Government Shutdown to Have Limited Impact on Highway Program, Other Construction Program Impacts Likely

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The House and Senate were unable find compromise and pass a continuing resolution (CR) by the October 1 deadline. Congress failed to enact any of the twelve appropriations bills that annually are necessary to fund government functions. Therefore  the federal government has been shutdown, furloughing about 800,000 federal workers and suspending most non-essential federal programs and services. For direct federal construction contracts, the vast majority of ongoing and already awarded contracts are not impacted by the shutdown. However, pending solicitations and awards, including task orders for existing multiple award contracts, will be delayed until the shutdown is over. In addition, agency action on permitting and project management decisions will likely face delays.

Meanwhile, the impact on the Federal-aid highway program will be minimal. Because the Federal Highway Administration (FHWA) is funded out of the Highway Trust Fund, and since MAP-21 authorized funding through the end of FY 2014 (September 30, 2014), FHWA will not be shut down. There will also be no impact on on-going contracts or on state bid lettings because MAP-21’s contract authority allows states to obligate funds through the end of FY-2014. States will also be reimbursed for payments for ongoing work. (The situation is of course reversed at the end of FY 2014 if MAP-21 is not reauthorized – FHWA would shut down and states would not be able to obligate funds for any new contracts.) The Federal Transit Administration (FTA) is not funded from the HTF and therefore would be shut down.

On-going construction funded under a full funding grant agreement is subject to annual appropriations and therefore the local transit agency would have to pay invoices out of its own budget with the expectation of being reimbursed by FTA in the future. The Federal Aviation Administration (FAA) is also not funded out of a trust fund, however, the Airport Improvement Program (AIP) is. Ongoing construction work funded through AIP should not be impacted, although reimbursements to airport authorities could be delayed.

You can find more information regarding the government shutdown on  AGC’s Federal Government Shutdown Resource Center. On the site, you will find a number of documents explaining what contractors should be aware of now that the federal government has officially shutdown.  Read More.