What To Expect When The Government Reopens: Key Considerations For Businesses

When the federal government reopens after a shutdown, the return to "business as usual" is rarely immediate. Agencies face backlogs, funding adjustments, and operational hurdles that can directly impact companies, contractors, and regulated entities. Below we outline several key issues businesses should anticipate in the days and weeks following a reopening of the federal government.

1. Agency Backlogs and Delays

Most agencies operate with a reduced staff or are closed entirely during a shutdown, leading to significant backlogs. Once reopened, entities should expect:

• Permitting and Licensing Delays: Applications for approvals, licenses, or permits may take longer to process as agencies work through accumulated submissions.
• Investigations and Audits Resuming: Agencies such as the Securities Exchange Commission ("SEC") and Department of Justice ("DOJ") will pick up paused enforcement actions and investigations, often with heightened urgency to meet statutory deadlines. This may result in a flurry of requests with quick turnarounds.
• Regulatory Filings: Entities with reporting obligations should be prepared for bottlenecks as staff triage incoming and backlogged filings.
• Litigation: Bid protests (i.e., government contracts litigation), most civil litigation, and any other litigation that may have been paused during the shutdown will resume, meaning filing deadlines will need to be recalculated and some filings will be due almost immediately.

2. Contracting and Procurement Impacts

For government contractors, the reopening has immediate and practical implications. Your contract performance will resume but some changes may be necessary given the lost time during the shutdown. Contractors will seek modifications to their performance schedules as well as adjustments to costs depending on the shutdown's impact. Requests for equitable adjustment can take time to process and any increases in cost may need to work their way through approvals. Whether an equitable adjustment is available may depend on agency budgets, which will need to be re-aligned.

For opportunities that were open prior to the shutdown, solicitations that were delayed or suspended may be extended or reissued. These updates likely will occur quickly after the shutdown ends, so stay alert for rapid-fire updates in SAM.gov and other databases for open acquisition opportunities.

Communication with agency officials regarding a particular procurement or contract will be critical once the shutdown ends.

3. Enforcement and Oversight Priorities

Shutdowns do not usually eliminate ongoing investigations and compliance risks; they typically just delay them. After reopening, agencies may seek to "make up for lost time." Agencies like the DOJ, Federal Trade Commission ("FTC"), and SEC often restart paused investigations with aggressive timetables. Agencies will attempt to make up for lost time in investigations and some prosecutions. You are likely to have outreach from agency attorneys within one to two weeks after the shutdown ends. You should be ready to provide updates on any outstanding requests and expect new requests on expedited timelines. Federal auditors (e.g., DCAA, FDA inspectors) typically move quickly to reschedule site visits and compliance checks. Sectors like healthcare, defense, energy, and financial services may see increased scrutiny, particularly where public funds are involved.

4. Rulemaking and Policy Timelines

Shutdowns can freeze or delay regulatory actions, but once reopened, agencies may attempt to accelerate rulemaking agendas. Stakeholders may have shorter windows to submit feedback on proposed rules. Agencies may pivot resources toward urgent policy objectives set by the Administration or Congress. Agencies also may use quicker regulatory actions, such as interim final rules, may accelerate in order to make up for lost time.

Takeaways

Once the shutdown is over, the federal government will move quickly to try and get back up to speed. This means entities working in the government space, particularly government contractors, should stay vigilant and monitor agency announcements in SAM.gov and other acquisition-related portals, outreach by their federal government points of contact (e.g., contracting officer), and industry alerts. Additionally, contractors should reach out to their contracting officers to discuss any impact the shutdown had on contract performance and ensure appropriate timing for restarting performance. Entities should compile all records associated with the impact of the shutdown on operations as they may be important during negotiations for extensions and modifications to contracts and potential disputes.

For regulated entities or companies facing government investigations, expect the government focus to return, albeit with some necessary ramp-up time. Where time is of the essence for the government in the form of statutes of limitations or other specific timelines, expect the government to be newly aggressive in making up for lost time.

The reopening of the federal government marks only the beginning of a complex recovery process. Companies that anticipate these challenges, remain flexible, and maintain open communication with agencies and counsel will be best positioned to manage the transition effectively.