WHAT THE BREAKING OF THE HOUSE IMPASSE MEANS FOR CONTRACTORS

With the ascendancy of Rep. Mike Johnson (R-LA) to the role of Speaker of the House, work can resume on legislation critical to government contractors and their customers.  In addition to action on final FY’24 appropriations, Congress may now move forward with the Defense Authorization Act and likely address another Continuing Resolution (CR).  No one, however, should expect smooth sailing on any of these.  While many observers believe that well over 90% of the substantive work has been done on final FY’24 appropriations matters, disagreements still exist on whether Congress should vote separately on each of the 12 spending bills or lump them together into an omnibus measure as they have done recently.  A significant minority of House Republicans believe that each measure should be voted on and will oppose any attempt to vote on multiple spending bills as a package.  That could result in disagreements between the House and Senate over funding levels and delay passage.  Some observers, including ourselves, believe that it is now more likely that we will see final spending bills in March or April.  That presents some potentially significant challenges to contractors and their customers, but certainly would not be the first time that scenario has played out.  The Defense Authorization measure is also close to being completed as House and Senate staff have worked out all but a few key items.  The bill may see action prior to Christmas, though the chance for last-minute riders in the House cannot be ruled out.  Lastly, the government will almost certainly need at least one more CR.  To be clear:  Support for a temporary government shutdown still exists in some parts of the House Republican conference.  Speaker Johnson will clearly remember that cutting a deal to prevent a shutdown and keep the government open cost his predecessor his job.  There is still the real possibility, therefore, that a shutdown could occur, and occur over Thanksgiving, resulting in a multi-week impact.  The next three weeks will bring this issue more clearly into focus. Contractors should follow the discussion closely and plan for multiple eventualities.  Stay very tuned.