As The Unites States government narrowly escapes a shutdown many entrepreneurs can breathe a little lighter, but we’re still left wondering how it would affect their business. In a previous post, we explained What a Government Shutdown Means for Contractors. In a shutdown, the federal government curtails agency activities and services, ceases non-essential operations, furloughs non-essential workers, and retains only essential employees in departments that protect human life or property.

Would My Existing Contracted Work be at Risk?

A shutdown should not halt any fully funded contracts. Such as Firm Fixed contracts or cost-reimbursable contracts with approved estimates. However, if your contract requires access to a federal facility that is closed or engagement with Government personal that are furloughed, then you may receive a notice to stop work. Its important to communicate with your CO and COTR to better understand if your contract is at risk. Additionally, the federal government cannot award new contracts, modify them, or exercise any options during the shutdown.

If you are a subcontractor, communicate with the prime contractor. Find out what happens during a shutdown, whether work should continue, and especially what happens to you and your team if and when the prime contractor receives a stop-work order.

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Impacts on Small Business

Small businesses can be hurt by a shutdown in at least two ways:

  1. The federal government spends tens of billions of dollars on contracts with small businesses including  nearly $163 billion, or 26.5% of all contract dollars, in FY2022. During a shutdown no new contracts will be awarded.
  2. A shutdown can halt operations at the federal Small Business Administration (SBA).

What Disruptions Would SBA Programs Experience?

For the most part, life continues as normal for SBA program with a few exceptions. When a shutdown occurs, new loan approvals from the SBA come to a halt and the government is not be able to award new contracts, issue modifications, or exercise options that are dependent on the funding that has not been appropriated. Existing contracts (e.g., cost-reimbursement contracts) may be funded incrementally.  Impacts among Small Businesses vary but most are slow to recover.

Coley has over 20 years’ experience helping thousands of companies accelerate success. Our consultants and coaches support our clients prepare and navigate the government contracting landscape. Join our online FedMap community to connect with enthusiastic government contractors and share your experiences, learn from others and find teaming opportunities. Contact us today by email at, by phone at 210.402.6766 or  schedule a call at a time convenient for you.

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