A Matter of National Security: The Shutdown and its Effects on Department of Defense Operations

BY CLAIRE RUMLER — On October 1, 2013, the United States federal government entered a shutdown after Congress failed to enact regular fiscal appropriations for a continuing resolution for fiscal year 2014. As a result, hundreds of thousands of federal employees were furloughed indefinitely, including half of the civilian staff of the Department of Defense (“DOD”). The country’s 1.4 million active duty personnel remained on duty, initially without pay.

Although the enactment of HR 3210, also known as the Pay Our Military Act, guaranteed salaries for active-duty personnel, hundreds of thousands of civilian DOD employees faced a less certain future. Certain civilians, who were designated as necessary for military operations and to protect the safety of persons and property, continued to come to work but will be paid retroactively once the government reopens. Because so-called “necessary” employees are working, the shutdown has implicated national security in a more subtle way: its contract obligations. The status of a large number of contract personnel is still unclear. Some new contracts for “essential” activities could not be signed, and money could not be disbursed to honor other contractual obligations. The end result is disruption to both materials and services. Only contracts, whether for weapons systems or services, which relied on previously appropriated funds and were to be provided over several years would continue to be funded. No new contracts, however, could be funded unless it was deemed “necessary for military operations,” like contractor personnel in Afghanistan.

Essentially, the DOD had the authority to obligate money for goods and services necessary to sustain continuing operations. These contracts represent a commitment to pay the providers, but only for activities necessary to support national security and military operations. However, the Anti-deficiency Act prevents the DOD from issuing additional expenditures or checks in advance of appropriations. Contracts for necessary activities could be signed, however, reimbursements could not be provided and it is unclear whether the vendors would be amenable to provide those goods or services without the guarantee of payment over an extended period of time.

Money for maintenance and operations remained generally available for obligation for a period of one year. Consequently, funding for day-to-day DOD operations could have lapsed and those operations could have only continued under the exceptions to the Anti-deficiency Act that allow the obligation of funds but not actual disbursement of those funds. Whether certain vendors are paid therefore depends on which particular pot of money obligations are made from, and prompt payment would depend on whether the money was needed for other, more urgent, operations.

Critical military operations, as well as payment of active-duty personnel, were guaranteed funding during the shutdown-at least in the short-term. Any activities that the DOD deemed necessary to support those operations also continued during the shutdown. However, although the DOD has broad funding authority for short-term essential operations, there would be some disruptions to some operations if the shutdown were to continue for a prolonged period of time. Specifically, funding would continue for some combat units but not for others, depending on their place in deployment or force generation plans. For example, some medical personnel would not longer be able to provide services for the retirees and dependents that would normally receive those services. The issuance of new contracts, as addressed above, would also be influenced. Local commanders would have broad discretion over which operations should continue to receive funding, resulting in inconsistent decisions over funding across the whole force.

[1] 31 U.S.C. § 1341

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