Preparing Your Business for the Potential Government Shutdown in Fiscal Year 2024

Preparing Your Business for the Potential Government Shutdown in Fiscal Year 2024

The prospect of a government shutdown looms as Congress struggles to reach an agreement on the fiscal year 2024 budget. With the Federal fiscal year ending on September 30th and no resolution in sight, businesses that contract with the government must be proactive in their preparations. This article outlines essential steps to help your business navigate a potential shutdown.

1. Review Your Contract

The first step in preparing for a government shutdown is to thoroughly review your contract. Several key considerations will determine how the shutdown will affect your business:

Contract Type: Determine the type of contract you have. Under certain circumstances, contracting officers may require continued performance on fixed-price contracts if payment has already been received or funds have been obligated.

Funding Profile: Assess whether your contract is fully funded or incrementally funded. In some cases, fully funded contracts may continue during a shutdown.

Stop-Work Order: Check if your contract includes FAR 52.242-15, which allows for the issuance of a stop-work order.

2. Reach Out to Your Contracting Officer

Communication with your contracting officer is crucial. Engage in a dialogue with them to understand the impact of a shutdown on your contract:

Essential Activities: Inquire whether the work performed under your contract is deemed essential to protecting life and property.

Contract Performance: Discuss whether contract performance should continue during a shutdown and whether a stop-work order is planned.

Stop-Work Order Details: If a stop-work order is expected, clarify the anticipated issuance date to facilitate an orderly shutdown. If not, inquire about the accessibility of government facilities and the oversight required during a shutdown.

3. Plan for Additional Costs

Anticipate potential delays and additional costs associated with a shutdown:

Payment Delays: Prepare for potential payment delays and consider the impact on subcontractors if government payments are delayed.

Cost Tracking: Develop internal methods to track additional costs incurred during shutdown and restart activities for potential cost recovery later.

4. Communicate with Your Team

Effective communication is essential to managing a shutdown:

Employee Communication: Create a communication plan for employees, informing them of the situation and any alternatives, such as work-from-home options, if practical.

Subcontractors: Reach out to subcontractors to understand whether their contracts include stop-work clauses and the potential cost impact. Discuss the possibility of deferring deliveries.

5. Meet with Internal Counsel

Engage with legal counsel to ensure your plans align with your contractual obligations and legal requirements. Legal guidance is essential to navigate the complexities of government contracts during a shutdown.

In conclusion, while the uncertainty of a government shutdown is unsettling, proactive planning is key to mitigating performance and cost risks. By reviewing contracts, communicating effectively, and seeking legal counsel, businesses can better prepare for the potential challenges ahead. Stay informed, monitor the situation, and adapt your plans as necessary. The Coalition will continue to provide updates to its members as the situation unfolds.

Additional Resources:

  1. Federal Acquisition Regulation (FAR) - Access FAR 52.242-15