Government Shutdown?  Should you be concerned?

I have faced government shutdowns at various times throughout my career as a Contracts Administrator for government contractors.  The overall impact on our workflow and accounts receivables varied depending on the type of contract we had, the type of SOW we were performing, and the priority rating of our contract.

A federal government shutdown has direct and indirect effects on government contractors, and the impact depends largely on the type of contract, funding status, and agency involved. 

Here’s what you need to know:

1. Work and Funding

• Funded vs. Unfunded Contracts
  
  • If your contract is already fully funded, work often continues (unless the agency specifically halts it).
    
  • If the contract is incrementally funded (common with cost-type contracts), work may stop if the funding runs out and no new appropriations are available.
    
• New Awards & Modifications
  
  • No new contract awards, options, or modifications can be issued during a shutdown, since contracting officers are typically furloughed.
    
  • That means pending bids, RFPs, and RFIs may be delayed.
    

2. Access to Federal Facilities

• Contractors often can’t access government sites, labs, bases, or offices if they’re closed.
  
• If your work is “mission essential,” you may be required to keep working, but you may need special documentation.
  

3. Payments & Invoices

• Delays in Payments: Even if you’ve invoiced for completed work, shutdowns often delay processing in systems like WAWF / PIEE or IPAC.
• QARs who perform the quality inspections for the government are typically furloughed, leading to delays in shipment/invoicing approvals.
  
• Small businesses, in particular, may feel the squeeze from cash flow interruptions.
  

4. Personnel Impact

• Federal employees you interact with may be furloughed and unavailable, making it impossible to get approvals, clarifications, or oversight.
  
• That can stall performance, especially in contracts needing Contracting Officer (KO) input or inspections.
  

5. Cost & Schedule Impacts

• If you’re ordered to stop work, you may be able to recover costs for demobilization, delays, or idle labor—but only if you document them carefully.
  
• Many contractors file Requests for Equitable Adjustment (REA) or claims later for shutdown-related impacts.
  

6. Communication & Documentation

• Contractors should:
  
  • Get written stop-work orders (verbal instructions aren’t enough).
    
  • Track all costs associated with shutdown delays.
    
  • Keep open communication with the Contracting Officer (if available).
    

7. Exceptions

• Some contracts are exempt because they’re tied to national security, emergency services, or life/safety missions (DoD operations, TSA, FAA controllers, medical research tied to health/safety).
  
• These continue regardless of the shutdown, but personnel may go unpaid during this time.
  

Bottom line:
A shutdown generally means delays in new business, slower payments, possible stop-work orders, and lack of access to federal partners. Contractors need to communicate with their Contracting Officer (KO) prior to shut down to determine the impact to specific contracts. Additionally, Contractors need to carefully track impacts, protect their rights, and be prepared to seek reimbursement later.