Update, Nov. 15: The U.S. House approved temporary funding for the federal government Tuesday, which will likely stop talk of a shutdown until the new year. The measure is expected to pass the Senate. It will likely head to President Joe Biden’s desk by Friday night, which is enough time to avoid a shutdown.
A shutdown would create challenges for procuring government contracts, said Fred Aus, a senior consultant at Strategic Partnerships. Aus has extensive experience working at the intersection of infrastructure, public policy and government relations.
For businesses that already have federal contracts and loans, a shutdown means timelines and funding could be delayed. However, it is possible to write contingencies into contracts to create short-term allocations to keep projects moving if shutdowns occur.
“Hopefully this is a lesson learned from the pandemic,” Aus said. “That (businesses) will have built into their contracts some sort of cost escalator or fund account.”
It’s also important to communicate while negotiating a contract or working on a project during a shutdown, he said.
“I would encourage them to get in contact with the agency they’re working with and see what they can tell them (about project status, delays and future payments),” Aus said. “And try not to be frustrated if they can’t tell them much because they might not be getting clear direction from their leadership, either.”
The same is true for those looking to enter into a contract with a government shutdown looming. Agencies could respond in two ways, he said: Either trying to get things in motion as soon as possible or not rushing into a commitment.
“We don’t really know what’s going to happen,” Aus said. “And we don’t want to get out there and over-promise what we can’t deliver.”
Although the continuing resolution from September prevented 1.5 million employees from being furloughed or working without pay, the effects of an upcoming government shutdown would affect almost every industry.
“A shutdown could delay major infrastructure projects,” Aus said. “And this could include projects such as modernizing utilities, including broadband in rural communities or even improving our interstate highways.”
The severity of a shutdown depends on its length. In recent years, the longest government shutdown occurred between 2018 and 2019 when operations paused for 34 days, costing $3 billion in lost revenue.
“It is rare to force a government shutdown, and government shutdowns bring damage to everybody,” Aus said. “Be prepared for all outcomes.”
Lawmakers are close to a deadline to prevent a shutdown — voting on the continuing resolution as soon as Tuesday — and Aus noted that most of the action happens at these pivotal moments. “There’s still time,” Aus said. “We know it’s close, but people’s attentions get focused the closer we get. And for many of those folks, they’re not close to crunch time yet.”