Government Contracts Monitor

The Federal Government Is Shut Down. Now What?

October 1, 2013

Because Congress was unable to reach an agreement on the federal budget by October 1, 2013, there is no appropriation in place and most federal agencies are required to severely curtail their operations or shut down entirely due to lack of funding.

The following is a sampling of federal agencies of interest to Jackson Kelly clients, a brief summary of their shutdown contingency plans, and the likely impact of such plans:

1. Government Contracting

A variety of agencies involved in government contracting will be closed during the shutdown.

The Office of Federal Contract Compliance Programs (OFCCP) is completely closed. The Department of Labor’s Wage and Hour Division, which is responsible for enforcing the Service Contract Act and Davis Bacon Act, is effectively closed. These closures mean that there will be no new investigations or audits and no progress on existing matters during the shutdown.

In addition to these agencies being closed, the Federal government shutdown also has temporarily closed the e-Verify website, thereby preventing federal contractors from running “real time” employment eligibility checks. Even though e-Verify is closed, employers must still complete the Form I-9 no later than the third business day after an employee starts work for pay.

The U.S. Government Accountability Office (GAO) is closed. This means that no new bid protests may be filed and there will be no action on existing bid protests. GAO announced that filing deadlines for new protests that otherwise should have been filed while GAO is closed will be extended until the first day GAO reopens.

Most agency Offices of Inspector General will be operating with a skeleton workforce. Criminal investigations will likely be unaffected, but civil investigations and other non-critical functions are likely to be closed.

Given the widespread impact of the shutdown, it is reasonable to assume that most suspension and debarment actions will be put on hold until the government reopens.

The Department of Defense’s contingency planning document is fairly typical of agency guidance on contracting and summarizes the impact on existing and future contracts:

Contractors performing under a fully funded contract (or contract option) that was awarded prior to the expiration of appropriations may continue to provide contract services, whether in support of excepted activities or not. However, new contracts (including contract renewals or extension, issuance of task orders, exercise of options) may not be executed, nor may increments of funding be placed on incrementally funded contracts or to cover cost overruns, unless the contractor is supporting an excepted activity. No funds will be available to pay such new contract or place additional increments of funding on contracts until Congress appropriates additional funds.

The Department may continue to enter into new contracts, or place task orders under existing contracts, to obtain supplies and services necessary to carry out or support excepted activities even though there are no available appropriations. It is emphasized that this authority is to be exercised only when determined to be necessary – where delay in contracting would endanger national security or create a risk to human life or property

2. Department of Justice Litigation

The federal courts are expected to remain open during the shutdown. The Department of Justice’s litigation efforts, however, will be curtailed during the shutdown. While criminal litigation will continue without interruption, Department of Justice civil litigators have been instructed to seek continuances or postponements from federal judges in all pending civil cases and work on those cases only if a continuance is not granted. In other words, if the shutdown continues for any appreciable length of time, it is reasonable to assume that most civil litigation will be placed on hold until the government reopens.

3. Safety and Health

The U.S. Department of Labor has deemed OSHA’s and MSHA’s mission to be “essential” and necessary for protection of safety of human life and protection of property.

As a result, most – but not all -- OSHA staff will be furloughed. OSHA will staff all area offices with one senior safety compliance officer and one senior health compliance officer and the regional offices will be staffed solely with the regional administrator and existing assistant regional administrators. This will leave 230 out of 2235 personnel to staff OSHA during the shutdown.

MSHA will also have mass furloughs and will restrict its activities primarily to “targeted inspection at mines which have been prioritized based on the mine’s history of the hazards that put miners’ lives at risk. . . . Additionally, investigations of accidents and miners’ safety complaints and select sample analysis will continue.” This will leave 966 out of MSHA’s total 2355 workforce in place during the shutdown.

Given OSHA’s and MSHA’s staffing levels, it is reasonable to assume that most routine compliance and enforcement matters will be placed on hold leaving those agencies to focus only on those issues involving protection of human life.

4. Labor and Employment

Most compliance and routine enforcement functions of federal agencies involved in labor or employment matters will be suspended during the shutdown. Like the Department of Justice, most civil litigation by labor and employment agencies will be suspended, unless a federal court directs otherwise. Some litigation or limited enforcement capacity will be maintained to the limited extent necessary for safety of life and protection of property. According to published contingency plans, the following federal agencies will keep the resulting staffing levels during the shutdown:

National Labor Relations Board: 11 out of 1611 personnel
Equal Employment OpportunityCommission: 107 out of 2164 personnel
Wage and Hour Division / DOL: 6 out of 1829 personnel
Office of Labor Management Standards / DOL: 1 out of 219 personnel

This level of staffing demonstrates that none of these agencies will be able to commence or continue routine compliance or enforcement activities during the shutdown.

As discussed above, e-Verify is not operating during the shutdown and care must be taken by employers to otherwise comply with Form I-9 obligations.

5. Higher Education

The U.S. Department of Education is effectively closed. Only 242 out of 4225 employees are exempt from furlough. As a result, most Department of Education functions will be suspended during the shutdown.

Among the exceptions are the agency’s Grant and Loan Programs that have their own funding and select personnel in the Office of Inspector General necessary for ongoing criminal investigations.

Conclusion

It is unclear how long this Federal government shutdown will last. What is clear is that most routine compliance and civil enforcement matters will be placed on hold for the duration of the shutdown. Federal agencies, however, will continue to pursue criminal matters and other limited matters deemed essential to the safety of human life and the protection of property.

Michael J. Schrier is the attorney responsible for the content of this article.