Many questions have come our way about the impact and management of business development pipelines in an environment governed by budget uncertainty and the expected passage of a months-long Continuing Resolution (CR).
By way of update, this afternoon, the U.S. House of Representatives passed the FY2017 continuing resolution on a vote of 326-96. The bill, which the Senate is expected to pass tomorrow or Saturday, extends government funding at current funding levels until April 28, 2017.
The stopgap bill, one of the longest continuing resolutions in the last 40 years, funds topline discretionary defense and non-defense spending at $1.07 trillion in line with the budget caps established in the Budget Control Act of 2011 and covers all federal agencies since none of the 12 required appropriations bills have been signed into law.
The bill includes $170 million to address the Flint Water Crisis and just over $10 billion in uncapped war funds divided between DoD ($5.8B) and the State Department ($4.3B) to combat ISIS and related activities.
The CR also includes a procedure for expedited processing of a waiver of the 7-year out of uniform requirement for Retired General James Mattis, who is President-elect Trump’s nominee to head the Defense Department, but does not grant the waiver itself and that will be address in the 115th Congress.
Impact on Contractors
As noted above, a continuing resolution of this length may create funding issues for some agencies and have a resulting impact on contractors. Here are some of the things you might expect to see as agencies deal with this long term CR:
The CR may create funding “gaps” in incrementally funded contracts. Talk to your contracting officers to see how or if this will impact you.
New contracts and new program starts, particularly those that require new money are generally barred under continuing resolutions.
Programs and contracts moving into a new phase should fare better as generally agencies should have been preparing for the effect of the CR but it is important that you work with your contracting officer to determine the impact on individual contracts.
Option years can be exercised but not if they require new money or extend beyond the period of the CR. This may give contractors an opportunity to renegotiate option years.
The moral of the story is be prepared and document the impact the CR is having on you. The more you can understand about the specifics of how your contracts may be impacted by the CR the better able to navigate these next 4 ½ months you’ll be. As issues arise related to any of your contracts, please let me or Rich know what’s happening and how we can help whether strategically or through individual engagement with agency acquisition officials.
Hettinger Strategy Group LLC