As we approach another potential tipping point in American politics and economy, legal professionals would do well to prepare for the repercussions of a potential government shutdown. The likelihood of such an event tragically increases with tensions in Washington, and the potential consequences for federal contractors and grantees should not be downplayed.
The question on everyone’s lips right now is – If Congress does not pass a continuing resolution or other funding legislation before the witching hour on Saturday, will agencies be left without authorized appropriations to fund their operations? JD Supra covers the topic in detail, comparing this potential event with other common occurrences over the past years.
The impact of a government shutdown is felt in every corner of society—from national defense and internal affairs to federal funding and investment. Which part of the economy will feel the sting the most during this stand-off is something that’s hard to predict. However, one area that is guaranteed to be in the receiving end of a significant blow is that of federal contractors and grantees.
While federal employees are ensured of being paid for the duration of the shutdown, the same cannot be said about those working under federal contracts or grants. While some contracts might be funded in advance or labeled as essential, ensuring they continue through a shutdown, many others won’t be so lucky. Payments may cease, work may halt, and in severe cases, contracts may be terminated altogether.
Given the impending possibility of a government shutdown, it would be wise for legal professionals, consultants, and stakeholders of federal contracting firms to brace for impact. Ensuring financial stability, setting up contingency plans and preparing for the worst-case scenario could make all the difference.
As the clock runs down, it’s evident that a lot hangs in the balance. Only time will tell whether Congress passes the required resolutions and prevents another government shutdown. Meanwhile, private sector stakeholders and legal professionals would do well to dust off the government shutdown playbook and be prepared for all kinds of outcomes.