Contractors face payment and project disruptions in looming government shutdown
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UPDATE – March 11, 2025: The U.S. House of Representatives narrowly approved a continuing resolution (CR) to fund the federal government through September 30. It narrowly passed by a margin of 217-213, almost entirely on partisan lines. The only departures were Rep. Thomas Massie (R-KY), who voted against, and Rep. Jared Golden (D-ME), who voted in favor. The resolution cuts about $13 billion in non-defense discretionary funding while increasing defense spending by about $6 billion for shipbuilding and military pay raises. The full text can be viewed here. It now heads to the Senate, where it requires the support of at least seven Democratic Senators to overcome the 60-vote filibuster threshold. Senator John Fetterman (D-PA) has already indicated that he will vote in favor, lowering the number to six.
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Congress is racing to meet the March 14 government funding deadline with no final agreement in place. While a short-term stopgap measure is possible, lawmakers remain divided on overall spending levels and policy priorities. If no agreement is reached by the deadline, parts of the federal government will shut down until Congress passes new funding legislation.
Contractors face immediate payment and project disruptions
For contractors working on federal projects, a shutdown could disrupt contract payments and project timelines. Contractors should reach out to their contracting officer immediately for guidance on how their specific projects may be impacted. If a contract is affected, businesses should review their agreements for stop-work clauses and be prepared for possible delays in invoicing and payment processing.
The shutdown would also impact contractors through delayed tax return processing. All federal agencies, including the IRS, operate with a reduced workforce during a shutdown, meaning businesses may experience slower refunds and processing of tax-related documents. Additionally, federal rulemaking would be put on hold, delaying any pending regulatory actions until the government reopens.
Beyond tax and regulatory delays, a shutdown would limit federal services that contractors rely on. This includes potential disruptions to SBA-backed loan approvals, workforce development programs, and anything else that requires the funding or approval of the federal government.
Legislative standoff threatens contractor operations
The House has proposed a full-year funding bill that would extend last year’s spending levels while shifting resources toward defense and border security. However, Senate leaders and the White House have pushed back, seeking additional funding for domestic programs. This standoff threatens contractor operations across multiple sectors.
ACCA is closely monitoring the situation and will provide updates as negotiations unfold. Contractors should prepare for potential short-term disruptions in federal programs and consider communicating with customers about possible delays in rebates or tax credit processing.
For more details or to get involved, contact ACCA’s Government Relations team at govt@acca.org.
Posted In: Government, Taxes
