What will happen to USAID operations if US government shuts down

Rajiv Shah, administrator of the U.S. Agency for International Development. The aid agency issued a lapse plan memorandum on Sept. 27, which states that it "will continue to operate until all appropriated balances are insufficient to continue." Photo by: Lance Cheung / USDA / CC BY

The U.S. Agency for International Development issued updated guidelines for contractors and grantees regarding how a possible government shutdown on Monday will impact impact their programming.

In a “lapse plan” memorandum issued late on Friday, USAID noted the agency “will continue to operate until all appropriated balances are insufficient to continue.”

The memorandum added that if no continuing budget resolution is passed by Congress before Oct. 31, “operating units using multi-year or no-year appropriations (with remaining available balances), trust funds, and any other funding source will continue operations” until the funds run out.

Earlier on Friday, Devex reported that USAID had said in a brief statement that “the majority” of the agency’s grants and contracts “are not dependent on additional appropriations.”

“As a result, we determined that performance would likely continue during the lapse in appropriations,” wrote Aman S. Djahanban, a senior procurement official with the agency.

On Friday, the Senate rejected a House-passed spending bill that would cut funding for U.S. President Barack Obama’s signature health reform law, raising the odds of a government shutdown unless lawmakers find common ground by Monday, when funding expires. The threat of a government shutdown isn’t new; in the past few years, last-minute negotiations between Democrats and Republicans avoided it every time.

USAID issued separate instructions for operations involving residual balances and those to be performed during a lapse in new appropriations.

Residual balances

For operations using residual balances, USAID said they will continue until these are insufficient if there is no new appropriation or continuing resolution for fiscal year 2014 on or before Oct. 1.

If that happens, the agency said that operations will be “restricted.”

“Funding will be subject to apportionment and allotment requirements. Those balances can be reprioritized and reallocated for use during a lapse in appropriations through the financial plan process,” noted the memorandum, which added that “such resources remain subject to any spending plans or notifications previously submitted to Congress on their functions; as well as statutory requirements regarding the reprogramming or transfer of funds, guidance from the Office of Management and Budget, and any other relevant guidance.”

Some of the rules and restrictions that will apply when operating with residual balances include:

  • Bureaus may not exceed identified residual balances.

  • Commitments and obligations to new programs should not be made except to protect life and property.

  • No new purchases of equipment, services, or supplies for operational purposes may be made.

  • Travel arrangements and trainings are suspended, except if previously authorized and using funds from fiscal year 2013.

  • No new offers of employment can be made, and only prospective employees with a final offer letter may report to work.

  • Acts of representation and speeches are suspended, unless approved by the Bureau for Legislative and Public Affairs.

  • No overtime is authorized, although compensatory time may be accrued.

Any exceptions to the above and other restrictions must be approved in writing by the Bureau for Management.

USAID also warned its missions abroad that they may enter into a lapse of appropriations sooner because they operate under single-year appropriations. If that occurs, then the shutdown plan comes into play.

Lapse in appropriations

When a single-year appropriation lapses and the residual balances in multi-year and no-year accounts are insufficient to continue operations, all non-excepted will be placed under unpaid leave until appropriations are received.

In that case, operating units will only carry out certain functions with excepted staff. No non-U.S. employees may be hired, only essential travel is authorized, most training will be suspended, as well as certain allowances.

As for grants and contracts:

  • Previously awarded contracts will continue unless the operating unit cannot guarantee oversight or the contract needs to be renewed.

  • New contracts may only be made to support excepted activities.

  • Recipients of grants may continue their activities if funding was already obligated, and incremental funding is subject to restrictions.

  • All new grants are suspended unless in case of emergency or a foreign policy need.

  • Obligations and performances services contracts will continue but only for excepted functions.

USAID included in the memorandum a copy of the furlough letter to be sent to all non-excepted employees in case the U.S. government shutdown is confirmed on midnight.

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About the author

  • Carlos Santamaria

    Carlos is a former associate editor for breaking news in Devex's Manila-based news team. He joined Devex after a decade working for international wire services Reuters, AP, Xinhua, EFE ,and Philippine social news network Rappler in Madrid, Beijing, Manila, New York, and Bangkok. During that time, he also covered natural disasters on the ground in Myanmar and Japan.