National Association of Government Contractors

Prepare for Some Form of Government Shutdown

Potential shutdown threats loom large after Labor Day. With the government rapidly approaching the statutory limit on federal borrowing, and the start of fiscal year 2018 without the needed spending appropriations the possibility of shutdown is increased.

While many speculate the likelihood of a complete shutdown is low, the risk is real enough that agencies and contractors alike are urged to prepare.

It will not be until the last weekend of September that we will know if shutdown is averted.

However, since Sept. 30 falls on a Saturday, it could complicate negotiations between Congress and the president, leading to a technical shutdown while most federal offices are closed for the weekend and pushing a decision on whether to truly close agencies to Sunday night. 

The likelihood of even a short-term technical shutdown is quite probable, and the effect it may have on particular agencies, depending on their funding and rules, is not clear. Contractors are advised to find out what this may mean for them.

In the event the debt ceiling is not raised, contractors will still be required to fulfill their obligations -- regardless of the chance the government may be unable to pay them. Contractors should process invoices as early as possible, or plan to delay them in the event the government runs out of money.

While the chances of a "soft shutdown" are most likely, contractors are advised to begun preparing now, rather than waiting to see how things play out.

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