Contracting officers hold the key to surviving the government shutdown

To work or not to work? There is no simple answer to that question if the government shuts down on Oct. 1, but your contracting office is the place to start looking for an answer.

The clock is ticking, so now is the time for contractors to prepare for a government shutdown at midnight Sept. 30.

One of the biggest questions is whether a contractor can continue to work if Congress fails to pass a budget or continuing resolutions before Oct. 1.

The answer to that question is not a simple "yes" or "no" because no single answer will fit all customers, and the right answer today for one customer may not the right answer for the same customer a week from now, said John Cooney, an attorney with the Venable law firm. He was speaking at a Professional Services Council event on contractor implications of a government shutdown.

Cooney was in the Carter administration and helped write the rules that govern shutdowns. The Office of Management and Budget rules came out just before Carter left office in January 1981. The rules have been adjusted since then but essentially are the same.

OMB controls the shutdown process, but the implementation is very decentralized and the parts of the government that are allowed to continue operations can change depending on needs and other factors. For example, a natural disaster would reactivate FEMA personnel.

Contractors need keep in mind the role of the contracting officer. Cooney and other panelists, Lisa Ashcraft of Abt Associates, and Alan Chvotkin of PSC, emphasized the need to communicate with the contracting officer.

While there were government shutdowns in the 1980s and in 1990s, the shutdown in 2013 was very different because contractors play a much larger role in government operations today, Cooney said.

“Many more government services are delivered by contractors,” he said.

The contracting officer is the only person with the authority to tell a contractor that they can work during a shutdown. If a contract continues to work with the contracting officer’s OK, they risk not getting paid for their work, Ashcraft said.

Everything you do needs to be documented, she said, adding for emphasis: “Document, document, document.”

There are costs involved in shutting down operations as well as restarting operations, so documentation will be critical if contractors expect to be reimbursed for these costs, Ashcraft said.

It is very critical for contractors to understand where their funding comes from, when funds are obligated, and for how long. For example, is it a multi-year funding? If so, the work may be able to continue, Chvotkin said.

Again, the only person who has the authority to answer that question is the contracting officer.

If a contract has been entered into before the budget expires and is fully funded, work should continue unless – and it is a big unless – a government employee is required for the work to be done and that employee is furloughed, or the contractor can’t get access to a facility.

There were jokes at the PSC seminar about taking "selfies" with the security guard who turns you away as documentation that you weren’t allowed to work.

Chvotkin emphasized that contractors should only stop working if they are directed to stop through a stop work order – again issued by the contracting officer.

Chvotkin presented six actions that contractors need to take or be prepared to take in the event of a shutdown:

  • Analyze your current situation – this includes your contracts as well as your company’s financial health
  • Plan for multiple possible events – there may be more than one shutdown and offices may open and close during a single shutdown, depending on need
  • Document everything
  • Account for everything – similar to document, but it is important to capture your costs of the shutdown if you want to file for reimbursement
  • Mitigate when possible
  • Communicate before, during and after. Talk to your contracting officer but also your employees
  • Promptly seek recoveries – there will be notices so watch for those. Many will be in the first 30 days after the shutdown ends

From Ashcraft, another item to be aware of is that due dates for proposals are not automatically extended during the shutdown. So, if a proposal is due and the government is shutdown, file your proposal.

PSC has stood up what it calls a Government Shutdown Resource Center with a variety of materials including agency contingency plans from 2013 and materials from the associations October 2013 teleconference on the shutdown.

These documents relate to the 2013 shutdown, but should give a good indication how things will run at the different agencies.

And finally, Chvotkin offered his prediction about the shutdown. He believes there will be a continuing resolution before Oct. 1, but that it will for a short period of time. In fact, there may be several CRs. He expects there is a better chance of a shutdown occurring in December than on Oct. 1.

A final post script: When it comes to shutdowns, the president always wins, Cooney said. Reagan won, Clinton won and Obama won. A shutdown only strengthens the president’s hand. And there is no evidence that Obama won’t win a second shutdown.

The House Republicans threatening a shutdown don’t understand that. Cooney called a shutdown, a “suicide mission.”