Congress has a 3-month CR, but it’s not all good news for contractors

Now that the three-month continuing resolution looks like what we’re going to get, contractors wonder whether that’s good news or bad news. Relative to a lapse in appropriations, it’s probably good news, but delayed regular appropriations still have consequences. Federal sales and marketing consultant Larry Allen joined the Federal Drive with Tom Temin to discuss more.

Interview transcript: 

Tom Temin Now that the three month continuing resolution looks like what we’re going to get, contractors wonder whether that’s good news or bad news. Relative to a lapse in appropriations, it’s probably good news, but delayed regular appropriations bill have consequences. More now from federal sales and marketing consultant Larry Allen. I think last week you were handicapping this kind of playing out the way it did with the Republicans blinking on the issue of illegal voting, illegal aliens voting. So what does it mean?

Larry Allen Well, Tom, I think in the short term, it means that we have an open government, a government that will surprise start FY25 under a continuing resolution. But you’re right, that’s been what I’ve been predicting for about the last ten days. It was just really a question of when we were going to get there. Everybody kind of knew what the path forward was, but you had to clear out a lot of the ideological underbrush before you got there. So that’s good news. We’ll have an open government. The downside, of course, is, you know, continuing resolution is a continuing resolution. Most companies and government agencies should be familiar with that by now. Of course, no new project starts with appropriated dollars. Contractors in particular that have annual maintenance agreements, leases, things of that nature really want to check the details of their contracts to make sure that they’re going to continue to get paid in this situation and how they’re going to get paid. And if it’s not clear in the contract and it’s definitely worth a discussion with the contracting officer, not the Corps, not the contract specialist, but the actual contracting officer, who is the only one who can say with the affinity whether or not you’re going to get paid, short term, long term, well?

Tom Temin Who knows? That’s right. And the idea of contacting your contracting officer relates to the idea that the government issued no guidance on shutdown to federal agencies as of even now. And I got no answer from Office of Personnel Management when I asked last week. Are you notifying agencies of what to do? OMB, you know, nothing coming there. So the government almost had to have a continuing resolution, right?

Larry Allen Well, I think it’s mind blowing that there was no official guidance put out. You don’t want to get too blasé about this just because we’ve been through it before. Technically speaking, groups like OPM and the Office of Management and Budget have directives that they’re supposed to have agencies follow and go through just in case this happens. And I’d be willing to bet that even in a lack of guidance from these centralized organizations, that a number of individual offices kind of did start to go through their checklist because they’re mandated to do that. And if they didn’t do it and then we did have a shutdown, then they’d get called on the carpet. Ironically, they get called on the carpet, not just by their congressional overseers, but by the people in the three letter agencies that didn’t issue the guidance they were supposed to issue.

Tom Temin Right. And I know from a couple of executives that said they simply set aside money for those continuing types of services, cloud computing and so on, or software as a service so that the agency wouldn’t come to a halt. Although I think it’s probably fair to say that the vendors, the big cloud providers, for example, would probably carry the government for a couple of months until appropriations came through or the C.R. came through. I think it’s unlikely that they would shut off their access to their cloud facilities, knowing the government as they do.

Larry Allen Well, I think that’s accurate. I think, you know, most companies would continue to honor contracts, particularly, you’re not in default for nonpayment on day one when you’re late. So which is good for all of us. But, you know, I think it’s an issue to any company of any size. Tom is going to have to be concerned to some degree about cash flow and when and if they’re going to get paid. And certainly if you’re a smaller business where cash flow tends to be prominent in your business design, you know, you might want to do the right thing and ensure that the government gets to keep the service that you’re providing. On the other hand, you do want to have some assurance on whether and how you’re going to get paid for that.

Tom Temin We’re speaking with Larry Allen, president of Allen Federal Business Partners. And you mentioned contracting officers a moment ago. And on another area of doing business with the government, the contracting officers are really kind of critical. And that is it varies from CEO to CEO how closely they adhere to technicalities like clauses that may be left out of a contract, but nevertheless are legally required. And what happens to contractors?

Larry Allen Tom, I do a lot of work in the compliance field. I’m not an attorney, as you know, nor do I give legal advice. But I still there’s a lot to be done in the compliance field and. Terms of helping companies stay on the right side of the compliance ledger. And as a result of my work, I’ve had an opportunity to see that, you know, the great Washington DC answer on whether or not something applies is it depends and it can be very frustrating for contractors. This was driven home recently by the Government Accountability Office in a decision they rendered on a contract protest company said that, hey, we didn’t mean to have our sam.gov registration lapse and technically the government contracting officer didn’t put far clause in it that said we had to have a current Sam registration. And despite a whole bunch of case law to the contrary, Tom, GAO bought the the company’s argument. They said, hey, the government left out that far clause and the before because they left it out. You can’t really read that into the contract. And so therefore, GAO ruled in favor of the protester and directed the agency to go back and do the procurement again. That’s going to sound mind blowing to lots of companies that have lost out on opportunities precisely for the same reason we let our Sam registration lapse. We didn’t know that. Put aside for a minute a Sam dock of registration only important if you want to get paid. So kind of important to make sure you keep that going. But you know, that is just another example of of inconsistency and how that in and of itself works within the relationship of the Christian doctrine of long held government contracting principle that agencies apply across the board. And least 99 and 44/100th percent cases where they read in contract clauses that are supposed to be in a solicitation even if they were not technically included.

Tom Temin Right. Those clauses are the ones that, in the legalese term are operations of law that have to be there. And even if they’re not there, they still have force.

Larry Allen That’s exactly right. So I think if you’re a contractor and you’re not sure or whether or how something applies to you in a specific contract, get a read on that contracting officer on how that’s going to apply. And unfortunately, if you’re a contractor that has lots of business, you can’t take the definition of one contracting officer to the bank for all the government. You’re going to have to keep asking contracting officers when you run across those things that you’re not sure of in every instance, even if you’re doing business inside the same agency. Tom, we’ve seen that contracting officers inside the same agency have discretion. They read clauses applying differently. The most important thing that companies can do get it in writing and make sure that you’re asking plenty of questions. Don’t think that there’s anything is a stupid question. And don’t think just because you’ve asked the question five times before that the answer is going to be the same on number six.

Tom Temin And keep your Sam registration up to date.

Larry Allen That avoids a lot of problems.

Tom Temin Larry Allen is president of Allen Federal Business Partners. As always, thanks so much.

Larry Allen Tom, thank you. And I wish your listeners happy selling.

Tom Temin We’ll post this interview with federalnewsnetwork.com/federaldrive. Subscribe to the Federal Drive wherever you get your podcasts.

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