Government Shutdown Guidance for SDVOSBs/VOSBs

Here's What You Need to Know!

As the clock ticks down on FY 2023, Congress has until midnight on September 30th to agree on a new budget. If you are an SDVOSB/VOSB or other small business, you are likely tracking the potential for a federal government shutdown. Although nothing is set in stone, it is important for SDVOSBs/VOSBs and other small business government contractors to prepare to minimize the detrimental impact of a government shutdown. Below is a summary of what you can expect during a government shutdown and guidance for mitigating losses.

?Of course, small businesses like SDVOSBs/VOSBs are particularly vulnerable to some of the consequences of a government shutdown.? You can expect the following:??closure of Government facilities; delays or non-payment of invoices; freeze on issuance of contracts, and furlough of non-essential employees.

What to do BEFORE?

Before the shutdown, you should start by determining which of your company’s contracts, if any, will be impacted by the shutdown. A contract may be unaffected, for example, if it is multi-year contract or if the contract has sufficient funding. However, it is quite possible that your contract will be impacted. In fact, all cost-type, IDIQ, and fixed-priced contracts that require access to a facility may be affected. It is vital that you maintain contact with the contracting officer and any subcontractors on the contract so that you take any direction prior to a government shutdown in the event the contracting officer is unavailable during the shutdown. You will need to closely review any “stop-work” provisions in your subcontracts and ensure your subcontractors are clear on what should happen if a stop work order is issued. Work performed after a stop work order would be “at-risk.”

In addition to the steps above, you should also address any outstanding invoices, approval of deliverables, and issuance of modifications (prior to the government shutdown). If you do not take care of these issues prior to the shutdown, you may not be able to address them for some time, and likely will be delayed in doing so after the government re-start.? It is also wise to prepare for security clearance processing issues, if required by the contract, because the Department of Defense Consolidated Adjudication Facility (DODCAF) will be shut down. You will also want to have clear and open communication with your employees so that they know what is happening and what they should do when the shutdown occurs.

What to do DURING

During the shutdown, you should do your best to mitigate all costs associated with the shutdown if you later want to recover through an equitable adjustment. This is an important step in ensuring you do not expend unrecoverable dollars.? Some steps you can take to mitigate costs include developing an alternative work plan by asking employees to take vacation time. In a worst-case scenario, you may need to furlough or lay employees off during the shutdown. You should document all costs and expenses incurred very closely including any labor costs, demobilization costs (and mobilization costs), attorney’s fees, and wind-down costs so that when you seek an equitable adjustment, you can prove the costs associated with the shutdown.? It is absolutely vital to have records to support any claim for recovery!? ?

Here are the two (2) most significant take-aways:

1) Determine which of your contracts will be affected by the shutdown, and,

2) Get in touch with contracting officers early and often while you still can.

Government shutdowns create more complexity for SDVOSBs/VOSBs and small businesses in an already difficult environment.? However, if you take the steps above, you can help prepare for and mitigate the negative impacts to your business.? ?