During the 2018-2019 government shutdown, which was the longest in U.S. history, more than 800,000 government workers went on unpaid leave or worked without pay. The shutdown also affected significant numbers of workers who contract with government agencies. Around 10,000 companies had contracts with agencies impacted by the shutdown.
Every year, Congress must pass budget legislation for the next fiscal year, which includes one appropriation bill for each of the appropriations subcommittees. Once Congress passes this legislation, the president must sign it. This legislation provides the funding government agencies and programs rely on. If Congress and the president do not pass these bills before funding runs out, a shutdown occurs. If none of them are signed into law, a full shutdown will occur. If only some of them aren’t passed, a partial shutdown will occur.
During a shutdown, federal agencies must stop spending on all functions deemed non-essential. Essential services and mandatory spending programs continue to function. To prevent a shutdown, Congress may enact a continuing resolution, which provides temporary funding. Eventually, though, Congress needs to pass a budget the president signs into law.
Since 1976, there have been 21 gaps in federal funding with varying levels of shutdown occurring as a result. Most of these events have been brief. The 2018-’19 one was by far the longest, lasting 34 days. The next-longest, which started in 1995, lasted for 21 days. In addition to the 34-day shutdown that began in December 2018, there were also two brief gaps in funding that occurred in January and February of 2018.
Clearly, shutdowns are not uncommon. What a government shutdown means for your government contract staffing agency depends on many factors, including the severity of the shutdown, the agencies you contract with, the services you provide and the terms of your contracts.
Which Government Workers Does a Shutdown Affect?
When federal agencies stop receiving funding, they must cease all functions that aren’t deemed essential. Many workers will be out of work for the duration of the shutdown. Workers whose jobs are considered essential, however, will continue working, although many of them will work without pay.
It’s difficult to say precisely which state and federal government jobs will be impacted by a government shutdown, as it can differ between occurrences. Every federal agency creates its own shutdown plan while following guidance from the Office of Management and Budget released during previous shutdowns. The plans identify which activities should continue during a shutdown and which should not. Many of the jobs deemed essential relate to public safety, including:
- Law enforcement
- Air traffic control
- In-hospital medical care
- Border protection
- Energy grid maintenance
Programs with mandatory spending not subject to annual appropriations, such as Medicare, Medicaid and Social Security, continues as well. If user fees fund a program, such as immigration-related activities funded by visa fees, it will also continue.
During December 2018’s 34-day shutdown, about three-quarters of government agencies had already received funding, so they remained open. The departments of Veteran Affairs, Defense, Energy, Education, Labor, and Health and Human Services stayed open and operated as usual. The Departments of Homeland Security, Justice, Agriculture, Treasury, State, Interior, Transportation, Commerce and Housing and Urban Development had to send some workers home while others worked without pay. That was the situation for 240,000 employees at the Department of Homeland Security, 116,470 at the Department of Justice and 100,000 at the Department of Agriculture. The shutdown impacted agencies in different ways. For example:
- The Department of Agriculture continued to provide food stamps and subsidized lunches but may have run out of funding for the programs eventually if the shutdown had lasted longer.
- Farmers stopped receiving checks to provide support due to declining soybean prices caused by the trade war with China. Those who hadn’t yet applied had to wait until the shutdown ended. The Department also did not issue various economic reports it usually publishes.
Federal government shutdowns may also impact state governments. Many state programs rely on federal funding. In past shutdowns, states have often kept programs funded while waiting to be reimbursed after the shutdown ends.
How Does a Shutdown Affect Government Contracts?
The impact on government contracts varies depending on the situation. If a shutdown occurs or is likely to happen, you should check the terms of your contract and reach out to the contracting officer as soon as possible. This should help you determine exactly how the shutdown will affect your contract and prepare for whatever may occur.
If you have a contract with a fully funded agency, you will still be able to do the work and receive the payment specified in your contract. An agency with full funding won’t shut down, and information technology government jobs, administrative jobs and all other positions in the department will still report for work.
If the agency with which you contract does not have full funding, your contract may be affected. If the work performed under a contract isn’t deemed essential, the government agency may request your contract workers stop doing it for the duration of the shutdown. In this situation, the staffing agency may attempt to reassign the workers. If it can’t find additional work for them and can’t afford to pay them without a new contract, it may be forced to lay them off temporarily.
Some government contracts contain a stop-work clause, which defines procedures for delaying work. If a contract includes such a provision, a government agency might use it to order a contractor to postpone action until the shutdown ends. If an agency uses a stop-work order, contractors may be eligible to receive compensation for the costs of stopping and later restarting work under the contract. Staffing agencies, however, are usually required to take reasonable steps to minimize expenses in such an event. The contractor and the government agency will determine the amount of compensation through negotiations, although this likely won’t occur until after the shutdown ends.
If a contracted job is deemed essential, your staffers may need to continue fulfilling their obligations under the contract. The United States recently passed legislation that ensured that federal employees who worked without pay or were forced to take unpaid leave during the shutdown would receive back pay. While many federal workers still struggled during times they didn’t receive payment, this assurance helped reduce the long-term consequences. A third-party staffing agency for a government shutdown sometimes doesn’t have such a guarantee. Because the government might not reimburse the agency for paying its contract workers during the shutdown, it takes on substantial risk.
A shutdown may also necessitate a change in the contract, either temporarily or permanently. The agency may, for example, require fewer contract workers than usual during the shutdown. In these situations, the two parties can make changes to the contract as needed.
In the most extreme cases, contracts may get terminated due to a government shutdown. Government agencies affected by the closure will not issue any new contracts. Only agencies that received full funding before the shutdown can issue new contracts during the shutdown.
How Does a Shutdown Affect Staffing Agencies and Employers?
Government shutdowns can also impact employers in various ways, including those that contract with the government and those that do not.
One impact of the December shutdown was the unavailability of E-Verify, the web-based system used to confirm that employees are eligible to work in the United States. Many federal contracts and subcontracts contain a clause that requires employers to use E-Verify. Some states also mandate certain businesses use the system, and some companies may be required to use it due to a legal ruling. Other employers may use E-Verify voluntarily. The system works by comparing information employees provide on their Employment Eligibility Verification form, Form I-9, with Social Security Administration and Department of Homeland Security records.
Because the system was unavailable during the 2018-’19 shutdown, many employers, especially government contractors, could not hire new employees. Employers can still prepare their I-9 Forms while the system is unavailable and then submit them when it reopens. There may be a delay in processing submissions directly after the shutdown due to the backlog of new cases created during the funding gap. Because so many government staffing agencies use E-Verify, this can cause challenges for the ones attempting to hire more workers.
Employers may also experience capital challenges as a result of a government shutdown. Some companies rely heavily on government staffing contracts. If those are paused or canceled, they may see a serious dip in revenue. Some firms may also need to provide contract employees without receiving any compensation. These unreimbursed costs can make cash-flow issues even more severe.
There is one effect of government shutdowns that may help staffing firms to make up for lost revenue due to suspended government contracts and other issues. Many federal employees forced to take unpaid leave turn to staffing firms during shutdowns to them pay the bills. Staffing firms may see a slight increase in candidates during a shutdown, especially if they offer temporary employment opportunities. These firms can find these furloughed employees the work they need to make ends meet.
Often, these workers have excellent resumes and may even be overly qualified for certain jobs. They can make great additions to firms’ candidate databases if they’ve held government jobs in the information technology field, health care or other in-demand professions.
How a Staffing Agency Can Prepare for Potential Government Shutdowns
It can be difficult to predict when a government shutdown may happen and even harder to determine how a shutdown will affect your business. However, agencies should still take steps to prepare for potential shutdowns. Having a plan in place can minimize any negative impacts and make the transitions into and out of the shutdown go much more smoothly. Here are some measures agencies can take to prepare.
1. Determine What Could Be Impacted
One of the first things a staffing agency for government jobs should do is determine which contracts a shutdown may affect, using these guidelines:
- Do any of your contracts rely on annual appropriations? If so, they may be affected by a shutdown. Contracts paid for with multi-year funding or that relate to programs funded by users may not be.
- When reviewing your contracts, look for clauses such as the Limitation of Cost clause and the Limitation of Funds clause, which you can find in incrementally funded contracts. The Availability of Funds clause can be found in contracts that are contingent on future fiscal year funding. Seeing which terms your contracts contain will give you insight into how your contract is funded and whether it will continue to receive funding during a shutdown.
- It can also be helpful to look at the contingency plans created by the government agencies you work with, as they may indicate whether the services provided through your contract are considered essential. You can also research which agencies and programs continued operating during recent shutdowns. Keep in mind, though, that plans and conditions can differ from shutdown to shutdown.
Once you determine which contracts may be affected, review them and look for clauses, special provisions and other requirements related to shutdowns. A contract may specify, for example, that you must continue working during a shutdown. Contracts might also allocate risks associated with a shutdown to a specific party. If your contract assigns risk to the government, you should be able to recover expenses related to stopping and restarting work because of the shutdown. Also, if your contract is going to expire near the end of the fiscal year, consider seeking an extension through an extension or option clause if such clauses exist. This will prevent a contract from expiring during a funding gap.
2. Create a Shutdown Contingency Plan
It’s essential to create a shutdown contingency plan ahead of time, so you’re prepared if a shutdown occurs. You may be able to use the contingency plans of agencies with which you work as a guide for creating your own plan. Agency plans may offer guidance for contracts about how to proceed during a shutdown. It’s important to remember that the agencies’ plans may change. Here are a few things to consider:
- Your contingency plan should address what you will do with workers who are off the job during a shutdown.
- Create a plan for determining if and how workers will be paid during a funding gap and seek ways to minimize the impact on your agency and its contractors. Establishing a procedure for finding new, temporary assignments can help.
- Have a plan for managing the potential influx of government employees seeking temporary work during a shutdown.
- An important part of your plan will be your communication strategies. You’ll need to quickly and efficiently get into contact with your contractors and keep them up to date on the status of their jobs. Miscommunications or delayed communications could result in additional expenses and complications.
- Create a system for documenting expenses, activities and communications during a shutdown. Keeping thorough records may be important in receiving compensation for your costs when the government reopens.
Your plan should also address practical issues such as ensuring workers deemed essential still have access to government buildings during a shutdown. Figuring out details such as this will require collaboration and communication with the government agencies you contract with.
3. Contact Your Contracting Officers
During a shutdown, you may not be able to connect with your contract manager if they have been furloughed. Reach out to your contract officer immediately if you haven’t already to discuss shutdown procedures. They should be able to provide you with insights about how to proceed in such an event. Even if you have already talked with your contract manager about this topic, it can be helpful to check in regularly to make sure nothing has changed and to verify information. If it seems a shutdown may occur in the near future, reach out to your contract manager as soon as possible to see if you can obtain any guidance from them.
How Staffing Agencies Can Bridge the Gap
Staffing agencies in a government shutdown can play a crucial role in aiding affected workers to bridge the gap in pay caused by the shutdown. During a closure, many affected workers seek temporary work to make ends meet while they are out of work. Staffing agencies may have the knowledge, resources and connections to find government employees the temp job they need.
Staffing agencies have relationships with clients looking for temporary, contingent workers for a specific project or to augment an existing team. Contingent workforce programs give companies the flexibility to adjust the size of their workforce as needed. They also provide ideal opportunities for workers looking for flexible, temporary work.
The relationships government jobs staffing agencies have with these companies enables them to quickly find placements for furloughed workers. If they have an extensive database of consultant profiles, they can also quickly replace employees when they need to go back to their government jobs once the shutdown ends. If a shutdown caused the cancellation of their contracts, they could stay on for longer. The staffing agency can land them a new assignment once the first one ends.
If an agency offers staff augmentation services, they can assess a company’s staff to discover gaps its talent can fill. This lets the staffing agency find assignments for furloughed workers more quickly while improving the effectiveness of clients’ teams.
Working With the Computer Merchant
At the Computer Merchant, we connect companies that need IT professionals with skilled individuals looking for work. We provide a full portfolio of staffing services and workforce solutions to clients across various industries. Our state-of-the-art technology matches candidates with jobs, including information technology jobs in the government sector, that are ideal for their skills and experience.
Our database contains more than 10 million consultant profiles across all 50 states and in the key labor categories of technology, engineering, professional, industrial and administrative talent. Our database continues to grow at an average rate of more than 40,000 profiles every month. The scale of our database, along with our technology and expertise, lets us match employees to the right opportunities and find our clients the top talent they need.
As one of the premier government staffing firms, we have experience finding IT professionals for government agencies to meet their workforce requirements, so we have an understanding of how government contracts work. In addition to government IT staffing, we also provide various services that can locate work for furloughed employees. We serve as a government healthcare staffing company and temp staff agency for government shutdowns.
Whether you’re looking to add IT staff to your team or you’re an IT professional looking for the perfect opportunity, the Computer Merchant can aid you. We provide rapid, cost-effective, precise, compliant delivery of contractor, full-time employee and project-based staff and resources. We’re a certified veteran-owned business and hold the highest Department of Defense clearance allowed. Our complete portfolio of staff and workforce solutions find the talent our clients require and connect job seekers with opportunities ideally suited to their skills and experience.