A Handy Guide to Federal Government Shutdown:
Federal Contractors—Non-FY 2011 Funds.
Contracts paid for with other than fiscal year 2011 money are still in operation, but invoices might be paid late because of a shutdown. The government might owe a little more if the payment is late. A contractor would generally be required to continue working and to bill the government according to the terms of the contract.
Federal Contractors—FY 2011 Funds.
A contractor may have to shift employees to avoid working on a project that is funded with fiscal year 2011 money. Work that has already been funded or receives money through revolving funds can continue. Although Congress has retroactively paid furloughed federal employees in the past, no such obligation exists for contract employees and Congress has never seen fit to do so. Also, the government is banned from accepting voluntary work, so contractor employees cannot be permitted to work if the funds do not exist.
Products Versus Services.
Companies selling products will face changes in when and where they would make their deliveries, but the government may pay a number of different ways, from quarterly to jobs done per day. Contractors should talk with their Contracting Officers about what will happen and share their concerns. However, Contracting Officers may not have any answers because the decision is being made by someone far above their level.
Most fixed-price contracts are funded at the time the contract is formed. Agencies also can continue to contract work for (1) Activities they have statutory authority for, such as the Defense Department's authority to contract for needed food, fuel, and medical supplies, (2) Specific duties imposed on an agency, such as paying Social Security benefits, which are not funded through annual appropriations, and (3) Emergencies involving the safety of human life or the protection of property. However, even under these conditions, Contracting Officers could temporarily stop contract work if their agencies do not have federal employees to open office buildings or monitor contract performance.
Cost Type Contracts
Most cost-reimbursable contracts receive funding only as parts of the contract are completed and many of them include a "limitation of funds" clause, which acts as a de facto stop order in the event funds are not available. Expenses incurred on those contracts after a shutdown may not be immediately, or even ultimately, funded by the government.