ARE COSTS INCURRED DURING A SHUTDOWN RECOVERABLE? MAYBE

One piece of good news coming from the end of the partial government shutdown is that contractors may be able to recover certain costs incurred that are associated with the closure.Several regulatory clauses, such as the FAR’s Suspension of Work, allow for contractors to be compensatedCompanies will have to move quickly once the agency that owes them money re-opens, though, as most of the clauses offer a short timeframe in which incurred costs can be covered.  Another best practice is for contractors to set up specialized charge codes for closure-incurred costs.  That way, it is clearly visible to both the contractor and its client that specific costs were associated with the shutdown, separate and apart from costs incurred in the course of normal business operations.  Contractors may even be able to collect interest on overdue payments as well.  Guidelines issued by the previous White House during the 2013 shutdown provided for interest to be paid under certain conditions.  This has been pointed to by some in government now as a precedent that could allow for payment this time.  It is essential for contractors to check their specific contracts to ensure that the proper clauses are included, whether for cost plus or time and material work.  Also, be prepared to move quickly so that you don’t lose any more money than you have to as a result of the partial closure.