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Government Shutdown

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Some agencies are probably shutting down.  One of my COR's has talked of furloughing contractor employees who work on Government site.

Assuming the Govt does shut down, I'd like to keep my employees working billable hours, or otherwise recover the money that would be billed for billable hours worked.

Any advice?

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What are you going to do with your employees if the government issues a Stop Work Order in regard to your contract?  Also, what does your contract say about your ability to get paid for work not performed because of a government shut down?  Generally, when there is a shut down, contractors are left out in the cold and it is difficult for them to recover any losses they incur as a result of a shutdown which is considered a sovereign act.  Contractors have the best chance of recovery if there is a contractual action by the government such as a Stop Work Order.

 

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I think that this will be considered a sovereign act of the Government. Time extensions but no cost reimbursement perhaps. 

https://www.procurementplaybook.com/2018/10/trump-administrations-sovereign-acts-cast-shadow-on-federal-procurement/

I didn’t read this one yet but it appears to be quite comprehensive:

https://apps.dtic.mil/dtic/tr/fulltext/u2/a254270.pdf

another instance:

https://www.jdsupra.com/legalnews/a-recent-reminder-of-the-sovereign-acts-87475/

http://www.gcila.org/publications/files/pub_en_177.pdf

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1 hour ago, lotus said:

Some agencies are probably shutting down.  One of my COR's has talked of furloughing contractor employees who work on Government site.

Assuming the Govt does shut down, I'd like to keep my employees working billable hours, or otherwise recover the money that would be billed for billable hours worked.

Any advice?

Does the Government need to be open for your employees to work?

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1 minute ago, Don Mansfield said:

Does the Government need to be open for your employees to work?

Well, they have to be able to get into the building.  If they can get to their desks they probably can find something to do.

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Didn't we have this discussion last January? You'd think we'd have it all figured out by now.

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Is the current partial Government shutdown a sovereign act?  I suspect the instinctive reaction of most readers is yes, although I am now believing otherwise.

The test for whether an act is a sovereign act is whether or only a sovereign could perform acts in the the same category. 

The current partial shutdown is a reflection of a budget dispute.  Can non-sovereign entities have budget disputes?  Yes, they can, and yes they do, for similar reasons (powerful people with large egos squabble about priorities).

Pick a big corporation.  Apple Corporation, for example.  Could Apple have a budget dispute and shut down part of it's operations pending resolution?  Obviously, yes it could.

Therefore, the current shutdown is not a sovereign act.  Instead it is a management act.  And, the Government should not be able to avoid paying contractors saying the shutdown was a sovereign act.

I seek your advice on overcoming the instinctive reactions that the partial shutdown is a sovereign act.

I seek your comments and advice on how to be kept whole, to be paid for hours that my employees are locked out of their workplaces in Government buildings.

(As you might expect, at the moment the contracting officers and COR's involved are furloughed.)

 

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30 minutes ago, lotus said:

Is the current partial Government shutdown a sovereign act?  I suspect the instinctive reaction of most readers is yes, although I am now believing otherwise.

The test for whether an act is a sovereign act is whether or only a sovereign could perform acts in the the same category. 

The current partial shutdown is a reflection of a budget dispute.  Can non-sovereign entities have budget disputes?  Yes, they can, and yes they do, for similar reasons (powerful people with large egos squabble about priorities).

Pick a big corporation.  Apple Corporation, for example.  Could Apple have a budget dispute and shut down part of it's operations pending resolution?  Obviously, yes it could.

Therefore, the current shutdown is not a sovereign act.  Instead it is a management act.  And, the Government should not be able to avoid paying contractors saying the shutdown was a sovereign act.

I seek your advice on overcoming the instinctive reactions that the partial shutdown is a sovereign act.

I seek your comments and advice on how to be kept whole, to be paid for hours that my employees are locked out of their workplaces in Government buildings.

(As you might expect, at the moment the contracting officers and COR's involved are furloughed.)

 

Asked and answered. 

For example: https://www.jdsupra.com/legalnews/a-recent-reminder-of-the-sovereign-acts-87475/

the  CBCA acknowledged that a three day suspension due to government shutdown  was a “sovereign act”.

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1 hour ago, lotus said:

I seek your comments and advice on how to be kept whole, to be paid for hours that my employees are locked out of their workplaces in Government buildings.

I think that you are currently out of luck. However, when pricing future contracts you should include a reasonable contingency to cover the increased costs of a shutdown. We have the historical data on shutdowns. Remember this.

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Don is correct. Congress has previously stated that "As a government contractor, [the contractor] knew that Congress or the President could close the government at any time. This is a business risk inherent in [their] relationship with the government."


https://www.congress.gov/congressional-record/2004/07/07/extensions-of-remarks-section/article/E1293-4

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@Jamaal Valentine A member of Congress (Rep Dennis Kucinich) and several signatories to the letter wrote that language, not Congress. There's a big difference. Individual members or groups of Congress have said or wrote all kinds of ridiculous things. 

 

 

This thread is about a contractor getting paid by the government for shutdown days. The letter you found is about a contractor paying its employees for shutdown days. On the latter topic, Rep Kucinich's letter is interesting because there are plenty of government contractors that do not pay their employees for unexpected shutdowns, closures, etc. and instead require their employees to take leave/vacation/unpaid leave. Rep Kucinich is trying to pressure a government contractor to foot the bill for a cost imposed by the government that was not reimbursed (directly) by the government.

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8 hours ago, joel hoffman said:

The writer is of the opinion that a shutdown is a sovereign act.  It is his opinion.  I disagree.

 

9 hours ago, joel hoffman said:

Asked and answered. 

For example: https://www.jdsupra.com/legalnews/a-recent-reminder-of-the-sovereign-acts-87475/

the  CBCA acknowledged that a three day suspension due to government shutdown  was a “sovereign act”.

"... one of the key inquiries is to determine whether the governmental action constitutes a sovereign act, determined by whether the government act is directed at only the contractor or at the public generally. " 

     This is a different test than the one that I think is appropriate.  It does seem to have some weight as the article says this rationale was used in a CBCA ruling.  Getting a ruling body to agree that a different test is appropriate (i.e., the test that I suggested) will be hard to do, even though a different test is appropriate.

     Any thoughts as to how to sway the judge?

 

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7 hours ago, PepeTheFrog said:

@Jamaal Valentine A member of Congress (Rep Dennis Kucinich) and several signatories to the letter wrote that language, not Congress. There's a big difference.

I didn't see the congressman's remarks as controversial or disputed within the Congress. (Yes, congressmen and the Congress have communicated all kinds of ridiculous things.)

I think I know what you mean and agree ('the Congress' didn't issue legislation, take a vote, etc.), but can you explain the difference(s) as you see it? I definitely see a difference in legal significance. The Congressional Record being used--potentially--as a secondary authority.

7 hours ago, PepeTheFrog said:

This thread is about a contractor getting paid by the government for shutdown days. The letter you found is about a contractor paying its employees for shutdown days. 

I quoted the relevant part as support that contractors (not their employees) are or should be aware of the business risk inherent in their relationship with the government. As Don mentioned, contractors should price accordingly.

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@Jamaal Valentine Yes, like you said. "The Congress" didn't vote or issue legislation. That's my only distinction. It was just opinions of Congress Critters who wrote a letter. You're right that it's worth nothing that it was not just a letter, but a letter entered into the Congressional Record, but that was just to embarrass and pressure the contractor.

You and PepeTheFrog are in agreement about contractors being on notice of the business risk inherent in their relationship with the government. 

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15 hours ago, lotus said:

Any thoughts as to how to sway the judge?

What judge?

On 12/27/2018 at 9:41 AM, lotus said:

The test for whether an act is a sovereign act is whether or only a sovereign could perform acts in the the same category. 

The current partial shutdown is a reflection of a budget dispute.  Can non-sovereign entities have budget disputes?  Yes, they can, and yes they do, for similar reasons (powerful people with large egos squabble about priorities).

Pick a big corporation.  Apple Corporation, for example.  Could Apple have a budget dispute and shut down part of it's operations pending resolution?  Obviously, yes it could.

Therefore, the current shutdown is not a sovereign act.  Instead it is a management act.  And, the Government should not be able to avoid paying contractors saying the shutdown was a sovereign act.

I seek your advice on overcoming the instinctive reactions that the partial shutdown is a sovereign act.

You're spinning your wheels with this stuff. Corporations have budgets also, therefore a government shutdown is not a sovereign act? Stop wasting your time.

If you want a theory of recovery, speak to an attorney or find a clause in your contract that will allow you to submit a claim or a request for equitable adjustment. Maybe you can argue there was a constructive change to the contract or that you were never ordered to stop work. Fighting the doctrine of sovereign acts is a quixotic waste of time. Focus on your contract, your contract's clauses, and your relationship with your client. 

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15 hours ago, lotus said:

Any thoughts as to how to sway the judge?

That will be a very long shot in light of the discussion of the sovereign act defense by the Supreme court in Winstar.  See, https://caselaw.findlaw.com/us-supreme-court/518/839.html

Further, you have to realize that the government acts in one of two ways in regards to its contracts - its contractual capacity and its sovereign capacity.  Thus, if the government prevents a contractor from working during a shutdown, you have to ask in which capacity did the government act when it did so.  Failure to appropriate funds is not a contractual act unless the failure is specifically directed toward a contractor or class of contractors.  That is clearly not the case here.  Thus, as I said earlier, unless the government does something based on the terms of a contract, such as issuing a stop work order, the contractor is generally out of luck in regard to recovery of costs relating to the shutdown.

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20 hours ago, lotus said:

 

     Any thoughts as to how to sway the judge?

 

Quote

 

Because the current Government shutdown is not specifically targeted at any particular contract, it is considered a sovereign act. Hence, while a contractor is entitled to additional time due to shutdown delays, it is not entitled to monetary compensation. M.E.S., Inc., ASBCA No. 56149, 12-1 BCA P 34,958 at 171,856 (no monetary compensation due for delays resulting from a sovereign act) There is a limited exception to this rule.

Specifically, if the contract expressly or implicitly promises that certain resources will be made available, and they are not because of the Government shutdown, there may be case for monetary reimbursement against the Government.  For example, in Raytheon STX Corporation v. Department of Commerce, GSBCA No. 14296-COM (October 28, 1999), the Board awarded a contractor monetary damages because the contract expressly provided that the contractor’s personnel would perform their work at Government facilities. Through no fault of the contractor, these facilities were closed by a Government shutdown.  The Board therefore awarded monetary damages because the Government did not honor its express obligation to provide facilities to the contractor.  This type of provision is rare and recovery will depend on the language in your contract.  Let’s hope this shutdown goes away soon!

 

The above article concerned the 2013 government shutdown.

http://manfredonialaw.com/past-post-government-shutdown-sept-2013/

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https://oversight.house.gov/legislation/hearings/government-shutdowns-contract-killers

Hearing by House Committee on Oversite and Reform was held on May 6,2019.

Quote

 

BACKGROUND

The longest shutdown in the federal government’s history ran 35 days, from midnight on December 22nd through January 25th.  The shutdown was the 3rd federal government funding gap of the Trump Administration.

In addition to the 400,000 federal employees affected by the shutdown, approximately 800,000 contractors from 10,000 companies that support and enhance the government directly felt its negative effects.

Federal employees rightly received back pay for the days they were furloughed, but many contractors – who support, supply, or sit directly next to these federal employees – received no similar recompense.

These contractors live and work in every state in the nation, including:

NASA contracts worth $7.9 million per week in Huntsville, Alabama and Cape Canaveral, Florida.

Virginia’s 11th Congressional district includes an estimate of at least 70,000 contractors, representing over 16% of the employed workforce.

In the National Capital Region, federal contracts pump $66 million into the local economy every week.

The U.S. Chamber of Commerce estimated that the shutdown had an adverse effect on at least 41,000 small businesses across all 50 states, costing them more than $2.3 billion in lost revenue.

Many affected contractors were low-wage employees, including security guards, janitors, and other service workers.

 

See Contracting News, posted 8 May 2019 on the  WIFCON Homepage.

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