Pillsbury Winthrop Shaw Pittman

In the event of a government shutdown: preparation pointers for federal contractors

By Daniel S Herzfeld

With the US Congress unable to reach an agreement on a continuing resolution, the US federal government shut down all non-essential services on 1 October 2013. The shutdown will remain in effect until Congress passes appropriations legislation for fiscal year 2014. This Pillsbury client alert, which was originally published in March 2011, provides guidance on how a shutdown affects federal contractors and what they can do to prepare for and react to the shutdown.

Contractors should be aware of several points to help prepare for and react to any shutdown: keep working until the contracting officer or other authorised agent of the government issues a written stop-work order; have an alternative plan in case a particular contract is stopped, such as conducting training or encouraging employees to take any vacation or leave; and keep track of the costs to implement the stop-work order and during any stopped work, because some of the costs might be recoverable. 

A government ‘shutdown’ does not necessarily mean that every part of the government shuts down and it does not necessarily mean that your contract will lack appropriations. A government shutdown, at least as understood during the last 1995–96 shutdown during the Clinton administration and today, refers to the failure of Congress to pass and the president to sign appropriations legislation funding the government. The Constitution requires that Congress appropriate money before the executive branch spends it…

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