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Planning key to navigating a U.S. government shutdown

Federal contractors and IT vendors should brush up on plans to navigate a government shutdown as a Dec. 3 funding deadline approaches.

As yet another government funding deadline looms, federal contractors and IT vendors should freshen up plans to navigate a U.S. government shutdown.

The federal government will run out of funds by Dec. 3, meaning if lawmakers can't agree on a federal funding bill by the deadline, then the government will face a potential shutdown. President Joe Biden signed a short-term spending bill, called a continuing resolution, in October to avoid a shutdown. Approval of a similar bill is needed again to keep the government funded.

A shutdown's effect on federal contractors and IT vendors often depends on its length. Regardless, planning is key to successful navigation no matter how long it is, said Deniece Peterson, senior director of federal market analysis at Deltek.

Preparing for a U.S. government shutdown

Peterson said federal contractors and IT vendors should treat a government shutdown like a project.

Someone needs to be placed in charge of the project, document costs incurred during a shutdown that can be billed to the federal government later and determine if their work is deemed "essential" by the government.

Essential agencies and programs continue to operate during a shutdown, she said. However, while an agency may be considered essential, certain projects might not, which is why contractors and IT vendors need to establish whether the project they're associated with fits the criteria.

"Someone needs to own the project, they need to document everything, do that research about the agencies and determine if they're essential or not," she said.

Forrester Research analyst Andrew Bartels said setting up alerts for employees is another crucial step for federal contractors and IT vendors to take.

If a federal contractor has employees on-site within a federal agency, Bartels said companies need to communicate with those employees almost daily on the status of their ability to go into work.

"That's a step every federal contractor who has employees or workers who are going onto government premises need to have in place so they can let their employees know on a timely basis that, 'Yes you're going to work today' or 'No you're not going to work today,'" Bartels said.

A U.S. government shutdown's impact

Contractors who need to work at federal properties may bear most of the shutdown brunt, Bartels said.

If the government shuts down and nonessential agencies cannot operate, contractors who would typically go into a facility to work can no longer enter the building. Bartels said if individuals can't go to work, they can't get paid because their pay is based on time worked.

"There, the impacts tend to be more significant because it's disruptive of their workflow and revenues," he said.

For IT vendors, Bartels said payments for software services could be delayed but that companies will eventually be reimbursed by Congress once the shutdown ends.

This is why Peterson said documentation for reimbursement purposes is critical for both IT vendors and federal contractors.

"All good things tend to follow documentation," she said.

Government shutdowns can also impact the issuance of new contracts and thus the ability of federal contractors to bid on new projects, Peterson said.

"Companies put real dollars into pursuing these opportunities," she said. "As things change or things get delayed, it's important for contractors to be on top of this."

Ultimately, Peterson and Bartels said most federal contractors and IT vendors can rely on past plans to help propel them through new shutdowns.

For most vendors, this is not their first rodeo.
Andrew BartelsAnalyst, Forrester Research

"For most vendors, this is not their first rodeo," Bartels said. "Unfortunately, [government shutdowns] have happened often enough that they have that roadmap of experience."

Along with facing a potential government shutdown, Congressional leaders are facing another December deadline to pass a law raising the debt ceiling.

If Congress doesn't raise the debt ceiling, the U.S. Department of the Treasury won't be able to pay its debts, causing it to default, which experts speculate could cause significant economic harm.    

Makenzie Holland is a news writer covering big tech and federal regulation. Prior to joining TechTarget, she was a general reporter for the Wilmington StarNews and a crime and education reporter at the Wabash Plain Dealer.

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