Operating Through a Government Shutdown: A Tactical Guide for Federal Contractors

When the federal government shuts down, it’s easy to assume everything grinds to a halt. But for those navigating the world of government contracting—especially in defense and innovation—the reality is far more dynamic. Shutdowns may pause new solicitations and furlough civilian staff, but the underlying machinery of federal funding, planning, and execution continues to move forward.

Even when agencies are offline, the deadlines don’t disappear. Once the government reopens, teams are expected to complete the same amount of work, just in a shorter window. That’s why contractors who stay engaged during a shutdown are often the ones who come out ahead. The sales cycle doesn’t stop—it simply shifts. Whether you're focused on short-term wins or long-term positioning, there’s plenty to do right now.

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The Funding Landscape: What Keeps Moving

Unfunded Requirements (UFRs) are a prime example of why timing matters. While the actual dollars tend to drop in late summer, the planning begins much earlier—often in January or February. Operational UFRs, typically managed by active duty personnel, continue to progress even during a shutdown. Program office UFRs, which involve procurement and R&D dollars, may slow down due to civilian furloughs, but that doesn’t mean you should stop preparing your packages.

Similarly, POMing (Program Objective Memorandum) is a multi-year planning cycle that doesn’t pause for shutdowns. Missing engagement windows now could mean waiting another year for funding. Staying in sync with program offices and continuing outreach is essential to maintaining momentum.

Here’s what’s still happening behind the scenes:

• Paperwork is being processed
• Outreach and demos are ongoing
• Research and targeting are active
• Phase III seeding and funding requests are advancing

Even if SBIR/STTR reauthorization is delayed, over $1 billion could be redirected into RDT&E budgets across the military branches. That potential funding surge makes relationship-building and strategic positioning more important than ever.

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Using the Lull to Your Advantage

This quieter period is an opportunity to get ahead. With fewer distractions, it’s the perfect time to refine your strategy, update your target lists, and schedule demos with active duty contacts who are still online. Paperwork for Phase III seeding and funding requests can be advanced, and proposals for SBIR topics—released before the shutdown—can be drafted in anticipation of reauthorization.

The next round of SBIR topics is expected to open the Wednesday after reauthorization passes. DIA and RPP programs are also accepting rolling submissions, with evaluations happening quarterly. Preparation now means faster action later.

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Pricing and Events: Strategic Levers

If your margins aren’t where you want them to be, now is the time to reassess your pricing strategy. Without the pressure of a race-to-the-bottom competition, you have the flexibility to reposition your pricing and take advantage of sole source authority where applicable.

Events also remain a critical part of the capture process. Despite the shutdown, major conferences like AUSA have continued, with nonprofit support even funding Army travel to ensure participation. While some events may face travel limitations, most are still expected to proceed. Planning ahead now ensures you’re ready to engage when the time comes.

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UFR Readiness: What It Really Takes

Securing a UFR isn’t just about asking—it’s about being ready. You need a customer with money, a way for them to spend it (like a contract vehicle or sole source authority), and a capability package that ranks high enough to beat the cutoff. Execution readiness is also key; if you’re not prepared to move quickly when funding becomes available, your opportunity may pass you by.

To be UFR-ready, make sure you have:

• A customer with available funding
• A contract vehicle or method to execute the purchase
• A high-priority ranking on the internal list
• A plan for rapid execution once funds are released

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How a UFR Gets Bought: A Quick Walkthrough

The process starts with a memo that outlines what you want, why it’s needed, how it supports the mission, and how much it costs. That memo moves up the chain—from squadron to group to wing—where priorities are evaluated and ranked. Once approved, contracting writes the Statement of Work, finance issues a Form 9, and the contract is awarded.

Details matter. Forget to specify a hazmat package for a vehicle? You might end up with a truck that can’t go where it’s needed. Buy a trailer without a hitch? You’ve got a very expensive shed. Sole source authority, like SBIR Phase III, helps avoid the “lowest technically acceptable” trap and ensures your government customers get what they actually need.

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Final Thought: Advance or Adjust

Shutdowns are not a time to stall—they’re a time to sharpen your strategy. The paperwork still needs to be done, the dollars will still be spent, and the mission continues. Whether you’re preparing proposals, refining pricing, or building relationships, the key is to keep moving. Because when the gates reopen, those who’ve stayed ready will be the ones who move first.

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