How will the government shut down affect Alaska contractors?
Considering all the moving parts and implications of the government shutdown what should Alaska contractors focus on now. In short, brace yourself, what is happening now is not a one-off situation; this is ground-zero for the foreseeable future.
Sequestration happened in March. During that time federal job losses averaged 9,000 per month, or 72,000 jobs lost. We anticipate that federal payroll decline will escalate.
We expect continued:
1. Reduction in new contracts;
2. Changes in administration contract administration on existing contracts;
3. Changes in procurement type;
4. Increase in Bid Protest activity; and
5. Increase in CDA Claims activity
Cost and need will drive new contracts. The government will likely focus on existing programs over long-term projects. On vehicle usage, conservatism should be anticipated as the rule; the Fed has lots of flexibility for greater restrictions – so dot the I’s and cross the T’s. You can expect a frequent use legacy indefinite in quantity contracts (IDIQ) and a desire to lock contractors in to Firm Fixed Price contracts.
Alaska Contractors can expect the government to offload risk to the contractor community. Alaska Contractors will need to manage this increased risk. Alaska Contractors should approach opportunities with a focus on discipline and rigorous risk evaluation. Fully-funded contracts and phases should be safe; forward phases and contract options are at risk and should be re-negotiated as soon as possible.
The same applies to your IDIQ task-orders. The funded task or delivery orders should be safe. Those that are not are at risk. You should determine 1) whether your contract relates to a sequestration exempt program; 2) whether it is impacted by any new congressional budget, 3) whether it is fully or incrementally funded, 4) when the agency anticipates exercise of options or issuance of task orders, and 5) what changes are planned.
With scarce contract opportunities; we expect an impact on Bid Protests and CDA Claims. The GAO shutdown creates doubt that protests will trigger an automatic stay. If the GAO protests fails to stop disputed contracts, you may reconsider rolling the dice in more expensive litigation at the U.S. Court of Federal Claims. However, if you decide to engage the GAO; the Agency has issued guidance to federal contractors about how bid protests and related filings will be handled during this period.
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