Preparing for a Potential Government Shutdown

Yesterday, the House of Representatives failed to pass a year-end spending bill that included a short-term funding extension. If no agreement is reached by Friday, December 20 at 11:59pm, federal appropriations will lapse and a government shutdown will begin.

While lawmakers regroup and attempt to navigate a path forward, it is important for ACEC member companies to dust off their government shutdown preparation plans, especially companies that do business directly with the federal government. The White House Office of Management & Budget website includes an FAQ page and a compilation of individual agency shutdown plans.

General Tips for Federal Government Contractors

1. Talk with your government customers – can you continue to work if there is a shutdown? If you can continue to work and your main government point of contact is unavailable, who do you contact for questions and issues during the shutdown?
2. Review your contract for any milestones in the next two months. Does a deliverable need to be accepted? If so, who will accept it? Is there an option year that needs exercised in the next two months?
3. Document business decisions made because of an actual or potential government shutdown. Without proper documentation, a request for equitable adjustment (REA) is less likely to be approved.
4. Submit all invoices for work completed to maximize your cash flow. Consider contacting your financial institution to discuss cash flow concerns and potential loan options.

If you see a disruption in the marketplace that is critical to your business, please alert ACEC. ACEC will keep you updated on developments.

More on Yesterday’s Failed Bill

The funding bill that failed to pass included a short-term funding extension, $110 billion in disaster assistance, and an increase in the debt limit for two years. That bill failed by a vote of 174-235.

All but two Democrats opposed the bill because it dropped many of the priorities they had negotiated in the first package, and 38 Republicans opposed the bill despite President-elect Trump’s support.

Lawmakers are meeting again Friday morning to continue to figure out a path forward. Anything that the House approves will still need to pass the Senate with 60 votes, and get signed by President Biden.

The $110 billion in disaster assistance funding included the following accounts for infrastructure-related recovery and restoration:

• $29 billion for FEMA
• $12 billion for HUD Community Development Assistance grants
• $8 billion for the FHWA emergency relief program, including 100% federal cost share for the Francis Scott Key bridge in Baltimore
• $1.5 billion for the Department of Commerce Economic Development Assistance program
• $1.4 billion for the Army Corps of Engineers
• $1.23 billion for capitalization grants for the Clean Water State Revolving Fund and $1.77 billion for the Safe Drinking Water Revolving Fund

More on a Potential Shutdown

Under a shutdown, “nonessential” government and congressional staff who are paid by federal appropriations are sent home without pay. This includes agency contracting officers, grant evaluators, program directors, and almost all staff. Contracts and programs are delayed or halted, and for new contracts and grants, even if an award was announced or expected, the staff are not allowed to work until a CR or full-year bill is enacted.

Government employees who are essential to life and safety, such as military members, air traffic controllers, Transportation Security Administration officers, and law enforcement officers, must work without pay until a CR or full-year bills are enacted.

Certain transportation programs will continue to operate because they receive funding outside of the annual appropriations process. Employees at the Federal Highway Administration and the Federal Transit Administration will continue to work as normal because these programs are funded through the Highway Trust Fund and advanced appropriations under the IIJA. A lapse in regular appropriations does not affect them.  That said, federal resource agencies will not be able to process environmental or other regulatory reviews, which potentially could impact some transportation projects as well other critical infrastructure sectors.

The delay in infrastructure project permitting through EPA and the Department of Interior was noted in a statement from the White House in 2023 on the impacts of a shutdown.

Federal Aviation Administration (FAA) personnel essential for public health and safety, such as air traffic control services, would continue to work without pay. In addition, airport grants and other programs funded through advance appropriations in the IIJA will proceed.

Get Caught Up

This information is still relevant, but might not reflect the current date and political dynamics this week.

Podcast: https://www.acec.org/podcast/are-we-headed-towards-a-government-shutdown/

Online course with guidance on how to prepare: https://www.acec.org/course/how-to-prepare-successfully-for-a-federal-shutdown-key-actions-to-take-now/