Decoding Government Shutdowns

Eric Marquette

Welcome to FAR & DFARS: Procurement Power. I’m Eric Marquette, and as always, I’ve got Paul Netopski here with me. Today, we’re unpacking something that comes up way more often than most of us would like—government shutdowns. Paul, before we get into the weeds, let’s start at the very beginning. So when folks hear “shutdown,” the first thing they wonder is, what actually sets this off? For anyone who’s not deep in the procurement trenches, it’s all about appropriations—Congress has to pass those funding bills every year. If that doesn’t happen, or a continuing resolution doesn’t come through to keep things afloat, then you get what’s called a funding gap. And that gap? That’s what triggers federal agencies to start shutdown procedures.

Paul Netopski

That’s exactly right, Eric. Just to clarify for everyone—the government runs on annual appropriations acts. If those aren’t passed by October 1st, or if a temporary continuing resolution runs out and there’s no follow-up, we end up staring down a shutdown. Now, here’s where it gets a little more technical: The appropriations process actually involves twelve separate bills. Congress might pass some of those before the deadline, and not others. So you could see a full government shutdown or a partial one, depending on which agencies have funding. For example, if they only manage to fund Defense and Transportation, but not Interior or Commerce, only those unfunded agencies have to shutter non-excepted operations. That’s why different parts of the government are affected in different ways.

Eric Marquette

That staggered approach really does make it complex. I always get tripped up thinking—wait, is it all agencies closing, or only some of them this time? Looking back just a few years, like late 2018, we had appropriations for a chunk of the government, but not the rest, and that created this odd patchwork. So it’s not as if every shutdown is exactly the same. I mean, even the timing—sometimes it’s the start of the fiscal year, sometimes it’s the middle if a continuing resolution runs out. Definitely not predictable, right?

Paul Netopski

Correct. Nothing about it is straightforward. The bottom line—appropriations must be enacted on time, or else, regardless of how or when the gap happens, we’re talking about some version of a government shutdown. Agencies that aren’t funded through annual appropriations, like those with permanent funding, might keep operating, but for the rest, it all depends on what Congress manages—or doesn’t manage—to pass.

Eric Marquette

Okay, let’s take a step back and look at the bigger picture—because shutdowns are definitely not a new phenomenon. Going back to 1981, when this current framework was established, we’ve seen, what, twenty-something shutdowns now? There’s some debate about what counts, but major ones stick in people’s minds. Think about 1995-96, or the really intense five-week shutdown across 2018 and 2019, which—if my memory’s right—holds the record for the longest ever at 35 days. And there’s been plenty that were just a day or two.

Paul Netopski

You nailed it—duration really does vary, and I think that adds to the sense of uncertainty. Sometimes shutdowns go almost unnoticed because they resolve over a weekend, and sometimes they drag way on, causing major disruptions. The 1995-96 shutdown is still cited a lot in federal contracting circles. But 2018-19? That’s when we saw significant contractor impacts, big backlogs, missed paychecks, people scrambling to figure out what work kept moving and what didn’t. That’s the one a lot of folks in our circles still talk about.

Eric Marquette

Absolutely. I actually remember covering the 2013 shutdown—not as long as 2018-19, I think it was about 16 or 17 days, but the chaos was real. I mean, being on the content side, you’re fielding calls from agency folks and contractors who suddenly have no clarity. It was stressful, and more importantly, people just felt left out in the dark. Uncertainty for everyone—agencies, the private sector, even the public relying on government services. There wasn’t a lot of transparency in real time, and that’s always stuck with me. I think that’s why it’s so important to talk through these details—so people have a roadmap, even if it’s a rough one.

Paul Netopski

Speaking of roadmaps, agency preparation is actually more structured than a lot of folks realize, thanks to the Office of Management and Budget, or OMB. Every year, OMB updates what’s called Circular A-11, which lays out guidelines for how agencies need to prep for shutdowns—including developing detailed shutdown—or “contingency”—plans. These plans aren’t just for show. Agencies are required to lay out exactly what they’ll do during a funding lapse, with procedures for both short gaps and longer ones, plus who’s staying on, who’s being furloughed, and what operations count as ‘excepted’ by law.

Eric Marquette

And here’s an interesting behind-the-curtain bit: agencies have to post those shutdown plans publicly, but there’s a lot more guidance communicated internally than what makes it out for the public to see. Paul, you’ve got way more experience dealing with these internal communications, especially from the contractor perspective. What’s your take on how that visibility can create confusion, or, at least, keep contractors guessing?

Paul Netopski

A good question. Yeah, here’s the thing—there are typically two streams of communication happening near a potential shutdown. OMB might send private memos, bulletins, or even templates to agencies; those aren’t public and are often only visible on internal executive branch systems. Then, a different version gets published online for the rest of us. The detail level can be pretty different, and sometimes contractors are left waiting for updates, trying to match internal deadlines and language that just isn’t spelled out in the public plans. It’s better than it used to be, but that gap between internal and external communication can mean contractors either over-prepare or fail to get crucial info until it’s a little late. Makes for a hectic week leading up to an appropriations lapse.

Eric Marquette

Definitely. And these plans are updated every two years, right? But if there’s a major agency change, a new funding stream, or a program revamp, the plan’s gotta get reviewed and resubmitted to OMB sooner. What always trips me up—when does OMB actually tell agencies, “Okay, it’s go time for these shutdown plans?” Is there a standard heads-up?

Paul Netopski

Yep, as we’ve seen, OMB will typically flag agency leadership about a week before funding’s set to expire—sort of a “review your plan” signal. If things are looking grim, they’ll provide a standardized employee notice about two days out, making sure everyone’s on the same page about what’ll happen if appropriations lapse. Not always enough time for everyone to digest, but that’s the framework as laid out in Circular A-11. And then, when a shutdown is confirmed, those agency plans kick into action—who gets furloughed, who’s excepted, timeline for communications, the whole playbook.

Eric Marquette

Now this next part—furloughs and exceptions—gets pretty personal for the people involved. Basically, if you’re not funded, you might get put on a “shutdown furlough.” That’s a fancy term for being benched with no pay, at least until appropriations return. But some government employees are told to keep working because their jobs fall into what’s called “excepted” status. That used to be called “essential”—a word that honestly made things emotionally messier than it needed to be. The thinking shifted because calling someone “nonessential” is, well, kind of harsh. No one likes being told they’re nonessential, right?

Paul Netopski

That’s right, and the switch from “essential” to “excepted” tries to get rid of that negative baggage. The actual criteria come down to what the law allows. Excepted employees are those who need to continue government functions that are permitted to operate during a shutdown—things tied to safety of life, protection of property, or activities mandated by the Constitution. If you fit those roles, you’re working—just probably not getting a paycheck until after funding resumes. One thing that changed after the 2018-19 shutdown was the Government Employee Fair Treatment Act of 2019. Now, by law, furloughed and excepted employees are guaranteed retroactive pay, so once the shutdown’s over, everyone gets paid for the time they missed or worked unpaid.

Eric Marquette

That’s a huge change. Before 2019, people really had to worry if they’d be paid back for missed days—and sometimes had to wait for special legislation. Now there’s at least some peace of mind. Oh, and quick clarification for listeners—the Antideficiency Act says agencies have to cancel scheduled paid time off during a shutdown furlough, but employees keep their health insurance going, and if you were supposed to be working—minus the shutdown—you still accrue sick and annual leave. It’s just all in limbo until things get fixed.

Paul Netopski

Exactly. And these determinations—who’s furloughed, who’s excepted—are made by agency heads and legal counsel. The President and certain presidential appointees are actually “exempt,” meaning their pay is protected under the Constitution, so the ripple effects are very uneven depending on your role in government. In the past, “emergency” employees and “excepted” employees were often confused, but “emergency” is now mostly about weather or disaster situations, not shutdowns. The language is definitely evolving as the government tries to balance clarity and morale.

Eric Marquette

Let’s round things off by getting into the legal framework. It’s the Antideficiency Act that really underpins all these shutdown actions. Agencies can’t obligate or spend money Congress hasn’t granted. But there are exceptions—like for activities tied to national security or public safety. That’s where we start to see the list of “excepted” operations become really important. I’m curious, Paul, how does this actually play out with agency guidance, especially for areas you deal in, like defense and cybersecurity?

Paul Netopski

That’s a topic we face every shutdown cycle. Within the DoD, for example, “excepted” activities often include operations critical to national security, so maintaining network defense and basic cybersecurity posture continues. However, broader planning, acquisition work, and anything judged not immediately tied to defense can grind to a halt. Some employees might be called in without pay, while others are furloughed—so contract cycles slip, and acquisition processes stall. This really impacts ongoing projects and deadlines. The Antideficiency Act is black and white on prohibiting obligations without appropriations, but where activities are “necessarily implied by law” or support constitutional duties, agencies carve out as much flexibility as they can…within reason.

Eric Marquette

So it’s not just about operational slowdowns—it ripples out into project planning, contract execution, and where the government draws those lines about what “can’t stop.” Sort of overlaps with what we explored in previous episodes about procurement flowdowns, right? It’s one of those moments where understanding FAR clauses and legal triggers is absolutely essential. Maybe that’s a good teaser for diving deeper in future episodes!

Paul Netopski

Absolutely. Shutdowns aren’t just some off-in-the-distance concern—they influence the day-to-day for federal procurement and those supporting national security and public services. Understanding the legal basis behind the actions agencies take, and how those play out in real time, is a key part of the picture for anyone dealing with federal contracts, especially in defense sectors.

Eric Marquette

Alright, I think that’s a good place to wrap. Thanks for joining us for this conversation on decoding government shutdowns. We know there’s a lot more we could cover—every shutdown brings new lessons. Paul, always good talking it through with you.

Paul Netopski

Good chatting as always, Eric. And to our listeners—stay vigilant, stay curious. We'll be back soon with more on FAR, DFARS, and everything in between. Take care, everyone.