Government Shutdown and Contractor Claims

The government shutdown could impact the amount of claims or equitable adjustments submitted by contractors. However, as for any claim under the Contract Disputes Act, businesses must be aware that such claims must be directly related to the contract itself.

A common issue that will arise is the ability of contractors to pay their employees. This source obviously comes from invoices for payment. The problem to be expected is that the agency may choose to rely on the remedy of interest. Yet this may not be a sufficient answer to contractors across the country.

Contractors should keep close tabs on the direct and unexpected cost associated with any contract claims to the government.

Reimbursable Claims?

Not all cost incurred as a result of the government shutdown will be reimbursable. Contractors will have to take a serious look at whether to furlough their employee pending the restart of government activity.  Companies should also look to insurance coverage and other ways of mitigating claims and damages to the government.

For firm-fixed priced contracts, funds should be already allocated for payment. However, the problem is when does the agency start to pay invoices. For essential contractor personnel, there could be hope to get paid early but there are no guarantees with the federal government.

When the contracting officer realizes that there are no federal employees to facilitate contract performance, they should arguable issue a stop work notice. Therefore, contractors who are expected to perform, but have no viable way of doing so, should be documenting costs and be prepared to submit the requisite claim.

For government contract claims resulting from the federal shutdown, your request should be very detailed and contain sufficient facts to support payment.

As a result of the government shutdown, contractors should also look seriously at reassigning employees to productive assignments. This is especially true for construction companies. If your company has potential claims against the federal government, consider seeking legal advice from a government contracts attorney.

 

Contact a government contracts attorney.