must stop work immediately upon receiving a stop work order
If your company receives a stop work order from Contracting Officer…
Get clarification and comply by it.
Notify any effected suppliers and subcontractors
The government makes no guarantees it will take any further deliveries whatsoever, regardless of the contract type.
The government makes no guarantee of payment after the stop work order if you continue work.
If you have received progress payment for work or products, complete that which you have been paid for because they have ownership rights.
If you’re in the middle of the work, (work-in-progress) then determine a stopping point with the contracting officer.
If the government has not paid you for items which you have ordered, they have no claims to it and you can resell it if you choose to. When things recommence, you can provide a new quote.
Manage your risk and treat the stop work order as if you will not continue again or hear from the again.
If and when the CO has funding to recommence work, you can submit a proposal and renegotiate the scope of work, the amount and delivery date. NOTE: FAR provisions allow for both price and delivery under the equitable adjustment within the spirit of the original contract.
IMPORTANT: DO NOT START WORK UNTIL YOU HAVE A SIGNED ADJUSTMENT.
GCA or its representatives are not attorneys and are not providing legal advice. Everything discussed here are for educational purposes only.