On October 1 the federal government officially shut down as Congress and the White House were unable to reach an agreement on a continuing resolution to keep the government funded. Democrats have dug in on their insistence that any spending deal must include an extension of Obamacare subsidies. Republicans have refused, insisting that any agreement on such tax subsidies should be handled outside of the spending debate.
Impact on highway and transportation contractors. Highway contractors should mostly be unimpacted because programs funded by the Infrastructure Investment and Jobs Act (IIJA) would continue and be uninterrupted. This includes programs funded by the Highway Trust Fund and advance appropriations for highways, airports, and transit.
Impact on direct federal contractors. For contractors that perform direct federal work like with the Army Corps, Naval Facilities Engineering Command, General Services Admin, etc. it is a little more nuanced. Construction contracts already awarded on a fixed-price basis should be substantially unaffected by the shutdown. However, for most cost-type contracts, time and materials contracts, IDIQ/MATOC/MACC contracts and those contracts that have yet to be awarded, the shutdown will likely suspend operations completely.
AGC breaks it down for you. Be sure to check out AGC’s Guide: What To Know in the Event of a Government Shutdown.
When will it reopen? Senate Republicans need a total of 8 Democrats to crossover and support a short-term continuing resolution to reopen the government, this being since Senator Rand Paul (R-Ky.) has been a consistent no vote. At this point, Senate Republicans need 5 more Democrats to cross over since they have already picked up three with Sens. Cortez Masto (D-Nev.), Angus King (I-Maine), and John Fetterman (D-Pa.). On the other hand, Democrats are insisting on negotiations for an extension of healthcare subsidies in exchange for voting to reopen the government.
Federal agencies have posted their shutdown plans:
- Department of Transportation
- National Telecommunications and Information Administration
- Environmental Protection Agency
- Army Corps of Engineers
- State Department
- Department of Defense
- Small Business Administration
- Department of Veterans Affairs
- Department of Homeland Security
- Department of Labor
- NASA
- IRS
But there is an asterisk. There is a lot of room for discretion from the administration, meaning they could halt projects based on politics. In addition, if the shutdown lasts beyond a few weeks, projects could face delays that require approvals or interactions with other agencies – like environmental reviews and permitting. We have already seen threats of massive staffing cuts by the Office of Management and Budget, and we could see more announcements in the days ahead. Stay tuned, AGC will keep you updated on the latest.