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richardbeutel@cyrrusanalytics.com

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Continuing Resolution's Impact on Contractors

December 15, 2016

 Status of FY2017 Continuing Resolution

  • Governing by CR has become the norm, rather than the exception.

  • The current CR continues government funding at current 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

  • Covers all federal agencies since none of the 12 required appropriations bills have been signed into law. 

  • 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.

Impact on Contractors

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:

  • Under a CR, funding is available only to fund ongoing projects and activities, with very limited exceptions.

  • The CR may create funding “gaps” in incrementally funded contracts.  You may also see larger contracts broken into smaller increments.

  • New contracts and new program starts, particularly those that require new money are generally barred under continuing resolutions, unless specifically authorized by Congress. 

  • Potentially more use of GSA Schedules, as a way around “new start” restraints. 

  • Work that has been awarded, but not funded or started, could be impacted.  Partial funding of some projects is a likelihood.

  • 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. 

  • Despite all of this, billions of dollars in contracts will be awarded during the CR timeframe

What You Should be Doing

  • Be hands on as it relates to your existing work and set achievable revenue targets.

  • Understand the status of each of your existing contracts

    • Which ones are scheduled to renew or expire before the end of April?

    • Create a spreadsheet and plan to talk to your contracting officer at each potentially impacted agency to determine what to expect with each contract

  • Review new and pending opportunities and determine acquisition strategies, including possible use of GSA Schedules, to move forward during CR.

  • Communicate with your team leadership.  There will be a revenue impact as a result of the long-term CR and the best way to minimize it is to set proper expectations.

  • Explore opportunities to renegotiate any options or unfavorable terms to your advantage.

  • Connect the dots between agency need, contract vehicle and trusted relationships and you will have the best chance to see increased revenues during a CR.
     

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