If you’re a contractor who deals with the federal government in some capacity, then knowing what happens during a government shutdown is essential for nurturing your business. The past week has seen a significant surge in the likelihood of such a shutdown taking place due to the current congressional gridlock. This gridlock won’t even allow a continuing resolution to progress, which would permit discussions around a broader funding bill to continue.
Given that there is less than a week left in the fiscal year, it appears increasingly likely that the federal government will experience its third shutdown in five years. What can contractors expect in this scenario?
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In a government shutdown, most immediate effects are experienced by ‘non-essential’ government employees who are furloughed. But contractors, who are technically not government employees, may feel the impact more swiftly and acutely.
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Government contracting officers may issue ‘stop work’ orders, causing contract work to come to a grinding halt until the shutdown is over. This can be particularly harmful for smaller contractors with less fiscal buoyancy.
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The shutdown can also affect payments. Government officials responsible for approving invoices might be furloughed, leading to delayed payments and cash flow issues for contractors.
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Contractors may not have access to government facilities or information systems. This could inhibit their ability to complete work, even if they have not received a ‘stop work’ order.
Considering these potential challenges, contractors are strongly advised to examine their contracts and identify any potential risks associated with a government shutdown.
For further details, click here to read the full article on this topic by Wiley Rein LLP.