A Contractor’s Guide to Surviving the Government Shutdown

Whitepaper
September 29, 2021

Likely Impacts and Possible Actions

Executive Management 

Impacts:

  • Shutdown impacts felt across many corporate functions

Actions:

  • Assign a multi-functional team to identify impacts, dependencies and actions required
  • Monitor shutdown activities daily

Contracts:

Impacts:

  • No funding
  • Can’t exercise option
  • Can’t work due to unavailability of Government facilities or personnel (constructive stop work order)
  • Stop work order issued

Actions:

  • Assess impact on each contract
  • Work at risk
  • Stop work
  • Notify COs of shutdown impacts and possible solutions

Employees

Impacts:

  • Direct charge employees may be unable to work on contracts

Actions:

  • Communicate with employees and their supervisors
  • Reassign employees to other projects direct or indirect
  • Attend or provide training
  • Allow employees to charge “idle time” indirect or against profit
  • Require employees to use leave
  • Furlough employees
  • Know how to get in touch with your employees

Cash

Impacts:

  • Invoices may not be paid during the shutdown

Actions:

  • Project your cash flow, prioritize expenditures
  • Collect as many receivables as you can before the shutdown
  • Notify your LOC Bank

Indirect Rates

Impacts:

  • Indirect rates will likely increase due to smaller allocation base

Actions:

  • Minimize indirect expenses
  • Consider claiming unabsorbed overhead as part stop work claim

Shutdown Costs

Impacts:

  • Contractors will incur shutdown related costs

Actions:

  • Notify COs
  • Separately track shutdown / restart up costs by contract for both direct and indirect employees

Business Development 

Impacts:

  • Ongoing procurements will be delayed
  • No one may be available to accept your proposal or to receive you marketing call

Actions

  • Seek guidance from the CO prior to the shutdown

  • Cutback or cease incurring BD or B&P expenses

Each of these topics is addressed in more detail in the attached white paper. Download it now.