Federal Government Shutdown: What You Need to Know

by Andrew Goldberg
AIA National Managing Director, Government Relations & Outreach
(click here to view original article)

It’s been 17 years since the federal government last experienced a shutdown. As federal agencies begin the process of shutting their doors and furloughing non-essential personnel, there are lots of questions about how it will affect all Americans, especially those who work with (and for) the federal government. If your projects receive federal funding, will they have to stop? If you are a federal contractor, what should you be doing? Much remains unclear about what happens during shutdown, including the procedures that individuals and companies doing business with the government will face. In order to help AIA members through the confusion, the AIA has launched this page to provide up-to-date information about the shutdown and what you need to do.


Shutdown 101: FAQ
What is a government shutdown?
A federal government shutdown occurs when Congress and the President fail to approve and enact into law funding for federal agencies. The federal government operates on an Oct. 1-Sept. 30 fiscal year. Each year Congress must pass and send to the President a series of appropriations bills that fund most government agencies and programs. If an agency does not have its funding signed into law by Oct. 1, Congress can pass a so-called continuing resolution that extends the prior year’s funding levels for a short time until a full-year appropriations bill can pass. If the president does not sign either a continuing resolution bill or a full-year appropriation, the affected agency or agencies must cease operations except for essential services.

Why is a shutdown happening this year?
Congress has not sent any of its fiscal year 2014 appropriations bills to the President because of disagreements between the parties over spending levels and whether to fund the Affordable Care Act (aka, Obamacare) in the upcoming fiscal year. Because Congress has not passed and sent to the President a new continuing resolution, then the government will shut down.

Do all agencies and programs have to shut down?
Not necessarily. If Congress and the President are to approve funding for specific agencies, then they would be able to continue running. In addition the funding of certain so-called mandatory spending programs is not contingent upon the annual appropriations process, and will continue to be funded. These include programs such as Medicare and Social Security. However, the staff that administer these programs may not be able to work.

On Sept. 30, the President signed a bill passed by both chambers that provides that military personnel will receive pay during a shutdown. The bill also ensures that civilian DoD employees and Pentagon contractors whom the Defense Secretary determines “are providing support to members of the Armed Forces” will continue to receive paychecks.

How long will a shutdown last?
It will last until Congress and the president agree on either a full-year spending bill or another continuing resolution. The last shutdown in 1995-96 lasted approximately three weeks.

Do all federal employees have to stop working?
Agencies are able to allow “essential” personnel to keep working. The definitions of what is essential vary by agency, but personnel like air traffic controllers, Secret Service agents and military personnel will most certainly continue working. Non-essential personnel would be placed on unpaid furlough, meaning they have to stop all work activities, including answering emails and phone calls.

I have an A/E contract with a federal agency. What do I do?
You should speak to your point of contact at the agency as soon as possible. To date, agencies have not provided the public, or even their employees, with a lot of guidance on what happens in a shutdown. According to the Wall Street Journal: “Legal advisors are telling contractors to document all supply chain interruptions to bolster potential claims against the government for contract breaches.” Contractors also have been recommended to carefully maintain records of all contacts with agencies, outstanding invoices, costs incurred due to the shutdown and other data about activities both before and during a shutdown that will help agencies understand what work has been done.

Will my firm get paid for the work we do during a shutdown?
In general, expenses incurred prior to the shutdown will be paid, but there may be delays in the processing of these expenses due to a shutdown. In the last shutdown, Congress did approve back pay for federal employees, but not for contractors. It is unclear, but unlikely, that contractors will receive back pay for any work done during a shutdown this time. That is why it is vital to keep good records of work done both prior to and during a shutdown. The AIA also recommends that firms speak to their counsel and/or accountants.

Will federal employees who are furloughed receive back pay?
Essential personnel who are required to stay on the job during the shutdown will receive backpay once the shutdown ends. Non-essential personnel will receive back pay only if Congress specifically approves it. It is entirely possible that this time, unlike in the 1990s, Congress will not provide back pay for federal employees.

Will my firm have to furlough me if its funding for federal projects is stopped or delayed?
That depends on your firm. If that happens, you may be eligible for unemployment compensation. Unemployment compensation requirements and rules vary by state.
For information, contact your state’s unemployment office.

We have projects that receive federal grants. Will they be affected?
As with contracts, it is not clear yet how grant will be affected. The AIA recommends that you speak with your point of contact at the awarding agency as soon as possible.

Are state and local governments affected?
Not directly, as Congress and the President are not responsible for state and local government budgets. However, state and local governments do receive monies from the federal government for various activities, including some that are design and construction related. Check with your state or local government point of contact.

Would a shutdown affect the requirement that by October 1, employers notify their employees about health insurance marketplaces under Obamacare?
No, that requirement will remain in place.