The federal government shut down on October 1 after annual appropriations lapsed. Pursuant to the Antideficiency Act, agencies may not incur obligations or expend funds without an enacted appropriation unless otherwise authorized by law.
When a funding gap begins and appropriations do not appear likely to resume the first day, most federal government action must stop, and many federal employees are temporarily furloughed. Only limited categories of activity may continue:
- Activities conducted by “exempt employees” may continue. Exempt employees are not affected by the lapse in appropriations as they remain funded through multi‑year, no‑year appropriations or other permanent law.
- Activities conducted by “excepted employees” may continue. Agencies may incur financial obligations for these excepted activities in the absence of appropriations. These activities include work necessary to protect the safety of human life or property.[1]
The impacts of a government shutdown vary among agencies. The Office of Management and Budget (OMB) issues government‑wide instructions, and agencies use OMB’s guidance to publish their own shutdown plans. Current shutdown plans are publicly available online.[2] The plans can differ in substance and detail based on mission, funding mix, and operations as agencies determine which programs are excepted, who is furloughed, and how to resume operations. These determinations affect contractors’ access to facilities, government oversight and approvals, invoice processing, and new awards.
Guidance for Federal Contractors
Deadlines for GAO protests and some contract disputes at the boards of contract appeals are affected during the shutdown.
- The Government Accountability Office (GAO) bid protest office is closed, and the filing system is offline during the shutdown.[3] Protest filing deadlines will be tolled until the first day that GAO reopens. As a result, recent contract awards will have an extended window for protests.
- The boards of contract appeals are also affected by the shutdown. While the boards will continue accepting new appeal filings, other deadlines for events such as discovery, reports, and depositions are cancelled during the shutdown. This is likely to prolong some disputes.
Protests and disputes at the Court of Federal Claims may be affected if the shutdown continues for an extended time period.
- Proceedings at the Court of Federal Claims (COFC) and other federal courts will continue as normal until at least Friday October 3, 2025. Federal courts will attempt to operate until October 17, 2025, but they may not have sufficient funds to continue for the additional two-week period in the absence of annual appropriations.[4] These courts are currently operating using financial reserves funded through court fees and no-year appropriations.
- After this time, federal courts may be forced to furlough many employees and toll deadlines similar to the GAO and boards of contract appeals. This would result in impacts to protests and disputes before the COFC.
Understand the funding status of active contracts.
- Performance may continue for fully funded fixed‑price or cost‑reimbursement contracts where the estimated costs have previously been obligated. Contractors’ ability to perform the work could be affected if access to government facilities, government personnel, or approvals are unavailable, however. Payment processing may also be delayed.
- The shutdown will have a greater effect on incrementally funded contracts, as the government may not be able to obligate funds.
Communicate with the government if possible.
- Agency-specific shutdown instructions should outline which types of agency personnel will continue working during the shutdown and which will be temporarily furloughed.
- If any agency contracting personnel remain working throughout the shutdown, contractors should reach out for instructions on active projects, to determine access to federal facilities, and other important information. The government may issue stop-work or suspension-of-work orders depending on the type of project.
- Contractors should also communicate relevant updates to their subcontractors and ensure all personnel understand the impacts of the shutdown.
Track the impacts of the shutdown on projects.
- The shutdown may create delays related to restricted access to the federal facility where the work is performed or the inability to obtain timely approvals from furloughed government employees. Contractors should keep organized records of all project impacts associated with the shutdown and any payment issues to prepare for potential requests for equitable adjustment.
New awards and options will likely be unavailable during the shutdown.
- Contract awards and the exercise of options will likely remain paused during a shutdown unless they are tied to excepted or exempted activities.
Conclusion
The duration of the government shutdown is uncertain, and it could have significant impacts on active federal contracts, pending solicitations, future opportunities for work, and litigation matters. Contractors with potential grounds for a bid protest should engage counsel now to ensure the timeliness of the protest, even if filing may be delayed. Contractors should review agency-specific shutdown plans, stay up to date on communications from the government to understand how it affects their projects, and carefully document all shutdown-related impacts.
[1] OMB Circular A-11, Section 124.1.
[2] Department of State (DOS) Plans; Department of War (DOW) Plans; Environmental Protection Agency (EPA) Plans.
[4] Administrative Office of the United States Courts Memorandum, September 24, 2025.