Preparing for a Potential Government Shutdown

To the ACEC Community,

We want to update you on the state of play in Congress on negotiations over federal spending and the prospects for a looming government shutdown. The federal fiscal year ends on September 30 and none of the appropriations bills for FY 2026 have been enacted into law. Without congressional action on a short-term stopgap funding measure, federal agencies that rely on annual appropriations will shut down on October 1.

This morning, the House passed a “continuing resolution” (CR) to maintain current funding levels for seven weeks, through November 21, on a nearly party-line vote of 217-212. This afternoon, the Senate failed to secure the 60 votes necessary to advance the House-passed bill. Democrats in both chambers opposed the bill and have asked for a number of health care provisions to be included in the package, which Republican leaders have rejected. The current impasse raises the prospects for a lapse in appropriations and government shutdown.

The House and Senate are scheduled to be in recess for much of next week in recognition of Rosh Hashanah, so no additional votes are expected until later next week.

While lawmakers attempt to navigate a path forward, it is important for ACEC member companies to review your government shutdown preparation plans, especially companies who do business directly with the federal government. The White House Office of Management & Budget website usually includes an FAQ page and a compilation of individual agency shutdown plans. Those contingency plans should be posted on the OMB website if/when they are made available.

Typically under a shutdown, “nonessential” government and congressional staff who are paid by federal appropriations are sent home without pay. This includes agency contracting officers, grant evaluators, program directors, and almost all staff. Contracts and programs are delayed or halted, and for new contracts and grants, even if an award was announced or expected, the staff are not allowed to work until a CR or full-year bill is enacted. Government employees who are essential to life and safety, such as military members, air traffic controllers, Transportation Security Administration officers, and law enforcement officers, must work without pay until a CR or full-year bills are enacted. 

The Trump Administration will have broad latitude to determine which personnel are deemed essential and must work without pay. It is not clear at this time how they might approach the optics of a shutdown and how to manage the federal workforce and other administrative decisions.

Transportation programs are treated differently during a shutdown because many accounts receive funding outside of the annual appropriations process. Employees at the Federal Highway Administration and the Federal Transit Administration will continue to work as normal because these programs are funded through the Highway Trust Fund and advanced appropriations under the IIJA. A lapse in regular appropriations does not affect them. That said, federal resource agencies will not be able to process environmental or other regulatory reviews, which potentially could impact some transportation projects as well other critical infrastructure sectors. Federal Aviation Administration (FAA) personnel essential for public health and safety, such as air traffic control services, would continue to work without pay. In addition, airport grants and other programs funded through advance appropriations in the IIJA could proceed. Similarly in the water sector, some grant programs are funded under the IIJA but the agency staff and many core functions are reliant on annual appropriations. 

General Tips for Federal Government Contractors

1. Talk with your government customers - can you continue to work if there is a shutdown? If you can continue to work and your main government point of contact is unavailable, who do you contact for questions and issues during the shutdown? 

2. Review your contract for any milestones in the next two months. Does a deliverable need to be accepted? If so, who will accept it? Is there an option year that needs exercised in the next two months?  

3. Document business decisions made because of an actual or potential government shutdown. Without proper documentation, a request for equitable adjustment (REA) is less likely to be approved.  

4. Submit all invoices for work completed to maximize your cash flow. Consider contacting your financial institution to discuss cash flow concerns and potential loan options. 

If you see a disruption in the marketplace that is critical to your business, please alert ACEC. 

Points of Contact:

Matt Reiffer, Vice President and Advocacy Counsel  

Bradley Saull, Vice President for Federal and International Programs

We will keep you updated on developments. 

Steve Hall

Executive Vice President

The American Council of Engineering Companies

1400 L Street NW, Suite 400

Washington, DC 20005