Congress has been criticized for kicking the can down the road when it comes to federal spending, but as the government shutdown clocks ticks closer to midnight — and agencies dust off their contingency plans — some are wondering if that kicked can might be the best option right now.
The continuing resolution currently funding the government expires at 11:59 p.m., April 28. Office of Management and Budget Director Mick Mulvaney said April 21 that the administration did not expect a lapse in appropriations, however “prudence and common sense require routine assessments to be made.”
OMB officials said the agency planned to hold a meeting or conference call a week out from the deadline, “regardless of whether the enactment of appropriations appears imminent.”
This will be the third such call in fiscal 2017. OMB made similar calls in fiscal 2014 and 2016.
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Agencies had yet to make any updates to their contingency plans as of Friday afternoon. Agencies are required to review their plans every two years and make necessary changes. Several updated their plans last year.
“Given the recent updates, we are not expecting many agency changes,” OMB said.
President Donald Trump said during an April 20 press conference with the Italian Prime Minister that he wanted to get support for both a funding bill and a new health care bill.
“There’s a great plan. And this will be great health care. It’s evolving,” Trump said. “As far as keeping the government open, I think we want to keep the government open. Don’t you agree? So, yeah, I think we’ll get both.”
When it comes to wishlists for the last half of 2017, financial and contracting experts say perhaps the most agencies can hope for from Congress is the status quo.
“I would expect something sort of neutral to come out just to at least get through the year, because if nothing else, I don’t think either party wants to be blamed for another shutdown,” said Michael Fischetti, executive director of the National Contract Management Association. “Kicking the can, I think that might be the best we can hope for. There are still a lot of issues and concerns and mission priorities that aren’t being addressed and that sort of thing.”
Putting the “continuity” in a continuing resolution is something Doug Criscitello, managing director of Grant Thornton’s Public Sector, and former CFO at the Department of Housing and Urban Development, said is usually what happens when a full-year CR is in place.
“It’s just not an area where you’re going to get surprised,” Criscitello said. “It can happen. There are some areas that can prove to be challenging where there are some uncertainties, but a CR is a pretty blunt way to fund government. It’s just sort of do what you did last year, with a few tweaks. That’s what the term means, continuing resolution. We’re continuing — at least the way I interpret them — it’s you’re continuing your spending activities from last year into this year.”
But what happens if there are surprises? Or if Congress can’t agree on a health care bill? Will lawmakers decide to fund agencies at a level that reflects President Donald Trump’s 2018 budget?
“I think the $64,000 question is will the Congress go along with that vision,” Criscitello said. “The reorg plan is all fine and good, but does the Congress go along? Congress has the power of the purse. The Executive Branch can try all it wants to reorg government, but if the Congress isn’t a whole partner in that endeavor, it will not succeed.”
If Congress decides to appropriate money to some agencies at significantly lower than expected levels, Criscitello said one of the biggest threats to agencies will be furloughs or even reductions in force if the cuts are that bad.
“If it comes down to something like … if it’s a severe cut, and it is many days, that is just devastating for the federal workforce,” Criscitello said. “At that point you cross some threshold where anyone who can leave and go to a job in the private sector probably does, or goes to an agency that has a more reliable funding stream.”
Furloughs are demoralizing, Criscitello said, and being furloughed for a significant number of days can force you to question your value or chosen profession.
“It’s a big problem,” Criscitello said.
Deferred maintenance is another issue for agencies if they don’t get anticipated funding. For example, in August the National Park Service said it had $11.9 billion worth of deferred maintenance.
On Friday a tweet from one of the alternative NPS Twitter accounts said that number could get above $15 billion by 2021.
— NastyWomenofNPS (@NastyWomenofNPS) April 21, 2017
Too much money can also be a problem. For agencies that handle a lot of grants, that means you’ve got a bundle of money you’ve been directed by Congress to spend, and grants are not as simple as buying boxes of pencils or extra desks.
“It could be a grant that’s subject to certain eligibility standards, so you’d have to put a notice of funds availability out to the entire country,” Criscitello said. “Just to get the notice out there and give folks an opportunity to respond, you’ve gotta think a couple of months for that would be expediting it in a big way. You’d have to review all of the applications that were received and then make funding decisions. But that’s a lot to do in five months. That would be challenging to do if the full-year funds were made available on Oct. 1 of last year.”
That sense of insecurity of not only what sort of funding an agency will receive, but when, can spread outside the government, Fischetti said.
Contractors end up with salaried employees looking for work while they wait for a government award — which are often delayed, Fischetti said. Combine that with more award protests and less competition because there are fewer companies “willing to step into that kind of environment,” and it creates a mess of issues, he said.
“It just plays havoc with the ability of the agencies to carry out their duties,” Fischetti said. “When you’re talking about a contract, you’re talking about the government is contracting with an outside party to perform certain tasks and the government has to be able to describe those tasks or products that they are contracting for. To the extent they don’t know or they’re guessing, the best they can do is they’re either taking their best guess and passing that uncertainty on to contractors, or they’re making assumptions about what might happen and why they’re keeping everybody in a continuous mode of funding what we were doing before until it changes. The bottom line is this all costs far more money, we’re not saving any money by doing this.”
Despite the mess, Fischetti applauded the work of government contracting offices, who not only learn how to maintain strong relationships with contractors, but are able to show “a lot of ingenuity” in a line of work with a reputation for being by-the-book.
Jon Holladay, former CFO at the Agriculture Department who now works for Deloitte, echoed those sentiments, saying in government there are a lot of “bright people” who try to make the best out of tough situations.
He also credited federal budget offices with their ability to maintain direction even in crosswinds.
“I think at some point everyone has to be prepared and have a list of things that they would consider reducing … to be prepared for getting less,” Holladay said. “That’s where the good news about having very seasoned budget staff in these departments is. There’s a cycle to it, so you understand the cycle, and you become conservative at points in time just to make sure you don’t get caught in an unfortunate situation.”
All three men stressed the importance of getting a full funding plan in October, rather than halfway through the fiscal year.
“It’d be really good for the workforce to have that stability,” Holladay said. “It would also be good for the folks counting on those grants and contract funds in order to do things the government and citizens find really valuable.”
Holladay did point out that in 2009, a transition year, the omnibus appropriations bill passed on March 10.
Criscitello said a transition year should be a time when the President comes into office and a “steady state budget” is already in place.
“We’re a year behind schedule right now. We’re about a year behind,” Criscitello said. “That’s saying something for a one-year process. We couldn’t be more late, really.”
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