As Congress lurches toward the first government shutdown in 5 years, federal contractors need to be increasingly aware of the short and longer-term impacts on their business.  These are three issues companies should be particularly aware of right now:

1.  Your Customer May Not Have A Current COOP:  A recent survey of federal agencies found that many have not updated their Continuity of Operations Plan (COOP) since 2015.  That’s pre-pandemic before hybrid work schedules were normalized and before newer projects were started.  Contractors absolutely need to take some time from pursuing last minute business to discuss what their current customers’ plans are for a shutdown. 

2.  A Shutdown is Not One Size Fits All:  Essentially, the longer a shutdown lasts the larger impact it will have.  While agencies may be able to maintain certain operations based on different types of available funding in the short term, much of that money will run out in weeks, causing many additional operations to close.  Even before then, budget experts point out that “color of money” issues can become increasingly jumbled, causing uncertainty on what actions can be performed, by whom, and for how long.

3.  There is Definitely an Initial Impact:  While “only” 40% of the federal workforce is estimated to be initially impacted by a shutdown, that number includes DOD.  The percentage of civilian agency employees that may be furloughed or restricted is likely much greater.  This could include acquisition personnel, the people that contractors rely upon to provide orderly information on suspending a project or providing other status directives.  That’s all the more reason why such discussions should happen now.   As former OPM and OMB officials recently pointed out on a Bipartisan Policy Institute webinar, Congressional spending decisions will be made in a political environment and be based on political inputs.  That means that there may be little consideration for the issues above, not to mention the necessary roles industry plays in ensuring cybersecurity and the processing of “mandatory” Medicare and Social Security payments.  Buckle up.  It could, indeed, be a bumpy ride.