Federal Government Partial Shutdown: What Contractors Need to Know

(Editor's note: As part of its duties in service to NECA, the association's government affairs team created a resource for contractors who may be looking for guidance during the federal government's partial shutdown. It is published here with permission.)

Now in its fourth week, the partial shutdown of the federal government has left many contractors unsure of how to proceed and, once the shutdown ends, what remedies, if any, they will have for time lost and costs incurred. NECA has partnered with the law firm of Smith, Currie & Hancock to provide greater and more detailed information for electrical contractors on what they need to know about the partial shutdown.

What Contractors Need to Know

The partial shutdown has left the Department of Defense unaffected. Other agencies, however, have been subject to varying degrees of closure or reduction in services.

The Department of Agriculture has published contingency plans for its various agencies and offices. The Forest Service will continue to operate existing timber harvesting contracts until 21 days after the shutdown (January 12, 2019), at which time further action will be decided on a case-by-case basis. The Forest Service contingency plan is available here.

The Department of Homeland Security is largely on the job, although its significant numbers of “essential” employees are working unpaid. Its contingency plan is available here. The Federal Emergency Management Agency has published guidance for contractors regarding the shutdown. The guidance states that affected contractors should receive instructions from their contracting officers.

The Department of Housing and Urban Development, largely considered “non-essential,” has only a skeleton crew on the job. Public housing authorities and tribal housing authorities, while not required to shut down, may suffer service reductions since some of their funding may come from federal sources. Information related to contracting begins on page 38 of HUD’s contingency plan.

The Department of the Interior has published contingency plans for its various agencies and offices.

The Department of Transportation has furloughed a little less than half of its employees. The Federal Aviation Administration is still providing air traffic control services and other life and safety services.

The Federal Highway Administration is still on the job using funding from other sources. The DOT contingency plan is available here.

Contractors should expect that certain government actions will be delayed due to staff shortages, regardless of the agency. Contractors should notify their contracting officers (CO) in writing of any such delays and conduct all other communications with the CO in writing as well. If a contractor receives instructions from someone other than the CO, it should confirm the instructions with the CO in writing before proceeding, since only the CO has the authority to bind the government.

When the shutdown ends, contractors may be entitled to extra costs and/or time. Contractors should keep detailed records of costs incurred and extra time required as a result of the shutdown, such as demobilization (and later remobilization) costs and delayed worksite access. If a CO instructs a contractor to continue work without pay, the standard disputes provision in most contracts (FAR 52.233-1) requires the contractor to continue performance while the dispute is resolved.

The government is likely to deny requests for equitable adjustment and certified claims for costs by asserting the Sovereign Acts doctrine, which relieves the government of liability for interference with a contract when the interference was the result of a government action taken in the national interest and with a general and public application. A shutdown such as this one usually will qualify as a sovereign act. There is some case law suggesting that the government can choose to accept liability for increased costs caused by a shutdown if the CO issues a suspension of work or stop work order. In any event, contractors should be entitled to additional time.

For any contractor in active litigation against the government, we recommend that they continue to meet all filing deadlines. Many deadlines, such as for filing an appeal of a contracting officer’s final decision, filing a bid protest, and filing a small business size or status protest, are jurisdictional; they will not be waived as a result of the shutdown. Failure to meet those deadlines will result in the case being dismissed as untimely.

Other filings are not jurisdictional, but we recommend that contractors continue to comply with any existing scheduling orders and filing deadlines to the extent possible in light of any limited access to the various tribunals. Based on available information, following is the current status of relevant courts, boards, and other tribunals:

Federal Courts (Court of Appeals for the Federal Circuit, Court of Federal Claims, U.S. District Courts): The Judiciary expects to remain open through January 18, 2019 using court fee balances and other no-year funds. In cases involving Executive Branch attorneys, hearing and filing dates may be modified.

Civilian Board of Contract Appeals: Open to accept electronic filings only. Each judge has the discretion to modify non-statutory deadlines.

Armed Services Board of Contract Appeals: Open and fully operational.

Government Accountability Office (GAO): Open and fully funded through 2019. Filing deadlines for private parties will not be waived.

Small Business Administration Office of Hearings and Appeals (OHA): The shutdown is being treated as an extended federal holiday for purposes of filing. Any OHA filing due during the shutdown will be due on the first day of normal operations after the shutdown. SBA’s contingency plan states that there will be no employees staffing OHA during a shutdown.

SBA Office of Government Contracting and Business Development (this office decides certain size and status protests): SBA’s contingency plan shows one employee out of 168 total employees continuing to work during a shutdown. Attempts to contact the office for additional information have been unsuccessful.

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