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Posted by on Sep 18, 2013

Preparing for a Potential Government Shutdown

OMB released memorandum yesterday, “M-13-22, Planning for Agency Operations During a Potential Lapse in Appropriations,” which provides agencies guidance on how to prepare for a potential government shutdown. The memo also provides a useful Q&A section detailing how agencies must manage and administer grants during a shutdown. The memo can be accessed here.

 Important guidelines for federal grants officials during a government shutdown include the following:

  • Awarding agencies cannot issue new awards;
  • Federal employees cannot, except in limited cases, provide technical assistance to recipients; and
  • Agencies must cease oversight, inspection, monitoring, closeout, and payment processing.

Performance and work on grant projects may continue during a government shutdown.

The federal fiscal year ends on September 30th. For normal government operations to continue, appropriations of funding for each federal agency must be approved by that date. On October 1st, any agency that lacks funding must shut down. There are limited exceptions provided for national security and essential government functions.

Congress has not approved any of the 12 appropriations bills for Fiscal Year 2014 as this deadline approaches. To avert a shutdown, Congress may pass legislation called a continuing resolution (CR) to temporarily fund government agencies until the appropriations bills are adopted. To track the status of the appropriations bills, click here.

Political and ideological differences between the House and Senate are complicating efforts to pass a CR. In response to the political gridlock, OMB released the memo yesterday to assist agencies in planning for a potential shutdown.  

Grant recipients should also be making preparations for a potential shutdown. Steps recipients can take include:

  • Contact agency officials now to assess the consequences of a potential shutdown;
  • Make necessary programmatic and administrative plans; and
  • Take into account the expected delays in receiving funds for the new fiscal year.

A government shutdown is the worst-case-scenario and political analysts are divided on whether a shutdown will actually occur. In previous budget battles, House and Senate leaders often find a compromise solution at the last moment.

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