The immediate impact of a government shutdown on U.S. foreign aid programs is expected to be minimal, and guidance given to implementing partners suggests that almost all grants and contracts will continue to be funded for the foreseeable future.
A longer-term shutdown, though, could delay payments to contractors and may especially impact personal services contractors, according to Alan Chvotkin, executive vice president and counsel at the Professional Services Council, a group representing government contractors.
“The message for contractors is: Absent direction from the U.S. Agency for International Development, you continue working,” said Chvotkin, explaining that because most aid projects are funded on a multi-year basis, those that have already been awarded will continue to be funded even if Congress doesn’t agree on a spending measure by Oct. 1, the start of fiscal 2014.
That said, some payments to contractors and grantees may be delayed if government agencies furlough staff members who otherwise would process such payments.
“The longer [a government shutdown] goes, the lengthier the backlog of invoices received but not processed pending that appropriation,” Chvotkin told Devex.
Ultimately, though, barring any extenuating circumstances, procurements would be honored, and in past government shutdowns, interruptions in payments to contractors have not caused significant issues.
Day-to-day activities at the Millennium Challenge Corp., meanwhile, will likely continue for the near future, since the government corporation operates on what is called “no-year appropriations,” meaning it can spend money as long as it is available. The government’s Food for Peace program doesn’t rely on annual appropriations and would likely continue, too. But not all foreign aid programs spearheaded by other government agencies would be so lucky.
Implementers in the dark
Aid groups working with the U.S. government appeared largely in the dark on Monday about which departments and offices will remain open in case of a government shutdown, which procurements might be effected, and who will be available to answer questions. USAID has pledged to individually contact implementing partners whose pay may be cut; Chvotkin said he hadn’t heard of any such call by Monday afternoon.
Implementing organizations are closely monitoring the government’s actions, but most of them seem to expect business as usual on Tuesday. Matt Renaud, the chief financial officer at ACDI/VOCA, a Washington, D.C.-based agricultural nonprofit that holds a number of USAID contracts, said that his organization had no current plans to furlough workers.
Government employees, meanwhile, are bracing for furloughs, delayed paychecks and limits on training and travel. Although most employees have been told to report to work as usual on Tuesday, those directly employed by the government who are not considered “essential” may be asked to stay home in case of a shutdown. Making that determination is at the discretion of each agency’s personnel office and USAID mission directors around the world.
Since they must be directly supervised by government employees, some personal services contractors will not be able to carry out their work if their supervisors were absent. The number of PSCs within USAID and other government agencies has grown significantly in recent years.
Other effects of a funding lapse will not be obvious at first, but certainly grow with time. On Capitol Hill, policy briefings have already been cancelled as Congress prepares to operate with a limited staff. Government agencies will likely delay the awarding of grants and contracts — although those are rare at the beginning of the fiscal year, anyway, so the impact of a brief shutdown in early October will be minimal.
The absence of oversight is certain to throw sand in the gears of the massive U.S. government bureaucracy, as will a hiring freeze. Recent guidance said that no new travel for should be arranged, which depending on the length of a shutdown, would create inevitable programmatic delays.
“While staff and contractors in the U.S. face an uncertain week or weeks ahead, it is especially so for those based in the field,” said Kate Warren, director of global recruitment services at Devex, citing things like passport services and other necessities of life abroad that could lead to big headaches in the event of a shutdown.
For many with a stake in U.S. aid, the only reasonable option appears to be to forge ahead in the hope that the government shutdown will be short-lived.
“I’m holding my breath and stomping my feet until Congress changes,” said Chvotkin. “Until then I’m trying to keep everyone informed on government actions.”
Or inaction, as the case may be.
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