Forgive me if I'm posting in the wrong forum or if this has been answered elsewhere. I did search old posts etc., but haven't seen this anywhere.

Recently, a friend was advised by their (small-business) employer that in the event of a Government Shut-down they would be working part-time or not at all (using PTO or LWOP). Now, to be clear, the friend is an overhead staffer at a company that offers primarily on-site staff services to the government. I asked and roughly 2/3rd of their contracts are T&M with 1/3 being FFP. On the surface this makes sense, since if all or most of your billable employees are unable to work, then your overhead staff shouldn't be able to work; also if the company has a cash flow problem and is unable to bill . . . but

As I understand it, presumably most of the contracts should keep going through a shutdown if fully funded and the employees are either allowed to work off-site or are 'essential' and allowed to keep working on-site. Also, I would think that even if the majority of employees are unable to work for whatever reason, wouldn't the employer be able to capture any kind of 'shut down' costs and/or request an REA related to a Stop Work?

I guess my question is: Aren't (at least some) overhead personnel costs recoverable under Stop Work costs?

I've only been through one government shut down and I was (happily) working an FFP at the time, but something seems odd about this situation.

Thank you in advance for your help!

You may err in presuming application of the Stop Work clause.

If a contracting officer's issuance of a stop work order under the Stop Work clause, whatever remedies are allowed by the clause will be possible. However, if a facility is closed by the Government acting as the sovereign, there may be no immediate remedy available. However, to whatever degree the shutdown affects the contractor's overhead rates, the contractor may be made whole in the long term by application of those rates to future work.

This probably won't be an entirely satisfactory answer.

Thank you for response! I read up on the discussion of Government as 'sovereign' but after researching on wifcon, your response makes sense. I think there is a lot of confusion out there about whether a SWO is synonymous with shutdown, since SWO are so often issued before a shut down.

I suspect my friend's employer will be giving HQ overhead employees a furlough rather than raising rates, for fear of losing business. I'll plan on buying dinner if it comes to this.

Suggested reading:

"Government Contracting in the Shadow of the October 2013 Federal Government Shutdown," by Darrell Curren, Public Contract Law Journal (Winter, 2015), 44 PUBCONLJ 349.

My recommendation: Do not adopt a general rule to issue stop work orders in the minutes before the shutdown -- that is a bad practice -- it might make sense in some few cases, but not as a general rule.

[M]y question is: Aren't (at least some) overhead personnel costs recoverable under Stop Work costs?

In my opinion, it is virtually impossible to provide anyone with any reliable general information or advice about the impact of a government shutdown on contracting operations and contractor performance and compensation. The impact of the 2013 shutdown on the various agencies and contractors depended on a wide variety of factors and varying legal interpretations. I have found the subject to be extremely complex and hard to get my arms around. It seems irresponsible to offer any broad generalizations.

All I would say to anyone is: first, stay in touch with the other party and, second, stay in touch with your lawyer and your accountant about the impact on each and every contract. Don't assume that the rules are the same for all agencies or for all contracts with a particular agency.

Edited August 27, 201510 yr by Vern Edwards