Federal government shutdowns have become an unfortunate recurrence in the contracting landscape. While attention is paid to how businesses can operate during a shutdown, the period immediately following a reopening can present equally complex navigation. Contractors are often required to restart performance quickly, manage workforce transitions, and confirm contractual obligations—occasionally with limited clarity around funding or timelines.
For contractors and subcontractors working with federal agencies, navigating the aftermath of a shutdown requires an informed and strategic approach. Understanding where risks typically arise can help organizations resume operations effectively while avoiding compliance issues that may surface later.
Immediate Operational Considerations After a Shutdown
When agencies reopen, pressure to resume performance can be intense. However, moving too quickly without confirming key details may expose contractors to unnecessary and avoidable risk.
Initial priorities often include:
- Confirming whether and when work is authorized to resume
- Reviewing any stop-work orders, agency guidance, or contract modifications issued during the shutdown
- Aligning internal teams on performance expectations and timelines
- Coordinating communications with subcontractors and partners
Clear internal communication is essential at this stage. Contractors should ensure employees understand whether work may resume immediately or remains paused, particularly to avoid wage and hour issues or misaligned expectations. Employment-related considerations frequently intersect with contract performance decisions during this phase, so attention must be paid in real-time.
Verifying Contract Status, Funding, and Scope
One of the most critical post-shutdown steps is confirming the status of contract funding and scope. Not all contracts are funded in the same way, and reopening does not necessarily mean that full funding has been restored.
Contractors should review:
- Current funding levels and limitations
- Any changes to scope, milestones, or deliverables
- Direction from the contracting officer regarding priorities or sequencing of work
- Whether performance beyond certain limits could be considered “at-risk”
Understanding where a contract sits within its broader lifecycle is essential. Warner PLLC’s overview of the lifecycle of a government contract provides helpful context for how post-shutdown activity fits into procurement, performance, and closeout stages. Confirming expectations early can help contractors avoid disputes related to unauthorized work or delayed payments at a later time.
Workforce and Employment Compliance Risks
Shutdowns can disrupt staffing plans, leading to furloughs, layoffs, or modified schedules. When operations resume, contractors need to carefully manage the transition back to active employment.
Key considerations may include:
- Properly recalling furloughed employees
- Reviewing pay practices, classification, and overtime compliance
- Addressing use of PTO during the shutdown period
- Ensuring documentation aligns with applicable wage and hour laws
Employment compliance risks can still exist well after a shutdown ends, particularly if staffing decisions were made under pressure and uncertain conditions. Reviewing employment practices following a shutdown can help reduce exposure to future disputes or enforcement actions.
Managing Delays, Claims, and Cost Recovery
Even after operations resume, shutdown-related delays and increased costs may continue to impact overall performance. Contractors should take steps to document how the shutdown affected their contracts, including schedule disruptions, increased expenses, or obvious inefficiencies.
Practical steps to prevent issues:
- Tracking shutdown-related costs and delays in real time
- Preserving written communications with government personnel and subcontractors
- Reviewing notice requirements and timing obligations under the contract
- Evaluating whether claims or equitable adjustments may be appropriate
In some cases, contractors may also need to assess whether a termination for convenience or other contractual remedies could apply. Certain provisions may factor into post-shutdown contract strategies, so early legal guidance can help contractors determine the most effective path forward while preserving rights and minimizing risk.
Planning Ahead for Future Shutdowns
Given the recent shutdowns, contractors may be reevaluating how prepared they are for future disruptions. While shutdowns are outside a contractor’s control, proactive planning can help reduce operational and financial strain and future stress.
Forward-thinking strategies can include:
- Building flexibility into staffing and subcontracting arrangements
- Strengthening internal documentation and cost-tracking processes
- Reviewing contract portfolios for funding vulnerabilities
- Considering diversification strategies to reduce reliance on a single funding source
Embedding shutdown preparedness into a broader risk management strategy can help organizations respond more efficiently when unexpected disruptions occur.
Guidance for Contractors Navigating Post-Shutdown Challenges
The period following a federal government shutdown presents a unique set of legal and operational challenges. From resuming performance and managing workforce transitions to addressing delays and documentation, contractors must balance speed with thoughtful and considered compliance.
Warner PLLC regularly advises government contractors and subcontractors through all phases of the contracting lifecycle, including post-shutdown recovery, claims, and risk management planning. With experience across government contracts, labor and employment, and dispute resolution, our attorneys provide practical, strategic guidance tailored to each client’s circumstances.
For contractors in need of informed legal support after a shutdown or future planning, Warner PLLC is ready to help navigate the path forward.
