Congress has a 3-month CR, but it’s not all good news for contractors

Now, with a three-month rolling resolution looking like what we’ll get, contractors are wondering if that’s good news or bad news. Compared to the lack of funds, that’s probably good news, but delays in regular funds still have consequences. Federal sales and marketing consultant Larry Allen joined to discuss more.

Interview transcript:

Tom Temin Now, with the three-month continuing resolution looking like what we’re going to get, the executives are wondering whether that’s good news or bad news. Compared to the delay in the appropriations, that’s probably good news, but a delayed regular appropriations bill has its consequences. More now from federal sales and marketing consultant Larry Allen. I think you made it difficult last week to play out this kind of the way it did when the Republicans blinked on the illegal voting, illegal immigrant voting. So what does that mean?

Larry Allen Well, Tom, I think in the short term, it means that we have open government, a government that will surprise us by starting FY25 under a continuing resolution. But you’re right, that’s what I’ve been predicting for the last ten days. It was just a matter of when we got there. Everybody kind of knew what the path forward was, but there was a lot of ideological undergrowth to clear before we got there. So that’s good news. We’re going to have open government. The downside, of course, is that a continuing resolution is a continuing resolution. Most companies and government agencies should be familiar with that by now. Of course, no new project starts with the money allocated. In particular, contractors who have annual maintenance contracts, leases, and the like, really want to look at the details of their contracts to make sure that they’re going to continue to get paid in this situation and how they’re going to get paid. And if it’s not clearly written in the contract, and it’s definitely worth discussing with the contracting officer, not the Corps, not the contracts specialist, but the contracting officer himself, who’s the only person who can say with affinity whether you’re going to get paid, short-term, long-term, well?

Tom Temin Who knows? That’s true. And the idea of contacting a contracting officer is related to the idea that the government has not issued any guidance on closing down for federal agencies, even now. And I didn’t get any response from the Office of Personnel Management when I asked last week. Are you notifying agencies what to do? OMB, you know, nothing comes in there. So the government almost had to have a continuing resolution, right?

Larry Allen Well, I think it’s amazing that there hasn’t been any official guidance. You don’t want to be too neutral about it, just because we’ve been through it. Technically, groups like OPM and the Office of Management and Budget have directives that they’re supposed to give agencies in case this happens. And I’d be willing to bet that even in the absence of guidance from these centralized organizations, a lot of individual offices have started going through their checklists because they’re required to do so. And if they didn’t do it and then there was a shutdown, they would get called on the carpet. Ironically, they got called on the carpet not just by their congressional overseers, but by people in the three-letter agencies who didn’t issue the guidance that they should have.

Tom Temin Sure. And I know from a few executives that they’re just putting money aside for these ongoing types of services, cloud computing, etc., or software as a service, so that the agency doesn’t get bogged down. Although I think it’s probably fair to say that the vendors, like the big cloud vendors, would probably hold the government for a few months until the funds were allocated or the CR was issued. I think it’s unlikely that they would shut down their cloud facilities knowing the government as well as they do.

Larry Allen Well, I think that’s true. I think most companies will still honor the contracts, especially since you’re not in default because you’re late the first day you’re late. So that’s good for all of us. But, you know, I think that’s an issue for any company, regardless of size. Tom’s going to have to worry to some extent about cash flow and when and if they’re going to get paid. And certainly, if you’re a smaller company where cash flow tends to play a big role in your company’s design, you know, you might want to do the right thing and make sure that the government can keep the service that you’re providing. On the other hand, you want to make sure that and how you’re going to get paid for it.

Tom Temin We’re talking to Larry Allen, president of Allen Federal Business Partners. You mentioned contract officers a moment ago. And in another area of doing business with the government, contract officers are really critical. And it varies by CEO, how strictly they adhere to technicalities, like clauses that might be omitted from a contract but are still required by law. And what happens to contractors?

Larry Allen Tom, I do a lot of work in the compliance space. I’m not a lawyer, as you know, nor do I give legal advice. But there’s still a lot of work to be done in the compliance space and. Conditions of helping companies stay on the right side of the compliance register. And as a result of my work, I’ve seen that, you know, the great answer from Washington, DC, to whether something applies or not is, it depends, and it can be very frustrating for contractors. And this was recently highlighted by the Government Accountability Office in a decision issued in a contract protest case where the company said, hey, we didn’t want our sam.gov registration to expire, and technically, the government contracting officer didn’t put a far clause in it that says we have to have a current Sam registration. And despite a whole bunch of case law to the contrary, Tom, the GAO bought the company’s argument. They said, hey, the government skipped this far clause and the previous one because they skipped it. You can’t really read that into the contract. And so the GAO ruled in favor of the protester and ordered the agency to go back and rebid. This is going to sound mind-blowing to a lot of companies that have lost opportunities for the exact same reason that we let our Sam registration lapse. We didn’t know about it. Let’s put aside for a moment the Sam registration doc, which is only valid if you want to get paid. It’s so important to make sure that you keep it going. But you know, this is just another example of the inconsistency and how that in itself works in relation to the Christian doctrine of the long-standing principle of government contracting that agencies apply across the board. And at least 99 and 44/100 percent of the time, they read clauses into the contract that should have been in the RFP, even though technically they weren’t.

Tom Temin Sure. Those clauses are the ones that are, in legalese, the actions of the law that have to be there. And even if they’re not there, they still have power.

Larry Allen Exactly. So I think if you’re a contractor and you’re not sure whether or how something applies to you in a particular contract, read that contracting officer how it’s going to apply. And unfortunately, if you’re a contractor that does a lot of business, you can’t take one contracting officer’s definition to the bank for the entire government. You’re going to have to keep asking contracting officers when you come across these things that you’re not sure about in every case, even if you’re doing business within the same agency. Tom, we’ve seen that contracting officers within the same agency have discretion. They read the clauses that apply differently. The most important thing that companies can do is put it in writing and make sure that you ask a lot of questions. Don’t think that there’s something that’s a stupid question. And don’t think that just because you’ve asked a question five times before, the answer to question number six is going to be the same.

Tom Temin And keep Sam’s registration up to date.

Larry Allen This helps avoid many problems.

Tom Temin Larry Allen is the president of Allen Federal Business Partners. As always, thank you very much.

Larry Allen Tom, thank you. And I wish your listeners successful sales.

Tom Temin We will publish this interview on federalwsnetwork.com/federaldrive. Subscribe to Federal Drive wherever you listen to podcasts.