Government Shutdown Impacts on Contractors Vary Across Programs

With Republicans and Democrats in Congress at odds over a stopgap spending measure, the federal government gave the impression to be headed towards a shutdown if lawmakers can’t attain an settlement and go a unbroken decision earlier than 12:01 a.m. Oct. 1, when the federal government’s 2026 fiscal 12 months begins.

For presidency development contractors, impacts are more likely to range relying on the company, program and sort of contract. Ongoing direct federal contracts will possible not be affected, so long as they don’t seem to be being funded with 2026 appropriations, says Alex Etchen, vice chairman of presidency affairs on the Related Common Contractors of America. Nevertheless, work underneath indefinite supply/indefinite amount, multiple-award job order contracts and comparable, in addition to contracts that haven’t but been awarded and tasks which are nonetheless present process environmental opinions or different allowing may face delays. 

“If a shutdown went on for an prolonged period of time, quite a lot of tasks could possibly be impacted, notably if it requires some sort of approval,” Etchen says. 

Transportation tasks funded by separate laws just like the floor transportation reauthorization don’t depend on the annual appropriations course of are much less more likely to face as a lot disruption, say Etchen and Joung Lee, deputy director and chief coverage officer on the American Affiliation of State Freeway and Transportation Officers. 

Employees at businesses just like the Federal Freeway Administration who’re paid by the Freeway Belief Fund, shouldn’t be furloughed, so long as the fund is functioning with its personal authority, Lee provides. And employees engaged on applications just like the Federal-State Intercity Passenger Rail also can draw their salaries from superior appropriations. 

“We’ve seen an growth of that strategy within the [Infrastructure Investment and Jobs Act] years,” Lee says.

Within the occasion of a shutdown, contractors working for the federal government ought to contact their contracting officers upfront to find out how the company intends to deal with tasks, Etchen says. He additionally recommends contractors doc all prices related to the shutdown and notify their contracting officers of all actions taken in response to the shutdown. 

Furloughs and Layoffs

What’s much less clear is the impression that potential mass firings of federal employees may have, past short-term furloughs throughout a shutdown. In a memo this month, the White Home Workplace of Administration and Price range directed federal company leaders to institute mass layoffs for workers of applications dealing with funding lapses if they’re “not per the president’s priorities.” As soon as 2026 appropriations are enacted, OMB additionally suggested that businesses ought to “retain the minimal variety of workers crucial to hold out statutory capabilities.” 

Senate Minority Chief Chuck Schumer (D-N.Y.) referred to as the OMB memo “an try at intimidation” and stated in a press release that any pointless firings can be overturned in courtroom, if the administration doesn’t rent the employees again first, because the administration just lately did with a whole lot of workers who had been fired by the Dept. of Authorities Effectivity earlier this 12 months.

Schumer and Home Democratic Chief Hakeem Jeffries (N.Y.) have been spearheading the Democrats’ effort to get an extension of Reasonably priced Care Act tax credit included within the persevering with decision. Democrats’ model of the bil would have saved the federal government funded by the tip of October and prolonged the well being care subsidy for low- and middle-income earners, which is in any other case because of expire on the finish of the calendar 12 months. 

The Home did go Republicans’ model of the invoice, which might keep most funding at present ranges by Nov. 21. Nevertheless, the measure failed to achieve the 60 votes wanted to go the Senate on Sept. 19. With the Home in recess this week, the seeming solely manner left to keep away from a shutdown earlier than the deadline can be for the Senate to go Home Republicans’ invoice. The Senate is scheduled to take up a second vote on Sept. 30. 

A gathering between Schumer and Jeffries with President Donald Trump on Sept. 29 yielded no progress, and each side had been fast responsible the opposite for the deadlock. 

“That is purely and easily hostage-taking on the a part of the Democrats,” Republican Senate Chief John Thune (S.D.) informed reporters Sept. 29. 

One other invoice sponsored by Sen. Ron Johnson (R-Wis.), the Eradicate Shutdowns Act, would routinely proceed appropriations at present ranges for 14 days, and for an additional 14 days till a full-year appropriation invoice is handed. Nevertheless, Democrats rallied towards the invoice over considerations it could hand over Congress’ “energy of the purse” to the White Home. 

“If this invoice had been to go, Trump may fairly actually refuse to signal any funding invoice, even a bipartisan invoice, until it met all of his calls for, and Congress would then must override his veto with a two-thirds vote in each chambers if we ever needed to get off the eternally CR that this invoice would put in place,” Sen. Patty Murray (D-Wash.) stated on the Senate flooring. “No manner.”

Kristen Swearingen, vice chairman of presidency affairs on the Related Builders and Contractors, referred to as for Congress and the president to maintain the federal government open.

“Any authorities shutdown creates uncertainty for ABC contractors all through the nation, together with potential delays in federal infrastructure tasks,” Swearingen stated in a press release. 

The federal government most just lately faced a shutdown in March. On the time, some Democrats agreed to assist a stopgap measure over considerations of potential mass firings. The final time the federal government truly shut down was throughout Trump’s first time period, when disagreement over border wall funding contributed to a 35-day partial lapse in late 2018 and early 2019.