Government Shutdown: What IEC Members Should Know

Late into the evening on Monday, the United States Congress failed to reach an agreement on legislation to fund federal agencies by the September 30 appropriations deadline before the start of Fiscal Year 2014, leading to a government shutdown effective at midnight on October 1. In contention was House Republican language tacked on to a short-term spending resolution that would defund President Obama’s health care bill, which the Democrat-controlled Senate stripped in its consideration of the measure. Republicans countered with a one-year delay of only the “individual mandate” of Obamacare which was again defeated by the Senate, assuring government closures and furloughs Tuesday morning.
 
As a result, nearly 800,000 federal workers deemed to be “non-essential” are estimated to be furloughed today – some told not to report to work, and others serving without pay – leading to widespread shutdowns and delays across the federal government.
 
Following is a list of impacted agencies, services, and activities that IEC members should be aware of:
 
Federal Contracts
Contractors working on federally-funded construction projects can expect to see a significant and immediate impact, with notices halting further work on a number of projects to be issued from their contracting agencies. According to a Department of Homeland Security memo obtained by the Washington Post, “certain existing contracts may be stopped, reduced in scope, terminated, and partially terminated.” There are no public details at this time of which contracts will be honored during the shutdown and which will be suspended.

In instances where the government will not permit a contractor to proceed with work on a project, contractors may wind up on-the-hook for damages such as idle labor or equipment costs, unabsorbed overhead, and lost profits as a result of the Sovereign Act Doctrine, according to law firm Smith Currie & Hancock:  “The doctrine provides that, when the federal government interferes with the performance of a contract to which it is a party, the government will not be liable for breaching the contract if the action causing the interference was taken in the national interest and had a public and general application.”  The congressional impasse on appropriations could qualify suspended contracts under the Sovereign Act.  
 
In some contracts, the government may have agreed to assume the risk of damages incurred or will have preemptively issued a stop order in anticipation of the shutdown to protect contracted companies in advance. IEC recommends that members with active contracts with the federal government contact their contracting officer for guidance. 
 
That said, many contracting officers will not be available during the shutdown, so there may be delays or an inability to process contractor invoices at this time. The Department of Labor speculates that payments may not be made until after the government reopens, even if a contract has sufficient funding to allow continued contractor work during the shutdown.

The Office of Federal Contract Compliance Programs (OFCCP) will also be entirely shut down, with all employees furloughed.
 
Department of Labor
OSHA

OSHA will temporarily cease all operations except for those which relate to “emergencies involving the safety of human life or protection of property.” While OSHA’s guidance states that the agency will still respond to safety and health complaints which involve potentially hazardous conditions that “present a high risk of death or serious physical harm,” it is expected that most if not all workplace inspections will be halted. Activities related to OSHA Alliances are also suspended at this time.