Roundup: Government Shutdown Looms – What it Means to Contractors

As March 4 draws closer, the likelihood of a government shutdown increases as Republicans remain steadfast in their commitment to deep spending cuts. Their resolve was exemplified by the House passing a continuing resolution on Saturday for $61 billion in cuts for the remainder of fiscal year 2011. Senate Democrats responded yesterday with a proposal for a one-month continuation of spending at current levels.

IBM 26 on/off switch
Image by Flickr user mwichary, used under Creative Commons license.

A Congressional Research Service report states that many agencies’ responses to the 1995 shutdown were in “many instances, disorganized and illogical at best, and oftentimes chaotic.” The report suggests that agencies take the time now to expertly analyze current plans to seek improvements.

White House press secretary Jay Carney seemed more confident in his assessment of government shutdown plans. He told reporters aboard Air Force One yesterday that the Office of Management and Budget (OMB) has had “contingency plans for government shutdowns since 1980” and “those plans are obviously updated accordingly, but they’ve been around for a long time.”

OMB communications director Kenneth Baer echoed these sentiments in a written statement saying “OMB is prepared for any contingency as a matter of course — and so are all the agencies.”

Carney did express confidence that a resolution would be reached by March 4, but vowed that President Obama would veto any Republican attempt to slash funding in a continuing resolution.

Effects of a Shutdown on Contractors
While furloughed federal workers would likely see retroactive pay for time lost to a shutdown, contractors can expect to not get paid at all. No contracts would be awarded and no proposals would be reviewed during a shutdown. The potential shutdown, coupled with existing DOD warnings about smaller procurement budgets, leads Qorvis Communications federal budget analyst Stan Collender to suggest contractors re-examine their five-year business plans.

In a Professional Services Council-hosted event this morning, “Contractor Implications of a Government Shutdown,” Council executive vice president and general counsel Alan Chvotkin presented a series of questions contractors should be asking themselves in the face of an expected shut-down. He suggested temporary work reassignments, training and paid vacations as options to a furlough. Companies should be able to keep in touch with employees during the shutdown time, he added.

Federal Times provides a list of more general questions and answers concerning a government shutdown. Two questions deal with excepted employees. These include the president, Congress, air traffic controllers and anyone else “performing emergency work involving the safety of human life or the protection of property, involved in the orderly suspension of agency operations, or performing other functions exempted from the furlough.” Each agency determines which contractors are performing essential tasks.

While Social Security payments and other necessary services would continue, many others would stop. Some of the effects of the 1995 shutdown were unprocessed foreign visa applications, no new clinical research patients at the National Institutes of Health, postponed work on 3,500 federal bankruptcy cases was put off, approximately $3 billion in foreign exports held up in ports and the closure of 368 National Park Service sites.

Is your company taking steps in case of a government shut down? Leave a comment, and participate in our poll and shutdown discussion forum.

This article was originally published on GovWin.

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