ANOTHER SHUTDOWN LOOMS

Another government shutdown is possible before Thanksgiving.  There are 12 bills to fund all agencies which must be passed by November 21, 2019.  The current executive administration has shown it likes brinkmanship and the current resident of the White House likes to wrap as many issues as possible into a package to hold as hostage to Congressional approval of the entire package.  Also, there is the threat to shut down the government over the impending impeachment of the President.  So, it is time again to consider what government contractors should do if there is another shutdown.

We have discussed this before.  You can use our search tool to find what we've said.  However, we remain convinced that the situation again reminds us of the premium placed on sound contract administration.  Sound contract administration begins and ends with staying in close contact with your contracting officer.  It is extremely important to insist on clear direction.  Yes, insist on it to the point of importuning if necessary.  If your contracting officer gives you no direction or just stonewalls you, act reasonably to mitigate damages.

In the end, we believe a shutdown which interrupts your performance or delays or denies payments is a breach of contract.  This allows you to sue or file a claim for breach of contract.  It may be argued that the shutdown is covered by a contract clause giving rise to a suspension, changes or partial termination claim.  However, a shutdown is a serious repudiation of government obligations which should be viewed as a breach of contract.  The only remaining question is whether the government can defend by using the sovereign act defense.  We have written often about this defense.  We do not believe it applies since the government is taking this action to benefit itself and at least collaterally to relieve itself of contractual obligations.

So, prepare for the worst and maintain tight contract administration.  Mitigate damages.  Above all, document, document, document.  Keep records of the impact and set up separate charge accounts for activities during the shutdown.

bill@spriggsconsultingservices.com