TL;DR. A funding lapse does not automatically stop your contract, but if a stop-work order lands, the government can owe you for idle time only if you document it (paperwork, the least glamorous superpower).
- Contractor with a fully funded contract? You can generally keep working through a lapse. Confirm that in writing before you assume it.
- Contractor holding a stop-work order? Stop right away, cut costs, track everything, and file for an equitable adjustment. The usual window is reported as 30 days, so check your clause.
- Government program or contracting staff? A stop-work order has a 90-day clock. Decide before it runs out whether to extend, cancel or terminate.
- Anyone planning ahead? Funding runs through 11 December 2026. A gap could begin 12 December.
Where we stand today
Nobody is under a shutdown-driven stop-work order right now. On 2 September 2026 the President signed H.R. 6500, which funds the government through 11 December 2026. The Senate passed it 90 to 6 and the House followed 370 to 48. CRS warns that a gap could start on 12 December if Congress passes neither full-year bills nor another continuing resolution.
I found no reporting on whether the December talks are on track, so I won't guess. What I can say is that FY2026 was rough. One count from the National Taxpayers Union puts parts of the government in shutdown for 161 days, or 44% of the fiscal year, beginning 1 October 2025. I could not confirm the exact dates of each lapse or which agencies were hit, so treat that figure as a sense of scale, not a calendar.
So what: You have about two months. That is enough time to read your contracts, not enough to be relaxed about it.
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A lapse is not a stop-work order
This is the most common misunderstanding I hear. When appropriations expire, contracts do not freeze on their own. Contracts that were fully funded (obligated) before the lapse can generally keep going. OMB's guidance tells agencies to suspend work mainly in two cases: where government oversight is critical and those people are furloughed, or where continuing would be wasteful. Law-firm guidance says much the same. Expiry alone does not require a stop-work order unless the work needs new money and isn't excepted.
| Your situation | Likely result | What to do |
|---|---|---|
| Fully funded before the lapse | Work can continue | Get written confirmation from your contracting officer |
| Needs new money to continue | Work may pause | Plan for idle staff and watch the funding line |
| Government oversight staff furloughed | Agency may suspend work | Ask for the direction in writing |
| Formal stop-work order issued | Stop now, 90-day clock starts | Minimise costs and start tracking |
So what: Do not send everyone home because the news says "shutdown." Equally, do not keep billing hours after a written order tells you to stop. Either mistake is expensive.
Who eats the standby cost?
If you get a formal stop-work order, you must comply immediately and keep costs down. In exchange, you can ask for an equitable adjustment. Secondary sources say recoverable items can include idle labour and the cost of demobilising and remobilising. The 30-day claim window comes from a secondary source, and I did not verify it against the clause text. Read the actual clause in your contract.
Construction work often uses a related suspension-of-work clause instead, with similar logic but its own wrinkles. Check which one you have.
Here is the uncomfortable part. I found no primary-source text on standby costs, no dollar figures, and nothing confirming that shutdown idle time was actually reimbursed in the 2025 and 2026 lapses. I also found no GAO or court decisions on the question. Assume recovery is possible but not guaranteed.
Contractor employees have no statutory back-pay guarantee. As widely reported, many firms furloughed people or moved them to other work, and some never made the lost revenue back. In October 2025, Leidos asked indirect employees to cut to 32 hours a week and use vacation for the rest. That is what absorbing standby cost looks like when no order exists to hang a claim on.
Key insight: The gap between "the work slowed down" and "the government ordered us to stop" is where the money lives. A formal order gives you a path to an adjustment. Informal slowdowns usually give you only a hit to your margin.
The 90-day clock cuts both ways
A stop-work order generally lasts 90 days unless both sides agree to longer. A April 2026 National Defense article describes what happens when nobody watches that clock. An incumbent protested an award to GAO, and the contracting officer issued a stop-work order (citing the general stop-work clause rather than the one meant for protests after award). The Air Force announced corrective action and GAO dismissed the protest. Then the Air Force did nothing within the 90 days. When the period ended, the contractor, called Wolverine in the article, resumed performance. I could not retrieve the forum, case number, outcome or dollar value, so I won't claim more than that.
So what: If you are on the government side, put day 90 on the calendar the day you sign the order. If you are a contractor, do the same, and ask in writing what the government intends before that date arrives.
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Start This Module Free →Your pre-December checklist
- Know your funding status. For each contract, find out whether it is fully funded or incrementally funded, and when the money runs out.
- Set up a charge code now. If a stop-work order arrives, you want idle time tracked from hour one, not reconstructed later.
- Ask for direction in writing. Verbal "just pause" instructions are hard to turn into an adjustment.
- Watch subcontractors. Orders need to flow down fast, or you will own their idle time too.
- Check the rulebook. I could not confirm any changes to stop-work procedures or any class deviations from DoD or GSA. Look at acquisition.gov and the OMB lapse FAQ for the current text.
One last caution. October lapses tend to be gentler than December or January ones, because prior-year funds and unexpired task orders carry some contractors for a while. A gap starting 12 December arrives with less cushion. Do the homework now, while the coffee is still hot and nobody is shouting.
What Keeps Running When the Money Stops
| Situation | Work Continues? | Who Decides | What You Do Monday |
|---|---|---|---|
| Fully funded contract, work already obligated | Yes | Nobody, the money is already yours | Keep working, keep invoicing |
| Incrementally funded, funds exhausted | No | Contracting Officer issues stop work | Stop, protect the cost, log everything |
| Option not yet exercised when the lapse starts | No | Government cannot obligate new money | Do not start, do not staff up |
| Government site closed, your work is on site | Usually no | CO plus the facility | Ask in writing before assuming |