The U.S. Government has reopened, at least temporarily. What does that mean for you as a government contractor? Well it depends on the agencies you perform work for and your particular contracts. As only a portion of the Government was affected by the latest shutdown, some agencies never closed. For contractors lucky enough to be working for these agencies, there was no interruption in activity or payments.

For those agencies affected by the shutdown, there is a spectrum of possible impacts on contractors, from the best case scenario in which your bills were paid late, but otherwise it was business as usual, to you had to stop work and lay off employees.

Set out below is suggested guidance for affected contractors based on several different potential scenarios from the best case to the worst case. The type of contract may also affect the actions you might take. Similarly, your courses of action might also be impacted if an option was not exercised in accordance with your contract or your contract expired. Note that more than one of these scenarios may impact any particular company.

Neither your contract nor your work under the contract was impacted by the shutdown. However, your invoices were paid later than required pursuant to the Prompt Payment Act (31 U.S.C. § 3901 et seq.).

• You do not need to do anything. The payments, once paid, should automatically reflect Prompt Payment Act interest. The current prompt payment interest rate is 3.625% for January 1, 2019 through June 30. 2019. If the invoices do not include the right amount of interest, you have the right to submit a request for equitable adjustment (REA). Whether action is warranted, however, will depend on the dollar size of your invoices. In some cases, rather than a formal REA, it may be better to simply submit a short letter to the contracting officer requesting the additional payment.

There was no obvious effect on your contract, in that you were able to continue working. However, some of the government personnel who you needed to interact with were not available or your documents, once submitted, took longer than normal for review and approval.

• If the financial or time impact might be significant, then at a minimum, you should send an official notice to your contracting officer that there may be a cost or schedule impact. At this juncture, you do not have to provide the specifics of the financial or time impact, however, you do need to notify the Government.

• Calculate all costs associated with the additional or extended efforts.

• Estimate the costs associated with the delays in government responses.

• Estimate the time impact of the delays in government responses.

• Once the total impact has been determined, submit the REA to the contracting officer.

You had to stop work on your contract. This stop work may have been caused by the contracting officer sending out an official letter stopping work, or it may have been caused by a lack of access to perform the contracted work. While the rationales in your REA may be different, you still need to perform the same steps as described in the scenario discussed directly above. In fact, given the potential for another shut down in less than 21 days, it is imperative that the notice of the REA be sent as soon as possible. According to the applicable regulation in the Federal Acquisition Regulations (FAR 52.243-4 Changes), the notice is required not later than thirty (30) days after the cause for the REA is known.

The Changes clause is only one of several potential FAR clauses that may be used for a stop work order. If you received the notice to stop work, then either the FAR 52.242-14 Suspension of Work or the FAR 52.242-15 Stop Work Order Clause may have been used. However, there are differences in what and how you recoup your costs under the two different FAR Clauses. And the Changes clause also has differing standards of proof and allowability of costs. It should also be noted that some relief is also available to FAR Part 12 contractors. However, they are subject to a different standard to determine whether you may get either cost or schedule relief. See FAR 52.212-4.

Finally, it is always better to make the notification of a potential impact and ultimately deciding against submitting the REA and then determine that there was no impact, rather than to fail to provide the required notice to the contracting officer and then find out that there was an adverse impact. In the former situation, you can simply never submit a REA or as a courtesy send a short note to the contracting officer indicating that the impact was not significant enough to justify the submission of a REA. In the latter situation, if the contracting officer decides to hold firm to the notice requirement, your only recourse may be to file a claim and hope that either the contracting officer waives the notice requirement or that a judge waives the notice requirement. Note that the case law in this area has resulted in decisions on both sides of the notice requirement and the final decision is based solely on the facts of the particular case. However, if the notice requirement is not waived, then you may not be entitled to either cost or schedule relief, although force majeure usually prevails with regard to schedule relief.

It should be also noted, that unlike in previous government shutdowns, the Government may be entertaining different elements of the costs incurred by contractors as a result of the shutdown. Nonetheless it is very unclear at this juncture what if any costs incurred by a contractor, such as paying employees to stand by, that the Government will ultimately pay for.

Contact Johana “Jody” Reed for additional information and guidance on these issues.