Surviving the Government Shutdown
Initially, it is important to understand that in many instances a contractor’s compliance obligations do not cease simply because the government has shuttered. For example, reporting websites, including the System for Award Management (SAM), the Electronic Subcontracting Reporting System (eSRS), the EEO-1 online filing system, and the VETS 100/100A reporting system remain active and must be updated as required. The Federal Service Desk call center is staffed and remains available for questions for questions regarding SAM, eSRS, Federal Business Opportunities (FBO or FedBizOpps), the FFATA Subaward Reporting System (FSRS) and the Catalog of Federal Domestic Assistance (CFDA). On the other hand, the Department of Labor is not staffing website helpdesks for the EEO-1 and VETS 100/100A filings.
Not all government business has ceased. Contractors should plan to submit all proposals by the posted deadlines, unless an extension is granted or the agency has advised otherwise. The FedBizOpps website remains active, and agencies have continued to post new, and update existing, solicitations. With contracting officers unavailable, contractors may expect difficulty if the solicitation requires paper submission or because there no contracting officer available to receive the proposal.
Also, the lapse in government funding does not impact all contracts. Contract performance that is fully funded using prior years’ appropriations generally may continue without violating fiscal law. The same may hold true for contracts funded with multi-year appropriations or non-appropriated sources. Contract performance dependent on non-existing fiscal year 2014 appropriations may be impacted—the Anti-deficiency Act generally prohibits the government from obligating funds in advance of being appropriated or in excess of their availability. The Government, however, has recognized several exceptions to permit continued performance, including exceptions involving certain national security functions and the protection of human life or property. The contractor should request guidance from the appropriate contracting officer, in writing, when there is any doubt as to how the shutdown impacts a particular contract.
While there may be valid reasons to continue contract performance following a stop-work order, a contractor who chooses to proceed does so at its own risk. Similarly, contractors must evaluate the risk involved before proceeding on any new contracts or those with unfunded renewal options. Government employees cannot encourage contract performance in the absence of funds; such action would violate the Anti-deficiency Act. See FAR 32.704(c). Contractors should also consider the impact of the Limitation of Funds, Limitation of Costs, or Limitation of Government Obligations clauses, if included in the contract.
Where contract performance is authorized to continue, many agencies are ceasing routine oversight, inspection, accounting, administration, payment processing, and other contract management activity typically performed by contract management personnel. It also appears that audit functions are suspended. DoD has instructed its auditors and investigators (including DCAA) that only criminal investigations related to the protection of life or property, including national security, undercover investigations, and counterterrorism/counterintelligence investigations will continue. In many cases contractor deliveries are being delayed because the government personnel required for inspection and acceptance are unavailable due to the massive number of furloughs.
Contractors may be able recover for increased costs and schedule delays caused by the shutdown. For contractors ordered to stop work, contractors may be able to recover costs associated with shutting down performance, eventual remobilization, and delay. Contractors authorized to continue performance may be able to recover for increased costs associated with restricted access to necessary facilities and resources, as well as delays. Contractors should separately account for any costs incurred as a result of the shutdown in order to support reimbursement. See Raytheon STX Corp. v. Dep't of Commerce, GSBCA No. 14296-COM, 00-1 BCA ¶ 30,632 (Oct. 28, 1999) (involving the 1995 shutdown and permitting recovery because the stop-work order covered an uncertain amount of time and the contractor was expected to maintain its same workforce and immediately resume work).
Finally, although the government may delay invoice payments, such delays may require the Government to pay interest on any late payments under the Prompt Payment Act. Contractors should be aware of the Prompt Payment Clauses in their contracts.