Further Danger for Contractors? Round Two of the Budget Crisis Begins

  |  January 29, 2019

Contractors, civil servants, and proposal professionals breathed a sigh of relief on Friday, January 25 when the president signed legislation that would reopen closed agencies. Now the question before everyone in the community is this: What happens next?

Who does it Affect?

Before we answer this question, it is important to understand that this crisis also has side effects for DoD programs. This is because: (1) some DoD programs require input or coordination from interagency groups or civilian agencies that were closed before moving forward; and (2) the toxic environment has contributed to slowing the release of some DoD solicitations.

The Situation

A bipartisan Congressional committee is assigned to come up with a compromise acceptable to both sides in the next three weeks. The problem facing the committee is that the argument is now framed as a zero-sum game: either (1) to provide $5+B for a border wall or (2) to provide no funding for a border wall. Based on the present options, therefore, one side would win and the other side would lose.

What Happens Next?

Civilian Agency Procurement Plans – The procurement personnel will now begin to revise their schedule for RFP releases, and the finance personnel will figure out how to get the civil servants and contractors paid. The procurement planning may be slowed down by another short Continuing Resolution (CR), given the amount of work needed to bring the two sides together. There will probably not be another shutdown, because this one hurt both parties too much. However, reaching a compromise in this timeframe is at risk because of the hardline positions by both congress and the president.

Outcome

If the bipartisan committee can find an acceptable compromise by the February 15 deadline, the slowdown on civilian RFP releases is only 3 or 4 weeks. If there is another short CR, then we might see a slowdown of an added 2 or 3 weeks. However, all bets are off because, as yet, neither side has shown a readiness to add new elements to the discussion to break the impasse.

So it remains to be seen what will transpire next.

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