Contractor’s Guide to Preparing for a Government Shutdown

At a glance

• The main takeaway: With a potential government shutdown on March 15, contractors must have a contingency plan in place to minimize disruptions.
• Impact on your business: Contracts relying on FY 2025 appropriations won’t receive funding, and no new contracts, task orders, or modifications will be issued. Payments, contract awards, and approvals will be stalled, impacting cash flow, operations, and workforce stability.
• Next steps: Track costs, stay in contact with contracting officers, and ensure compliance to position your business for post-shutdown recovery with the help of Aprio’s trusted advisors. Schedule a consultation.

Need assistance with Government contract and grant terminations, stop-work orders, and claims? Our experienced Government Contracting CPAs and nonprofit accounting professionals have you covered. Don’t hesitate to get in touch with an Aprio team member today.

The full story:

In anticipation of a potential Government shutdown in March, it is time to create your plan of action. If Congress does not pass a continuing resolution, the Government may shut down beginning March 15, 2025. The length and ramifications of a Government shutdown are difficult to predict, but what can be predicted is that a shutdown will adversely affect Government contracting.

A shutdown could still be averted—or it could be of such a short duration that it is only a minor inconvenience. However, with so much at stake and given the current political climate, it would be imprudent for Government contractors to assume a shutdown won’t happen. Though many things—such as the duration of the shutdown—are unknown, history has shown us they can be as lengthy as 35 days or as brief as one day. One thing is certain: Contractors who have made preparations will suffer less than their competitors. Toward that end, Aprio recommends that Government contractors develop a “shutdown contingency plan.”

Unfortunately, there is no single “one size fits all” approach to dealing with a shutdown. The Federal Acquisition Regulation (FAR) and the corresponding FAR clauses do not specifically address the contractor’s rights and obligations in the event of a Government shutdown. The appropriate course of action must be determined on a contract-by-contract basis based on the totality of the circumstances. In other words, the shutdown contingency plan must address each contract individually.

The purpose of this whitepaper is to provide contractors with guidance on how to prepare for and respond to a shutdown. We outline a general description of how the shutdown is likely to affect Government contracting. We also list a variety of factors that contractors need to consider in determining how the shutdown will specifically affect them. Finally, we offer some possible actions that contractors should take to minimize, if not avoid, the adverse consequences of a shutdown.

Related Resources/Assets/Aprio.com articles/pages

Prime Contractors: How to Manage Multiple Terminations, Subcontractors, and Settlements

Contractors’ Rights when the Federal Government Issues a Stop-Work Order

Federal Funding Freeze: Steps for Short- and Long-Term Success

Stop-Work Order Claims: What Costs are Reimbursable?

Federal Contracting in Flux: Strategies for Managing Trump Administration Stop-Work Orders, Terminations and REAs