Is there a cure for the shutdown blues?

You’ve got the rotten lowdown federal shutdown blues,
This is an event no sane person would choose,
So what’s a government contractor to do,
And how might this shutdown impact you?

As of Oct. 1, the U.S. federal government officially shut its doors to 800,000 employees. A considerable number of those affected are contracting officers, contract specialists, contracting officer’s technical representatives, program managers, and others integral to the federal procurement process.

This event, which is undoubtedly wreaking havoc in Washington, will also have a tremendous ripple effect through the federal contracting community and the economy at large.

While we wait for Congress to get its act together and make progress on a continuing resolution and raising the debt ceiling, no timetable is certain. With midterm elections coming next year, any continuing resolution will likely leave agencies on budget autopilot for at least the initial months of fiscal 2014.

What can federal contractors expect?

The impact on specific contracts will likely depend on the contract itself and how it was funded. Contracts for health and defense services should continue while contracts for IT most likely will be put on the back burner. Contracts where funding was paid up front are likely to continue, and those not paid upfront or receiving a specific notice from the contracting officer to continue, may not be reimbursed for work performed—this is, of course, extremely risky for a federal contractor. It will even be the case in some situations where some contractors are unable to access government facilities that have been shut down, and as a results, they will not be able to work.

During a shutdown, many contracting officers will be barred from making new awards, issuing new task orders, entering into contract amendments or modifications and exercising contract options, which depend on current year funding. The Pentagon, on the other hand, will continue to award hundreds of millions of dollars in acquisitions, services and other types of contracts despite a government-wide shutdown; although, it doesn’t plan on announcing them until the shutdown ends.

Some proposal deadlines will remain unchanged. One General Services Administration requirement provided this specific comment in an Federal Business Opportunity modification:

Proposal due dates remain unchanged and Government personnel will be available to receive and accept proposal submissions.

Volunteering (unpaid services) is prohibited in contracting offices, so only a skeletal staff may be present while federal employees are furloughed. This means that contractors can still submit procurement-related questions but they won't be answered in a timely fashion and amendments are not likely to be issued.

What can federal contractors do?

Government shutdown is not a pretty picture. The last time this happened, which was in the 1990’s, there were serious repercussions including higher attrition rates, major project shortcomings, an increase in business failures and loss of agency knowledge and experience. For a description of the characteristics of companies that survived the last shutdown, download this checklist.

Federal contractors should share their concerns with government contracting officers and program managers. They should also inform members of Congress of the negative impacts and repercussions a government shutdown has on their businesses.

Cautious companies should take a careful look at the portfolio of products and services that they provide to the government. In other words, are they chasing the right opportunities?

Assess which portfolio elements have a clear value proposition and proximity to agency priorities and which do not. Candidness about agency relevancy is a key ingredient to making this work. Once the criticality is established, the hard work is associated with planning for reductions in the offerings that will lose future marketability and increasing investments where the demand will be certain.

Some government points of contact may be available during the shutdown, so it cannot hurt to try contacting them. Also, now is a good time to invest in researching other sources of information to remain competitive during this crisis: check Centurion’s Business Intelligence NOW™ (biNOW), FPDS, active contract lists, agency forecasts and FBO.gov.

It is also important to take steps to maintain and even strengthen relationships with existing customers. This will become extremely important when they are making the tough decisions about which programs to cut. And, don’t forget to develop and implement a communications plan to manage employee morale—they will need all the support they can get.