Practical Steps for Contractors and Subcontractors to Take Before, During and After a Government Shutdown

Real Estate   |   Construction   |   Development   |   January 23, 2018
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It appears we may have dodged the government shutdown bullet, at least for the next couple of weeks. However, if you are involved in federal contract work, do you know what you need to do in the event of a shutdown? For contractors and subcontractors providing labor, materials, work, or services as part of a federal contract, the terms and conditions of your contract will govern both your obligations and your potential remedies in the event of a government shutdown. For example, will you be entitled to damages for delays arising out of the government shutdown, or are such damages waived or restricted in your contract? Under what circumstances do you have the right to suspend performance of your work? What are your obligations once a delay has occurred including any obligations to mitigate against the damages associated with the delay? It is critical that you know what your contract says about these things before a government shutdown so you are able to better comply with those contractual obligations and properly preserve all of your rights and remedies. Also, talk with your project’s contracting officer to find out to what extent, if any, your project may be shut down before the government shutdown. Once a shutdown occurs, you may be unable to contact your contracting officer, as he or she may have been furloughed.

Once a government shutdown occurs, you should consider taking the following practical steps during the shutdown to protect yourself and mitigate the shutdown’s effects.

Don’t assume. Confirm that your project has, in fact, been shut down before suspending performance. Attempt to perform under your contract until you either are (1) notified by someone with appropriate authority (preferably in writing) that your performance under the contract has been suspended, or (2) unable to access the project as a result of the government shutdown.

Document, document, document! Once you have determined that your performance under the contract has been suspended, carefully collect and maintain all of the supporting documentation (e.g., how, when, why, what, who, etc.) relating to the delay. 

Notice. As soon as possible after the government shutdown, notify the contracting officer in writing of the delay and its anticipated effects. Supplement that notice when additional information becomes available.

Stand By. Stay aware of the shutdown, keeping in touch with the contracting officer if possible. Be ready to immediately recommence performance under your contract once the shutdown is resolved.

Submit your claim timely. After a government shutdown ceases, determine the cost and time impacts of the delay, including mitigation costs such as overtime and hiring extra workers, and other damages. Then submit your claim within the timeframe required by the terms and conditions of the contract, making sure to provide all required backup to support your claim, as required by the contract. Discuss with your contracting officer whether acceleration efforts will be required to regain some or all of the lost time, and if so, include those costs in your claim as well.

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