Federal Funding Cutoff Hits Many, But Not All, Contracts

As Senate Democrats and House Republicans unleashed streams of blame at each other for the fiscal standoff that closed much of the federal government on Oct. 1, construction industry officials were studying how the shutdown will affect federal contracts and grants. Federal construction aid totals tens of billions of dollars a year.

The Office of Management and Budget made clear in a Sept. 17 memo that, during a funding lapse, an agency cannot award, extend or renew contracts or grants "except in very limited circumstances." That restriction applies to fiscal 2014 contracts that would have been funded from the general Treasury through appropriations.

Steve Hall, American Council of Engineering Companies vice president for government affairs, says some existing but not completed contracts can proceed if they draw on 2013 or earlier appropriations.

But Hall says such projects' progress also hinges on whether agency staffers who oversee or manage contracts were furloughed. Many workers' pay, starting on Oct. 1, was to come from 2014 appropriations, which were halted.

Marco Giamberardino, National Electrical Contractors Association executive director for government affairs, says that, without federal staffers on duty, "it's a question of access and being able to get to the jobsite. So, right there, you're going to see [project] delays."

Trust-fund-financed programs, such as federal-aid highways, were not cut off. All Federal Highway Administration workers also "get to stay on board," says Cathy Connor, Parsons Brinckerhoff senior vice president, because the Highway Trust Fund pays for personnel as well as construction.

But Brian Turmail, Associated General Contractors of America spokesman, says, "The longer the government stays closed, the worse this gets for our members." If the shutdown lasts for more than a few days, lawmakers soon will face a much larger problem. Treasury Secretary Jacob Lew has told Congress that, by Oct. 17, his department will exhaust its options for avoiding a breach in the country's debt limit.

Tom Ichniowski has been writing about the federal government as ENR’s Washington Bureau Chief since the George H.W. Bush administration, and he has covered at least five major highway bills. A recognized expert on government policy on infrastructure and regulation, Tom is also a Baltimore native and Orioles fan who grew up rooting for Brooks and Frank Robinson. He is a graduate of Columbia College and Columbia’s graduate school of journalism, where he once used “unrelentless” in a headline.

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