What Does the Federal Shutdown Mean for Grants?
Regardless of political views or debate about the merits of a Federal shutdown, there are a few things to keep in mind with regard to grants and cooperative agreements during a shutdown. Both pre-award and post-award processes are impacted (or not).
Federal websites continue to function during a shutdown. While there may not be as much technical support available or information may not be updated, the websites remain active. Any previously announced submission deadlines for proposals, therefore, are still in effect. There is no hall pass to excuse a late submission. Applicants should not expect an extension based on the shutdown, and should submit as planned. Grants.gov reinforces this protocol with a notice on its home page:
NOTICE: During a lapse in Federal appropriations, the Grants.gov system will remain in an Operational status. Additionally, the Grants.gov Support Center will remain available to provide assistance to applicants.
Award decisions, on the other hand, would be delayed until after the shutdown because the Antideficiency Act (Pub. L. 97-258, 31 USC 1341, 1501-1519) prohibits agencies from incurring obligations that are in advance of appropriations, such as during a shutdown when there is a lapse of funds.
Continuation of essential services and reimbursement payments remain the biggest concerns post-award, and it depends upon the type of award (entitlement, mandatory/formula or discretionary), and whether a particular action is required under law or would be in response to an emergency.
The Constitution provides that no funds may be drawn from the treasury unless appropriated by Congress (the power of the purse). Likewise, the Antideficiency Act, enacted in 1905, also prohibits federal agencies from making payments in excess or in advance of an appropriation. The Act has been amended over time, including apportioning or dividing funds into categories and allowing for exceptions.
The Act, therefore, provides that necessary and essential services continue, even during a funding lapse or shutdown. These include funding the military, law enforcement, benefit payments under entitlements, the banking system, emergency and disaster relief, medical care, border protection, power systems, air traffic control, and other essential services. If the federal award provides essential services and/or services mandated by federal statute, then those services may be covered during a shutdown. These services would need to be defined by the authorizing statute, not by the award agreement itself. Please confer with your legal advisors.
Presidential Memorandum M-11-13, released during a prior shutdown, also provides specific guidance about federal grants and contracts. Routine or ongoing activities under an award such as grant or contract administration would need to cease during a shutdown. These activities include oversight and payment processing; however, M-11-13 also references the Antideficiency Act and reminds federal agencies they have statutory authority to incur obligations for essential services, i.e., services defined by a program statute or other legal requirement (not by the award agreement).
If there is an emergency, those services may also be covered, but again, the emergency exception does not cover ongoing, regular or routine functions. Please confer with your legal advisors.
If an unobligated balance of funding remains available from a prior period, if the award was made before the shutdown, or if it was appropriated on a multi-year or no-year basis, then the federal agency may have some discretion with respect to timing when activities may be carried out. It depends if the obligation during the shutdown is considered a “necessary implication,” or essential by the program statute. The challenge would be in contacting federal officers, who may not be available, to inquire about approval during the shutdown.
While essential services may be covered during the shutdown, they would be as an exception, tied to the program statute or authority, not to the award agreement. Please confer with your legal advisors. There has been no recent Presidential Memo, as of this writing, about the current shutdown to offer further guidance beyond the Antideficiency Act and M-11-13.