In the wake of the Government’s October 1, 2013 shutdown, clients of the Georgia Tech Procurement Assistance Center (GTPAC) have been asking our counselors a lot of questions about the implications. Here is a summary of the advice we are giving:
- Generally, if you are competing for a Federal contract, everything is on hold. Watch FedBizOpps (www.fbo.gov) where a majority of Federal solicitations are posted to see updates on the status of anything you are bidding on, or have bid on recently. Don’t expect up-to-the-minute information since so many Federal employees are on furlough, but that’s the best place to check on the status of most Federal procurements. If you discover that the procurement official assigned to managing the solicitation in which you are interested is not on furlough, an inquiry by email is permissible. Be patient in waiting for a reply — remember that literally hundreds of thousands of Federal employees are on furlough status at the moment.
- Some procurements, related to essential Government functions, are proceeding with minimal disruption, but expect delays.
- If you have an active Federal contract, it is imperative that you comply with all contractual terms and conditions, and that accurate records of shutdown-related impacts be maintained. Knowing the terms and conditions of your contract inside-out will pay-off right now. Be sure to read the rest of this article for tips on managing an active Federal contract.
Specific contractual actions to protect your company’s interest will vary by contract type and contract terms. All have to do with the specific provisions contained in your contract. Some things to consider include:
Cost-Type/Fixed Price-Type (incrementally funded) Contracts
- Ensure compliance with the notification requirements of the “Limitation of Cost” or “Limitation of Funds” provision of the contract (cost-type contracts).
- Develop plans to minimize the impact to the customer (the end-user within the Government) and your firm (i.e., curtail non-essential program elements to stretch program funding) and request a Stop Work be issued by the Government’s Procurement Contracting Officer (PCO or just CO) for the non-essential elements.
- If a Stop Work is not issued, notify the PCO/CO of potential delays under “Government Delay” and/or “Excusable Delay” provisions. (fixed price-type contracts).
- Provide direction to your supplier base consistent with the PCO/CO’s direction.
- Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.
- Segregate costs as documentation for a potential delay and disruption under the Request for Equitable Adjustment (REA) provision of your contact.
Fixed-Price Type Contracts (fully funded)
- The Government shutdown does not have an immediate impact on contract performance but, over time, the unavailability of Government inspectors or support could lead to delays and disruptions and should be documented for future Request for Equitable Adjustment (REA) consideration.
- Ensure Government payments reflect any adjustments due you under “Prompt Payment” provisions.
Other Items to Consider
- Proposals and unexercised options could expire during an extended shutdown period. If it is in the best interest of your firm, a non-solicited proposal extension/option exercise date extension could be provided to the Government.
- The Government may not be able to provide inspectors (e.g., Defense Contract Management Agency) under a shutdown and delay, so disruption impacts should be captured and documented for a future Request for Equitable Adjustment (REA).
- The Anti-Deficiency Act (ADA) does not allow the government to spend money that is not obligated, therefore and firms should be leery of non-warranted individuals requesting you to work and get paid later; e.g., contracting officer representatives (CORs) or other Government officials. Only COs and PCOs can make binding commitments.
- Be mindful of mission creep, where the Government requests you to perform additional contract tasks due to Government personnel unavailability.
- The Government shutdown potentially impacts to your rates and long-range plans based on prolonged funding gaps and/or stop work orders, so alert your accounting staff to document all impacts of the shutdown.
As always, feel free to contact a GTPAC procurement counselor if you have questions or need guidance. All contact information is posted at: http://gtpac.org/team-directory.
