This is the accessible text file for GAO report number GAO-15-86 
entitled '2013 Government Shutdown: Three Departments Reported Varying 
Degrees of Impacts on Operations, Grants, and Contracts' which was 
released on November 14, 2014. 

This text file was formatted by the U.S. Government Accountability 
Office (GAO) to be accessible to users with visual impairments, as 
part of a longer term project to improve GAO products' accessibility. 
Every attempt has been made to maintain the structural and data 
integrity of the original printed product. Accessibility features, 
such as text descriptions of tables, consecutively numbered footnotes 
placed at the end of the file, and the text of agency comment letters, 
are provided but may not exactly duplicate the presentation or format 
of the printed version. The portable document format (PDF) file is an 
exact electronic replica of the printed version. We welcome your 
feedback. Please E-mail your comments regarding the contents or 
accessibility features of this document to Webmaster@gao.gov. 

This is a work of the U.S. government and is not subject to copyright 
protection in the United States. It may be reproduced and distributed 
in its entirety without further permission from GAO. Because this work 
may contain copyrighted images or other material, permission from the 
copyright holder may be necessary if you wish to reproduce this 
material separately. 

United States Government Accountability Office: 
GAO: 

Report to the Chairman, Government Performance Task Force, Committee 
on the Budget, U.S. Senate: 

October 2014: 

2013 Government Shutdown: 

Three Departments Reported Varying Degrees of Impacts on Operations, 
Grants, and Contracts: 

GAO-15-86: 

GAO Highlights: 

Highlights of GAO-15-86, a report to the Chairman, Government 
Performance Task Force, Committee on the Budget, U.S. Senate. 

Why GAO Did This Study: 

The federal government partially shut down for 16 days in October 2013 
because of a lapse in appropriations. According to OMB, about 850,000 
federal employees were furloughed for part of this time. GAO was asked 
to describe the effects of the shutdown. This report describes (1) how 
the shutdown affected selected agencies' operations and services, 
including immediate and potential longer-term effects; (2) what is 
known about how the shutdown affected federal contracting and grants, 
as reported by the selected agencies and associations with expertise 
in grants and contracts; and (3) what economic studies or reports 
state about the effect of the shutdown on national economic activity. 

GAO selected three departments for review—-DOE, HHS, and DOT—-based on 
the value of grants and contracts, the percentage of employees 
expected to be furloughed, and the potential for longer-term effects. 
GAO reviewed department contingency plans and other documents; 
economic forecasters' analyses; and interviewed officials from the 
selected departments and components, BEA, OMB, OPM, associations, and 
economic forecasters. 

What GAO Found: 

The 2013 shutdown impacted some operations and services at the three 
departments that GAO reviewed: Energy (DOE), Health and Human Services 
(HHS), and Transportation (DOT). For example, at HHS's National 
Institutes of Health (NIH), initial closure of the clinical trials 
registry prevented new trial registrations for patients, before NIH 
recalled a small number of employees to reopen the registry. 
Similarly, DOT's Merchant Marine Academy closed and required a change 
to the academic calendar to allow eligible students to graduate on 
time. However, officials at these departments said that longer-term 
effects are difficult to assess in isolation from other budgetary 
events, such as sequestration. 

Because of employee furloughs and payment or work disruptions, the 
three departments, their components, grant recipients, and contractors 
faced delays and disruptions in grant and contract activities during 
the shutdown, including the following examples: 

* Within HHS, grants management activities at NIH effectively ceased 
with employee furloughs, although most current grant recipients were 
able to draw down funds. NIH had to reschedule the review process for 
over 13,700 grant applications because of the shutdown. After the 
shutdown, NIH completed the process to meet the next milestone in 
January 2014. 

* Grants activities at DOT's Federal Transit Administration (FTA) 
effectively ceased with grants management officials furloughed and no 
payments made on existing grants. FTA officials said that no new grant 
awards were processed because of the shutdown, but the effect was 
minimal because the grant processing system is typically unavailable 
in early October for fiscal year closeout activities. 

* At DOE's Office of Environmental Management (EM), contract 
activities generally continued because of the availability of multi-
year funding, but more than 1,700 contractor employees who operate and 
maintain EM facilities were laid off or required to use leave because 
EM issued stop work orders. EM officials reported some programs 
required 4 months to return to pre-shutdown levels of contract 
activity. 

Researchers' analyses of the economic effects of the shutdown have 
been limited to predicting its effect on real gross domestic product 
(GDP) in the fourth quarter of 2013. In January 2014, the Bureau of 
Economic Analysis (BEA) estimated the direct effect of the shutdown on 
real GDP growth to be a reduction of 0.3 percentage points. Economic 
forecasters GAO interviewed believed the other economic effects to be 
minimal at the economy-wide level. 

The selected departments were aided in managing the uncertainties of 
the shutdown by their experience with preparing for prior potential 
shutdowns, funding flexibilities (such as multi-year funding), and 
ongoing communications internally and with Office of Management and 
Budget (OMB) staff and Office of Personnel Management (OPM) officials. 
OMB staff addressed questions from agencies on how to communicate 
about the shutdown with their employees, but did not direct agencies 
to document lessons learned from how they planned, managed, and 
implemented the shutdown for future reference. 

What GAO Recommends: 

GAO recommends that OMB instruct agencies to document lessons learned 
in planning for and implementing a shutdown, as well as resuming 
activities following a shutdown should a funding gap longer than five 
days occur in the future. OMB staff did not state whether they agreed 
or disagreed with the recommendation. 

View [hyperlink, http://www.gao.gov/products/GAO-15-86]. For more 
information, contact Yvonne D. Jones at (202) 512-6806 or 
jonesy@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The 2013 Shutdown Impacted Some of the Selected Departments' 
Operations and Services, but Longer-Term Effects Are Difficult to 
Assess: 

Selected Components, Grant Recipients, and Contractors Faced 
Challenges Related to Grants and Contracts during the Shutdown: 

Economic Effects of the Shutdown on GDP Were Limited: 

Conclusions: 

Recommendation for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Selected Departments' and Components' Missions for Fiscal 
Year 2013: 

Table 2: Selected Departments' and Components' Planned Employee 
Furloughs Compared with Actual Furloughs on Average: 

Figure: 

Figure 1: Examples of Activities and Programs by Three Selected 
Departments that Did Not Continue and that Did Continue During the 
2013 Government Shutdown: 

Abbreviations: 

ACF: Administration for Children and Families: 

BEA: Bureau of Economic Analysis: 

BPA: Bonneville Power Administration: 

CMS: Centers for Medicare and Medicaid Services: 

DOE: Department of Energy: 

DOT: Department of Transportation: 

EIA: Energy Information Administration: 

EM: Office of Environmental Management: 

FAA: Federal Aviation Administration: 

FTA: Federal Transit Administration: 

GDP: Gross domestic product: 

HHS: Department of Health and Human Services: 

IHS: Indian Health Service: 

MARAD: Maritime Administration: 

NIH: National Institutes of Health: 

NNSA: National Nuclear Security Administration: 

OMB: Office of Management and Budget: 

OPM: Office of Personnel Management: 

PHMSA: Pipeline and Hazardous Materials Safety Administration: 

SNAP: Supplemental Nutrition Assistance Program: 

TANF: Temporary Assistance for Needy Families: 

WAPA: Western Area Power Administration: 

WIC: Special Supplemental Nutrition Program for Women, Infants, and 
Children: 

[End of section] 

United States Government Accountability Office: 
GAO:
441 G St. N.W. 
Washington, DC 20548: 

October 15, 2014: 

The Honorable Mark R. Warner: 
Chairman: 
Government Performance Task Force: 
Committee on the Budget: 
United States Senate: 

Dear Mr. Chairman: 

In October 2013, the federal government partially shut down for 16 
days, because of a lapse in appropriations. At the start of the fiscal 
year, agencies without available funds were required to cease all 
operations (with few exceptions, such as the protection of human life 
and property) and commence an orderly shutdown. While under way, the 
government shutdown affected federal agencies differently in terms of 
agency operations and services provided, as well as in the numbers of 
employees that were furloughed. The Office of Management and Budget 
(OMB) reported that approximately 850,000 federal employees, or 40 
percent of the civilian federal workforce, were furloughed for at 
least part of the shutdown.[Footnote 1] The Department of Defense 
recalled the majority of its 400,000 furloughed civilian federal 
employees at the end of the first week in response to the Pay Our 
Military Act.[Footnote 2] 

In July 2014, the Bureau of Economic Analysis (BEA) issued the latest 
estimate of gross domestic product (GDP) growth for the fourth quarter 
of calendar year 2013--the time period during which the shutdown 
occurred.[Footnote 3] According to the estimates, in the fourth 
quarter of 2013 real GDP grew by 3.5 percent over the preceding 
quarter. According to BEA, increases in personal consumption 
expenditures, net exports, and gross private domestic investment were 
three of the largest contributors to this growth. 

You asked us to describe the effects of the federal government 
shutdown.[Footnote 4] In this report, we describe (1) how the federal 
government shutdown affected selected agencies' operations and 
services, including the immediate and potential longer-term effects, 
(2) what is known about how the shutdown affected federal contracting 
and grants, including the immediate and potential longer-term effects 
as reported by the selected agencies and associations with expertise 
in grants and contracts, and (3) what economic studies or reports 
state about the effect of the government shutdown on national economic 
activity. 

For this review, we selected three departments and three departmental 
components to serve as nongeneralizable case studies: the Department 
of Energy (DOE) and its Office of Environmental Management (EM); the 
Department of Health and Human Services (HHS) and its National 
Institutes of Health (NIH); and the Department of Transportation (DOT) 
and its Federal Transit Administration (FTA).[Footnote 5] These 
departments and components were selected based on the following 
criteria: (1) having grants or contracts valued over $1 billion in 
fiscal year 2013, as reported on USASpending.gov; (2) the percentage 
of federal employees expected to be furloughed as reflected in the 
department contingency plans; and (3) the potential for longer-term 
effects from the shutdown on operations, grants, or contracts based on 
our determination using department contingency plans, the dollar value 
of grant and contract programs in fiscal year 2013, and background 
research (including OMB's report on the shutdown).[Footnote 6] We 
selected a component within each department in order to obtain 
detailed examples of how components were affected by the shutdown in 
terms of operations and services as well as grants and contract 
activity. 

To describe the effects of the shutdown on the three departments' and 
components' operations and services, we reviewed documentation from 
the departments (including the contingency plan and guidance to 
employees) and components (including details on programs affected by 
the shutdown) and interviewed relevant departmental and component 
level officials regarding steps they took for planning for and 
implementing the shutdown and the effects of the shutdown on 
operations and services. We reviewed OMB documentation (including its 
November 2013 report on the shutdown and guidance to agencies on 
preparing contingency plans and operating during a shutdown); reviewed 
Office of Personnel Management (OPM) guidance to agencies; and 
interviewed OMB staff and OPM officials. We did not assess whether 
departments correctly implemented the shutdown or whether decisions to 
except certain programs or employees were in accordance with the law. 

To describe what is known about how the shutdown affected contracts 
and grants at the selected departments and components as reported by 
associations with expertise in grants and contracts, we reviewed 
documentation from the selected departments and components (including 
guidance to the recipients of grants from the components and 
contractors employed by the components) and interviewed officials 
managing grants and contracts within the selected departments and 
components. We targeted our review of grants to HHS and NIH and to DOT 
and FTA. We targeted our review of contracts to DOE and EM and HHS and 
NIH. We also reviewed documentation--identified through background 
research--on how federal grant recipients in general were affected by 
the shutdown. We interviewed relevant officials from national 
associations which either represent contractors and grant recipients 
or otherwise have relevant expertise, including associations 
representing recipients of grants from our selected departments and 
components. For grants, these organizations and associations included 
the American Association of State Highway and Transportation 
Officials; Association of American Medical Colleges; Association of 
American Universities; Community Transportation Association of 
America; Federal Funds Information for States; Federation of American 
Societies for Experimental Biology; National Association of State 
Auditors, Comptrollers, and Treasurers; and National Association of 
State Budget Officers. For contracts, these organizations and 
associations included the Professional Services Council and the 
American Small Business Chamber of Commerce. 

To describe what economic studies or reports state about the effect of 
the government shutdown on national economic activity, we conducted a 
literature review to identify relevant studies or reports and 
economists who have researched the issue. We reviewed the identified 
research predicting the effects of the shutdown on the national 
economy. Using the results of the literature review, we interviewed 
several economic forecasters from financial services firms who had 
conducted relevant analyses. Forecasters we interviewed included 
economists from Goldman Sachs,[Footnote 7] IHS Global Insight, 
[Footnote 8] Macroeconomic Advisers,[Footnote 9] and Moody's 
Analytics.[Footnote 10] Using the results of the literature review, we 
also reviewed reports and analyses from federal agencies on the 
economic effects of the shutdown. We interviewed relevant officials 
from BEA, Congressional Budget Office, Congressional Research Service, 
and the Council of Economic Advisers. 

We assessed the reliability of OMB's furlough data in its report, 
Impacts and Costs of the October 2013 Federal Government Shutdown, to 
be used for the limited purpose of background information. We checked 
OMB's data by comparing the data to the planned furlough data agencies 
reported in their shutdown contingency plans, and we checked the data 
for reasonableness and the presence of any obvious or potential errors 
in accuracy and completeness. We also interviewed selected OMB staff 
knowledgeable about the data and clarified the process whereby the 
data were collected and verified. We also assessed the reliability of 
the federal grants and contracts data as reported on USASpending.gov 
for the limited purpose of case study selection and background 
information. We assessed the USASpending.gov data for accuracy and 
completeness based on our recent report on the reliability of 
USASpending.gov data.[Footnote 11] We believe these data to be 
sufficiently reliable for the purpose of this report. (See appendix I 
for a more detailed discussion of our objectives, scope, and 
methodology.) 

We conducted this performance audit from April 2014 to October 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Overview of Shutdowns: 

Over the past 20 years, there have occasionally been federal lapses in 
appropriations that led to government shutdowns. The longest of these 
shutdowns lasted 21 calendar days, from December 16, 1995, to January 
6, 1996.[Footnote 12] The most recent government shutdown--the subject 
of this report--occurred at the beginning of fiscal year 2014 and 
lasted for 16 calendar days, from October 1 to 16, 2013. According to 
OMB, this shutdown resulted in agencies furloughing federal employees 
for a combined 6.6 million work days. Furloughed federal employees 
were retroactively paid and OMB estimated the cost to be about $2 
billion.[Footnote 13] 

Text box: 

Types of Employee Furloughs[A]: 
A furlough is the placing of an employee in a temporary nonduty, 
nonpay status because of a lack of work or funds, or for other 
nondisciplinary reasons. There are two types of furloughs: 
* A shutdown furlough occurs when there is a lapse in appropriations, 
and can occur at the beginning of a fiscal year, if no funds have been 
appropriated for that year, or upon expiration of a continuing 
resolution, if a new continuing resolution or appropriations law is 
not passed. In a shutdown furlough, an affected agency would have to 
shut down activities funded by annual appropriations that are not 
excepted by law; 
* An administrative furlough is a planned event by an agency designed 
to absorb reductions necessitated by downsizing, reduced funding, lack 
of work, or any budget situation other than a lapse in appropriations. 

Source: Office of Personnel Management. GAO-15-86. 

[A] Office of Personnel Management, Pay & Leave Furlough Guidance, 
accessed Sept. 10, 2014. See also Office of Personnel Management, 
Guidance for Shutdown Furloughs (Oct. 11, 2013) and Office of 
Personnel Management, Guidance for Administrative Furlough (June 10, 
2013). 

[End of text box] 

Funding Gaps: 

Congress may provide budget authority to agencies through the passage 
of appropriations acts, which permits agencies to incur obligations to 
spend federal funds. When one or more of the appropriations are not 
enacted, a funding gap may result and agencies may lack sufficient 
funding to continue operations. Funding gaps occur most commonly at 
the beginning of a fiscal year when new appropriations, or a 
continuing resolution, have not yet been enacted. In this context, a 
gap may affect only a few agencies (if, for example, only one 
appropriation act remains unenacted as of October 1) or agencies 
across the federal government. We have previously reported that 
funding gaps, actual or threatened, are both disruptive and costly. 
[Footnote 14] 

Operations during a Shutdown: 

Side bar: 

Budgetary Definitions: 

Budget Authority enables the federal government to enter into 
financial obligations that will result in immediate or future outlays 
involving federal government funds. Budget authority may be classified 
by its duration (one-year, multiple-year, or no-year), by the timing 
provided in the legislation (current or permanent), by the manner of 
determining the amount available (definite or indefinite), or by its 
availability for new obligations. 

An obligation is a definite commitment that creates a legal liability 
upon the government for the payment of goods and services ordered or 
received, or a legal duty on the part of the United States that could 
mature into a legal liability by virtue of actions on the part of the 
other party beyond the control of the United States. Payment may be 
made immediately or in the future. An agency incurs an obligation, for 
example, when it places an order, signs a contract, awards a grant, 
purchases a service, or takes other actions that require the 
government to make payments to the public or from one government 
account to another. 

Source: Budget Glossary. GAO-05-734SP. 

[End of side bar] 

One of the key issues related to a government shutdown is determining 
what activities and programs an agency is permitted or required to 
continue when faced with a funding gap and resulting shutdown. Except 
in certain circumstances when continued activities are authorized by 
law, the Antideficiency Act generally restricts agencies from 
continuing operations funded by annual appropriations during a 
government shutdown.[Footnote 15] 

Text box: 

Activities Which May Continue During a Government Shutdown: 

The categories of activities which may continue fall into two broad 
categories. The first category is obligations authorized by law. 
Within this category, there are four types of exceptions: 

* Activities funded with appropriations that do not expire at the end 
of the fiscal year, that is, multiple-year and no-year appropriations; 
* Activities authorized by statutes that expressly permit obligations 
in advance of appropriations, such as contract authority; 
* Activities "authorized by necessary implication from the specific 
terms of duties that have been imposed on, or of authorities that have 
been invested in, the agency." For example, there will be cases where 
benefit payments under an entitlement program are funded from other 
than 1-year appropriations (e.g., a trust fund), but the salaries of 
personnel who administer the program are funded by 1-year money. As 
long as money for the benefit payments remains available, 
administration of the program is, by necessary implication, authorized 
by law, unless the entitlement legislation or its legislative history 
provides otherwise or Congress takes affirmative measures to suspend 
or terminate the program; 
* Obligations "necessarily incident to presidential initiatives 
undertaken within his constitutional powers," for example, the power 
to grant pardons and reprieves. This same rationale would apply to 
legislative branch agencies that incur obligations "necessary to 
assist the Congress in the performance of its constitutional duties"; 
The second broad category reflects the exceptions authorized under the 
Antideficiency Act (31 U.S.C. § 1342)--emergencies involving the 
safety of human life or the protection of property. 

Source: GAO. GAO-15-86. 

[End of text box] 

OMB's Role: 

In the event of a government shutdown, OMB is responsible for ensuring 
that agencies have addressed the essential actions needed to 
effectively manage the shutdown; OMB does so by providing policy 
guidance and shutdown-related instructions. In particular, OMB 
Circular No. A-11 directs federal agencies to develop contingency 
plans for use in the event of a government shutdown and to update 
those plans on a recurring basis.[Footnote 16] On September 17, 2013, 
OMB published guidance for executive branch agencies on how to prepare 
for and operate in the event of a government shutdown (including 
guidance on grant and contract administration) stating that agencies 
should be prepared for the possibility of a lapse in appropriations 
and resulting government shutdown.[Footnote 17] The guidance also 
instructed them to update their shutdown plans consistent with section 
124.2 of OMB Circular No. A-11, which directs agencies to include the 
following in their shutdown plans: a summary of activities that will 
continue and those that will cease, the amount of time needed to 
complete shutdown activities, the number of employees on-board prior 
to shutdown, and the number of employees to be retained during the 
shutdown, among other information.[Footnote 18] 

Side bar: 

Communicating Changes during a Government Shutdown: 

OMB Circular A-11 Guidance, most recently updated in July 2014, 
requires that if any of this information is expected to change should 
a lapse in appropriations extend for a prolonged period of time (i.e., 
longer than 5 days), the contingency plan should explicitly describe 
these changes. In particular, the plan should indicate any points in 
time when the furlough status of employees may change, how many 
employees would be affected, and the legal basis for such changes. 
Agencies should consult with an Office of Management and Budget (OMB) 
representative at such points in time during a lapse in appropriations 
to make OMB aware of any such changes. In addition, during a lapse in 
appropriations agencies should make an OMB representative aware of 
any instances where actions deviate from what is set forth in the 
plan. At the time agencies give furlough notices to employees, 
agencies should provide employees with as much information as possible 
regarding how the agency will go about resuming operations after the 
furlough has ended. 

Source: OMB. GAO-15-86. 

[End of side bar] 

Text box: 

Agency Shutdown Contingency Planning: 

Given the inherent uncertainty of a lapse in appropriations, an 
agency's contingency plan should include actions to be taken during a 
short lapse in appropriations (1 to 5 days) as well as identify 
changes necessary should the lapse continue for an extended period. A 
plan should designate personnel responsible for implementing and 
adjusting the plan in response to duration or changes in circumstances 
that may arise. 

The contingency plan should include a summary of significant agency 
activities that will continue and those that will cease as a result of 
the lapse in appropriations, the total number of agency employees 
expected to be on-board before implementation of the plan, and an 
estimate of the time (to the nearest half day) needed to complete 
shutdown activities. If shutdown activities cannot be completed in a 
half day, the time to completion, the number of employees necessary to 
accomplish shutdown, and the specific nature of the activities being 
performed should be identified. 

Additionally, the contingency plan should address the total number of 
employees retained for each of the following categories: 
* Those whose compensation is financed by a resource other than annual 
appropriations; 
* Those necessary to perform activities expressly authorized by law; 
* Those necessary to perform activities necessarily implied by law; 
* Those necessary to the discharge of the President's constitutional 
duties and powers; 
* Those necessary to protect life and property. 

The plan should also describe in detail for each component within the 
agency the total number of employees in the component to be on-board 
before implementation of the plan. Additionally, it should identify 
the total number of employees to be retained in the component under 
the plan: 
* Exempt employees whose compensation is financed by a resource other 
than annual appropriations. Employees who perform excepted activities 
expressly authorized by law; 
* Employees who perform activities necessarily implied by law; 
* Employees who are necessary to the discharge of the President's 
constitutional duties and powers; 
* Those employees necessary to protect life and property. 

Lastly, the agency should explain the legal basis for each of its 
determinations to retain the categories of employees including a 
description of the nature of the agency activities in which these 
employees will be engaged. 

In its July 2014 guidance update, the Office of Management and Budget 
(OMB) directs agencies to consider preparations for resumption of 
activities. The guidance suggests the agency plan describe actions 
necessary for the resumption of orderly operations. This description 
should include methods for notifying employees that the furlough has 
ended; supervisory flexibilities to address employees who have 
difficulty returning when operations resume; plans for restarting 
information technology systems; and procedures for resuming program 
activities, particularly grants and contracts. 

Source: OMB. GAO-15-86. 

[End of text box] 

Selected Departments' and Components' Missions: 

The 2013 government shutdown came at a time of continuing budgetary 
uncertainty, which we previously reported limits the operations of 
federal agencies.[Footnote 19] To describe the effects of the 
shutdown, particularly on agency operations and services, grants, and 
contracts, we selected three federal departments and components (see 
table 1). 

Table 1: Selected Departments' and Components' Missions for Fiscal 
Year 2013: 

Department/Component: Health and Human Services (HHS); 
Mission: HHS is the federal government's principal department 
responsible for protecting the health of Americans and providing 
essential human services. 

Department/Component: National Institutes of Health (NIH); 
Mission: A component within HHS, NIH is the nation's leader in 
sponsoring and conducting biomedical research. 

Department/Component: Department of Transportation (DOT); 
Mission: DOT is the principal department responsible for implementing 
national transportation policy and administering most federal 
transportation programs. 

Department/Component: Federal Transit Administration (FTA); 
Mission: A component within DOT, FTA provides assistance to transit 
agencies to plan and develop new transit systems and operate, 
maintain, and improve existing systems. 

Department/Component: Department of Energy (DOE); 
Mission: DOE's missions encompass energy resources, scientific and 
technological development, environmental cleanup, and nuclear security. 

Department/Component: Office of Environmental Management (EM); 
Mission: A component within DOE, EM carries out activities to clean up 
radioactive wastes, excess plutonium and uranium, and contaminated 
facilities, and conduct government-sponsored nuclear energy research, 
among other activities. 

Source: GAO analysis of agency documents. GAO-15-86. 

[End of table] 

Budget Authority Duration: 

Side bar: 

Government Funding Authorities: 

Agencies have varying budget authorities, which afford more or less 
flexibility with implementing activities. Some authorities include 
for example: 

No-year authority: Budget authority that remains available for 
obligation for an indefinite period of time. A no-year appropriation 
is usually identified by language such as “to remain available until 
expended.” 

Multiple-year authority: Budget authority available for a fixed period 
of time in excess of one fiscal year. This authority generally takes 
the form of 2-year, 3-year, and so forth availability but may cover 
periods that do not coincide with the start or end of a fiscal year. 

One-year authority: Budget authority available for obligation only 
during a specific fiscal year that expires at the end of that fiscal 
year. It is also known as “fiscal year” or “annual” budget authority. 
Transfer authority: Statutory authority provided by Congress to shift 
all or part of the budget authority in one appropriation or fund 
account to another.
Reprogramming authority: Shifting funds within an appropriation or 
fund account to use them for purposes other than those contemplated at 
the time of appropriation. Unlike a transfer of funds that involves 
shifting funds from one account to another, reprogramming involves 
shifting funds within an account. 

Source: Budget Glossary. GAO-05-734SP. 

[End of side bar] 

Across the federal government, departments and components have varying 
periods of duration for which budget authority is available for 
obligation, such as no-year, multi-year, and annual funds. The 
duration of budget authority is important to agencies in a government 
shutdown, as differing durations afford differing degrees of 
flexibility. Departments and components also have varying degrees of 
transfer authority and reprogramming limitations, which also afford 
agencies differing degrees of flexibility in the event of a shutdown. 

For example, DOE generally receives no-year funds (i.e., 
appropriations available for obligation without fiscal year 
limitation) and as a result, DOE may use funds not yet obligated from 
prior fiscal years. On the other hand, most of DOT's appropriations 
are available for one year. Generally speaking, appropriations 
providing for periods of time longer than one year, such as multi-year 
and no-year, afford agencies more flexibility, which may be helpful in 
terms of being able to continue some activities during a government 
shutdown. 

Grants and Contracts: 

Federal grants and contracts are important tools through which the 
federal government provides program funding to implement initiatives 
and provide goods and services. At $546 billion in fiscal year 2013, 
federal grants to state and local governments accounted for about 16 
percent of total federal outlays. The National Association of State 
Budget Officers reported that federal funds comprised an estimated 31 
percent of state spending in fiscal year 2012.[Footnote 20] HHS is the 
largest federal grant-making department, and according to 
USASpending.gov, HHS and DOT awarded about $337 billion and $56 
billion in grants in fiscal year 2013, respectively.[Footnote 21] In 
addition, federal procurement spending was over $459 billion in fiscal 
year 2013. According to USASpending.gov, HHS and DOE awarded $20 
billion and $24 billion in contracts in fiscal year 2013, 
respectively. DOE is the largest civilian contracting department and 
spends an estimated 90 percent of its annual budget on contracts. 

The 2013 Shutdown Impacted Some of the Selected Departments' 
Operations and Services, but Longer-Term Effects Are Difficult to 
Assess: 

Preparations to Furlough Federal Employees Affected the Operations of 
the Selected Departments: 

The shutdown impacted some of the selected departments' and 
components' operations and services due to activities undertaken to 
help prepare for furloughing federal employees and determining which 
programs could continue. According to some officials at the selected 
departments and components, planning for the shutdown took resources 
away from administering their daily operations and services. Officials 
said that quantifying the total time spent or overall cost of shutdown 
preparations and implementation was difficult. However, some officials 
said time spent preparing for the shutdown led to a loss of 
productivity. 

For example, for the last 2 weeks of September and through the first 2 
weeks in October, EM management was consumed by work concerning the 
shutdown. A department level official stated that DOE spent an 
extraordinary amount of time reprioritizing its budget to help ensure 
as many programs and functions as possible remained open and to help 
minimize the impact of the shutdown on the agency's operations. 
Similarly at the component level, during the month of September EM 
headquarters began collecting information from each field office in 
order to estimate how long each field office could sustain operations 
with current funds. EM headquarters asked the field offices for 
information such as unobligated balances available to support 
continued operation into fiscal year 2014, the number of days 
supported by available balances, and the number of federal and 
contractor employees impacted. EM officials estimated that budget, 
procurement, and management officials spent at least 50 percent of 
their time in September preparing for the shutdown. 

In their contingency plans, the selected departments documented the 
planned number of employees that were to be furloughed and those who 
should continue to work during the shutdown (referred to as excepted 
employees in some cases). Specifically, DOE, HHS, and DOT planned to 
furlough 96 percent, 52 percent, and 33 percent of their employees, 
respectively, as shown in table 2. According to officials at these 
departments, the contingency plans were reasonably accurate 
representations of how the shutdown was implemented in terms of total 
employees actually furloughed and those that continued to work. 
However, as discussed later and shown in the table below, DOE 
officials told us that they were able to avoid furloughing any EM 
federal employees because prior year balances were available to fund 
program direction accounts.[Footnote 22] Similarly, DOE officials said 
the Energy Information Administration was the only office within DOE 
that furloughed employees during the shutdown. 

Table 2: Selected Departments' and Components' Planned Employee 
Furloughs Compared with Actual Furloughs on Average: 

Department and component[A]: Department of Energy (DOE); 
Total federal employees[B]: 9,140; 
Furloughed: 
Planned: 8,617; 
Actual: 350; 
Continued to work[C]: 
Planned: 523; 
Actual: 8,790; 
Percentage furloughed: 
Planned: 96%; 
Actual: 4%. 

Department and component[A]: Office of Environmental Management (EM); 
Total federal employees[B]: 1,413; 
Furloughed: 
Planned: 1,348; 
Actual: 0; 
Continued to work[C]: 
Planned: 65; 
Actual: 1,413; 
Percentage furloughed: 
Planned: 95%; 
Actual: 0%. 

Department and component[A]: Department of Health and Human Services 
(HHS); 
Total federal employees[B]: 79,133; 
Furloughed: 
Planned: 40,512; 
Actual: 42,702; 
Continued to work[C]: 
Planned: 37,686; 
Actual: 36,431; 
Percentage furloughed: 
Planned: 52%; 
Actual: 54%. 

Department and component[A]: National Institutes of Health(NIH); 
Total federal employees[B]: 19,740; 
Furloughed: 
Planned: 13,698; 
Actual: 15,712; 
Continued to work[C]: 
Planned: 4,948; 
Actual: 4,028; 
Percentage furloughed: 
Planned: 73%; 
Actual: 80%. 

Department and component[A]: Department of Transportation (DOT); 
Total federal employees[B]: 55,468; 
Furloughed: 
Planned: 18,481; 
Actual: 17,992; 
Continued to work[C]: 
Planned: 36,987; 
Actual: 37,476; 
Percentage furloughed: 
Planned: 33%; 
Actual: 32%. 

Department and component[A]: Federal Transit Administration (FTA); 
Total federal employees[B]: 529; 
Furloughed: 
Planned: 501; 
Actual: 504; 
Continued to work[C]: 
Planned: 28; 
Actual: 25; 
Percentage furloughed: 
Planned: 95%; 
Actual: 95%. 

Source: GAO analysis of contingency plan data and data from selected 
departments and components. GAO-15-86. 

Notes: The actual number of employees furloughed and those who 
continued to work are on average for the period of the shutdown given 
that the numbers of employees furloughed and those that continued to 
work in some cases varied slightly throughout the shutdown based on 
the needs of the departments and their components. 

[A] EM, NIH, and FTA are components within DOE, HHS, and DOT, 
respectively. The components' employee numbers are included in the 
department level numbers. 

[B] The total number of federal employees for DOE is as of September 
30, 2013, for HHS is October 10, 2013, and for DOT is September 27, 
2013. This table includes only federal employees, not employees of 
contractors working for the department or component. For DOE, the 
total number of employees does not include the Federal Energy 
Regulatory Commission or the Power Marketing Administrations within 
DOE. 

[C] For this table, the continued to work data include excepted 
employees and those employees who were determined to be exempted from 
the furlough due to other funding sources. 

[End of table] 

During the shutdown, management officials that were not furloughed at 
the selected departments and components reevaluated their contingency 
plans to determine which employees were needed for excepted functions 
that arose during the shutdown. As a result, the number of furloughed 
employees changed during the shutdown. For example, according to NIH 
officials, mailroom employees were initially furloughed, but NIH 
realized that some mailroom employees were needed to pick up mail that 
was delivered to NIH including bills that needed to be paid to keep 
the facilities minimally operational. NIH brought some mailroom 
employees back to work as a result. 

The Shutdown Disrupted Some Operations and Services at Selected 
Departments and Components: 

The selected departments and components reported that the shutdown was 
disruptive to their operations and services resulting in immediate 
disruptions to selected programs that were affected by the shutdown. 
For example, at NIH protecting human life and property continued to be 
a focus when deciding which activities to continue or close. During 
the shutdown, NIH's Clinical Center, also called the House of Hope, 
reduced patient morale services such as library services and pet 
therapy because of employee furloughs.[Footnote 23] According to NIH 
officials, while it is difficult to measure the influence of these 
services on patients' health and well-being, these services help 
improve the morale of patients at the center. As issues arose in 
patient care at the NIH Clinical Center during the shutdown, 
specialists or professionals were brought in to take care of the need 
and then furloughed when they completed the task. 

Side bar: 

ClinicalTrials.gov: 

ClinicalTrials.gov is a database operated by the National Library of 
Medicine. It includes information on clinical trials registration such 
as participant eligibility criteria, location, and the condition being 
studied. The database also includes summary results from completed 
trials. The database typically receives roughly 400 new trial 
registrations and updates to 1,300 of the more than 30,000 open trials 
per week. The Food and Drug Administration Amendments Act of 2007 
requires registration of certain clinical trials, so-called Applicable 
Clinical Trials, regardless of the source of the funding, into 
ClinicalTrials.gov within 21 days of enrolling the first participant. 
Some information (i.e., recruitment status and trial completion) must 
be updated no later than 30 days after a change. In addition to the 
statutory deadline for trial registration, many institutions that 
conduct clinical trials have their own internal policies that require 
registration before their institutional review board will review the 
study – a necessary step before a clinical trial can begin. 

Source: NIH officials. GAO-15-86. 

[End of side bar] 

In addition, according to NIH officials, the clinical trials registry 
was initially closed because of the shutdown but was reopened during 
the shutdown. At the beginning of the shutdown the employees who 
manage ClinicalTrials.gov were furloughed. While the public side of 
ClinicalTrials.gov was still accessible, the submission side of the 
database was closed, preventing new trials from being registered to 
the database and all updates to existing entries. According to NIH 
officials, clinical trials may be the only hope for some patients with 
life-threatening diseases. Also, agency officials said that NIH 
received concerned calls from members of Congress and institutions 
performing clinical trials, as well as queries from the media. To 
handle the posting of new clinical trial registrations and critical 
trial updates to ClinicalTrials.gov, NIH recalled a small number of 
ClinicalTrials.gov employees on October 4, 2013, and reopened the data 
submission system. The ClinicalTrials.gov employees continued to 
facilitate registration and other critical trial updates through the 
remainder of the shutdown. A message was posted on the website and 
sent to NIH's extramural community as well as to registered users of 
ClinicalTrials.gov to inform them of this decision. In making the 
decision to reopen ClinicalTrials.gov, NIH officials said they 
considered a number of factors, such as the uncertainty of the length 
of the shutdown and the fact that the registration of trials in 
ClinicalTrials.gov provides critically important information to 
patients seeking opportunities to participate in clinical trials, 
including important information about details of enrolling. 

In terms of immediate disruptions within DOT, the Merchant Marine 
Academy, funded by DOT and administered by the Maritime 
Administration, was closed.[Footnote 24] According to DOT's 
contingency plan, an extended lapse in appropriations could 
significantly disrupt the Merchant Marine Academy's academic schedule, 
making adjustments difficult to accommodate. To lessen the impact of 
the closure, the academy revised its academic calendar to allow 
eligible students to graduate as previously scheduled. In terms of 
immediate disruptions to FTA's operations and services, FTA officials 
stated that in the short term the shutdown may have affected the 
delivery at the local level of public transportation services in 
certain parts of the country. 

To identify programs that would be affected by the shutdown, the 
selected departments used shutdown guidance from OMB and determined 
the funding sources for their programs in collaboration with their 
general counsel, budget officers, and human resources officials. See 
figure 1 for examples of programs or activities within the selected 
departments that did not continue and those that did continue during 
the shutdown. 

Figure 1: Examples of Activities and Programs by Three Selected 
Departments that Did Not Continue and that Did Continue During the 
2013 Government Shutdown: 

[Refer to PDF for image: illustrated table] 

Selected Activities and Programs That Did Not Continue: 

Department of Health and Human Services: 

National Institutes of Health (NIH): 
* New patient admittance; 
* New protocol initiations[A]; 
* Some veterinary services; 
* Grant application or award actions. 

Administration for Children and Families (ACF): 
* Quarterly formula grants for Temporary Assistance for Needy 
Families, Child Care, Social Services Block Grant, Refugee Programs, 
and Community Service Block Grant programs[B]; 
* New discretionary grants, including Head Start and other social 
service programs. 

Centers for Medicare and Medicaid Services (CMS): 
* Discretionary funding for health care fraud and abuse. 

Indian Health Services (IHS): 
* Tribes and Urban Indian Health programs; 
* National policy development and issuance; 
* Oversight and other functions. 

Department of Transportation: 

Federal Transit Administration (FTA): 
* Unfunded core agency functions, including grants, cooperative 
agreements, contracts, purchase orders, travel authorizations, or 
documents obligating funds. 

Federal Aviation Administration (FAA): 
* Development of new air traffic control specialists not certified to 
work a position; 
* Aviation rulemaking; 
* Facility security inspections, evaluations, audits, and other 
similar activities. 

Maritime Administration (MARAD): 
* Administrative support (excepting life and safety support and 
activities associated with the no-year Maritime Security Program and 
the reimbursable program, National Defense Reserve Fleet (including 
the Ready Reserve Fleet); 
* U.S. Merchant Marine Academy operations. 

Pipeline and Hazardous Materials Safety Administration (PHMSA): 
* Strategic planning and program evaluation; 
* Public affairs; 
* Civil rights; 
* Pipeline program development. 

Department of Energy[C]: 

Energy Information Administration (EIA): 
* Select functions related to collecting, analyzing, and disseminating 
energy information promoting understanding of energy interactions 
within the environment and the economy. 

National Nuclear Security Administration (NNSA): 
* Not applicable. 

Bonneville Power Administration (BPA): 
* Not applicable. 

Western Area Power Administration (WAPA): 
* Not applicable. 

Selected Activities and Programs That Continued: 

Department of Health and Human Services: 

National Institutes of Health (NIH): 
* Clinical Center patient care;
* Ongoing protocols (minimal support)[A]; 
* Animal care services; 
* Safeguarding facilities and infrastructure actions. 

Administration for Children and Families (ACF): 
Mandatory funded programs, including: 
* Federal Parent Locator Service; 
* Personal Responsibility Education; 
* Health Profession Opportunity Grants. 

Centers for Medicare and Medicaid Services (CMS): 
Large portions of Affordable Care Act activities, including: 
* Medicaid and the Health Insurance-Marketplace coordination; 
* Insurance rate reviews. 

Indian Health Services (IHS): 
* Direct clinical health care services; 
* Referrals for contracted services not provided through Indian Health 
Services clinics. 

Department of Transportation: 

Federal Transit Administration (FTA): 
* Hurricane Sandy activities funded from the 2013 Disaster Relief 
Appropriations Act; 
* Lower Manhattan Recovery Office activities funded by emergency 
supplemental appropriations after 9/11. 

Federal Aviation Administration (FAA): 
* Air traffic control services; 
* Maintenance and operation of navigational aids and other facilities; 
* Flight standards, field inspections, and other activities. 

Maritime Administration (MARAD): 
* Positions required for U.S. Merchant Marine Academy midshipmen 
safety and welfare activities (on campus or at sea). 

Pipeline and Hazardous Materials Safety Administration (PHMSA): 
* Pipeline accident investigations; 
* Pipeline operators and systems inspections; 
* Pipeline safety regulation enforcement. 

Department of Energy[C]: 

Energy Information Administration (EIA): 
* Environmental restoration related to Cold War activity; 
* Waste management; 
* Stabilization and disposition of special nuclear materials; 
* Technology development; 
* Facility transition and management. 

National Nuclear Security Administration (NNSA): 
Management and security of: 
* U.S. nuclear non-proliferation programs; 
* Naval reactor programs; 
* U.S. nuclear weapons arsenal. 

Bonneville Power Administration (BPA): 
Marketing of wholesale electrical power from: 
* 31 federal hydropower projects in the Columbia River basin; 
* One nonfederal nuclear plant; 
* Several small non-federal power plants. 

Western Area Power Administration (WAPA): 
Marketing and delivery of: 
* Hydroelectric power and; 
* related services (within a 15-state region of the central and 
western United States). 

Source: GAO analysis of selected departments' contingency plans. 
GAO-15-86. 

[A] Clinical Research Protocols are research studies conducted by NIH 
staff. The protocol may test something for a specified condition or 
purpose (e.g., a drug or medical device) or may review previous 
studies or record the history of a disease or condition. 

[B] While HHS did not make the quarterly formula grant payments for 
Temporary Assistance for Needy Families (TANF), the underlying TANF 
statutes remained in place and states were permitted to use their 
unspent federal TANF funds from prior years for expenditures allowable 
under the TANF statute. The Continuing Appropriations Act, 2014, 
allowed for states to be reimbursed for expenses they incurred to keep 
grant programs operational. Pub. L. No. 113-46, § 116, 127 Stat. 558, 
561-62 (Oct. 17, 2013). According to HHS, nearly $110 million in 
grants to the states to assist in refugee resettlement was delayed due 
to the lapse, causing some states to reduce or suspend services. 

[C] According to DOE officials, DOE was able to continue operating 
most of its activities and programs throughout the shutdown, because 
of funding flexibilities, and did not stop most of its activities or 
programs as originally outlined in its contingency plan. In addition, 
DOE officials stated that there was a concern that in the absence of 
federal oversight, had the lapse continued more than a few weeks, 
there would have been added risks engendered in operations involving 
hazardous materials and the possibility of errors, which in turn lead 
to risks to the facilities and the surrounding areas. DOE officials 
explained that although operations continued, there were impacts to 
operations as noted in their contingency plan. 

[End of figure] 

Mitigating Factors Lessened the Uncertainties of the Shutdown: 

The shutdown created uncertainty for the three selected departments 
regarding how employees and programs would be affected. Officials at 
the selected departments said they were concerned about how long the 
shutdown would last and the uncertainty of the length affected 
employees. However, several mitigating factors in the preparation and 
implementation of the shutdown lessened the uncertainty of the effects 
on the operations and services of the three departments and the 
workforce. These factors include (1) experience with prior budget 
uncertainties including past preparations for potential shutdowns; (2) 
funding flexibilities, such as multi-year appropriations; and (3) 
ongoing communication internally and with OMB staff and OPM officials. 

Experience with Prior Budget Uncertainties: 

According to officials at the three departments, employees were 
familiar with shutdown guidance and procedures from previous potential 
shutdown preparations and planning for operating under a continuing 
resolution or in other environments of budgetary uncertainty. For 
example, according to DOT officials, DOT has experience with managing 
budget uncertainty from addressing the sequestration of funds, 
shortfalls within its Highway Trust Fund, and past preparations for 
possible government shutdowns.[Footnote 25] DOT officials explained 
that they have planned extensively for continuity of operations in 
times of budgetary uncertainty working with their management team--
officials from human resources, budget, general counsel, 
communications, and the modal administrations--to assess and plan for 
the potential situations that would affect the department's budget. 

Similarly, according to DOE officials, during August and September DOE 
prepares to address potential budgetary uncertainty that would impact 
its operations and services in anticipation of a potential continuing 
resolution or other situation affecting funds. The officials indicated 
that these yearly preparations helped ensure that their planning and 
processes for the shutdown were implemented and the department was 
well prepared to keep its operations running as funds allowed. 
Specifically, DOE has an order that it follows if Congress fails to 
pass appropriations for the new fiscal year by October 1.[Footnote 26] 
The order describes the procedures DOE will follow 1) for continuing 
operations using available balances such as unobligated balances from 
unexpired prior-year appropriations and 2) upon exhaustion of all 
available balances, continuing only those functions excepted from a 
shutdown. At the component level, although EM reprioritized its 
budget, officials said they were concerned about the length of the 
shutdown. 

Funding Flexibilities: 

Having flexibility in funding beyond the annual appropriations for 
some of its programs helped the selected departments manage the 
effects of the shutdown on their operations and services given that 
some programs were able to continue throughout the shutdown, which 
also reduced the number of employees furloughed. For example, most of 
DOE's appropriations are multi-year or no-year. DOE's programs with 
multi-year and no-year funding were allowed to continue their 
activities during the shutdown by expending unobligated balances of 
prior year money still available for obligation. Each organization or 
program within DOE planned to operate during the shutdown until 
available funds to pay federal employees were exhausted. According to 
DOE officials, prior to the shutdown, the budget office reevaluated 
budget priorities in order to have funds available to meet payroll and 
to help ensure that the highest priority activities, such as the 
oversight of nuclear materials at EM, could continue during the 
shutdown. 

Several HHS components have mandatory spending programs or operate 
programs using user fees that were not affected by a lapse in annual 
appropriations. Therefore, the employees managing the programs in 
these components were generally considered excepted. For example, the 
Administration for Children and Families and the Centers for Disease 
Control and Prevention have mandatory spending programs such as the 
Health Profession Opportunity Grants and the World Trade Center health 
program, respectively, which continued during the shutdown. Also, the 
Food and Drug Administration continued activities related to its user 
fee funded programs including activities in the Center for Tobacco 
Products. 

DOT also has several activities that are funded by other sources 
including multi-year appropriations or contract authority. For 
example, the Federal Aviation Administration's Airport Improvement 
Program is funded through contract authority, while the Maritime 
Administration used reimbursable Department of Defense funding to 
continue its Ready Reserve Force.[Footnote 27] The Highway Trust Fund, 
which funds several DOT programs, was established by law to hold 
federal highway-user taxes that are dedicated for highway and transit 
projects and is also a multi-year fund. Although FTA furloughed most 
of its federal employees, it used prior year emergency supplemental 
appropriations that were available to continue its Hurricane Sandy 
activities. 

Ongoing Communication Internally and with OMB Staff and OPM Officials: 

Officials at the selected departments commented that communication 
within their departments and with OMB and OPM was very important to 
the preparation for and implementation of the shutdown. According to 
these officials, prior to the shutdown, some of the departments posted 
furlough guidance and frequently asked questions from OMB and OPM on 
their websites to ensure employees were provided with the latest 
information regarding the potential for a shutdown. During the 
shutdown, management officials at the three departments who were not 
furloughed reevaluated their contingency plans to determine which 
employees were needed for excepted functions that arose during the 
shutdown. According to officials at the three selected departments, 
all decisions were made in collaboration with their general counsel, 
budget officers, and human resources officials, and in line with 
guidance from OMB. 

At DOT, prior to and during the shutdown, the management team met to 
determine what actions were needed to maintain operations and services 
in the event of a government shutdown. The management team was 
convened in August 2013 to start planning and met frequently in the 
days before and during the shutdown. According to DOT officials, some 
days there were multiple meetings held to make the necessary 
determinations and after the team reached consensus on a particular 
issue the requisite action was taken. Specifically, DOT officials said 
they continually monitored how employees were affected by the shutdown 
through their daily management meetings. According to DOT officials, 
DOT developed an emergency furlough recall form to document when an 
employee needed to be recalled temporarily back to duty because of an 
emergency situation, such as services needed to protect life and 
property. The form allowed management to document its request for 
employee recall in addition to outlining the internal steps that 
needed to be followed to obtain approval and document the process. 
According to DOT officials, management used a tracking log to ensure 
these emergency recalls were internally monitored throughout the 
shutdown. DOT did not update its contingency plan after the shutdown. 

According to HHS officials, throughout the shutdown key management 
officials were in constant communication to monitor the effects of the 
shutdown on department operations and services including employee 
furloughs. For example, the number of employees furloughed at HHS 
changed according to the circumstances for each day of the shutdown, 
according to HHS officials. Employees that completed the end of the 
fiscal year financial close out for HHS initially were not furloughed, 
but after they finished the financial close out they were furloughed. 
While HHS did not document the number of employees furloughed each day 
during the shutdown, HHS officials said, the key officials made 
decisions orally as they were in constant communication throughout the 
shutdown. HHS updated its contingency plan during the shutdown on 
October 10, 2013, to reflect the number of employees actually involved 
in the orderly phase-down and suspension of operations. Specifically, 
on October 1, HHS estimated that 1,103 employees were engaged in this 
activity, while on October 10, HHS estimated that actually 429 
employees were engaged in this activity. HHS did not update its 
contingency plan after the shutdown. 

DOE officials said ongoing communication with management at the 
department and component level allowed them to closely monitor the 
shutdown and make decisions as needed to keep programs operational 
based upon the availability of funding, as discussed earlier. For 
example, although DOE planned to furlough some of the EM staff at 
headquarters and at each site that it oversees, EM officials said that 
their federal employees were not furloughed as projected in the 
contingency plan. DOE officials said the Energy Information 
Administration was the only component that furloughed a number of 
employees during the shutdown. According to departmental officials, 
DOE managed its contingency plan throughout the shutdown in an effort 
to assess the needs of the department and components regarding 
furloughs for employees at EM and its other components. However, DOE 
did not formally update its written plan after the shutdown. 

Officials at the three departments we reviewed said the daily 
communication with OPM and OMB to address questions about the shutdown 
was beneficial and helped lessen the uncertainty of the situation. 
According to OMB staff and OPM officials, OMB and OPM had daily 
telephone communication with agencies' management to address questions 
such as clarifying guidance and answering questions from agencies 
relating to recalling furloughed employees. Issues discussed included 
unemployment compensation for furloughed employees and the treatment 
of the Columbus Day holiday for excepted employees. In addition, OMB 
staff indicated that they addressed questions from agencies regarding 
how to communicate shutdown information to their employees through 
these phone calls. Prior to the shutdown, OMB provided guidance to 
agencies instructing them to update their contingency plans and to 
determine the number of furloughed and excepted employees.[Footnote 
28] During the shutdown, OPM posted frequently asked questions on its 
website to provide details on how employees' pay, leave, and other 
personnel functions would be affected by the shutdown. 

Consistent with Circular No. A-11, OMB staff told us that after the 
shutdown, they did not direct agencies to update their contingency 
plans or document in another way how the shutdown was planned for, 
managed, or implemented in terms of lessons learned for future 
reference. For a longer shutdown, such as one lasting more than five 
days, documenting what actually happened once a shutdown is over 
including how operations were fully resumed could help agencies better 
prepare and plan in the event of a future shutdown.[Footnote 29] 
Federal standards indicate that agencies should identify, record, and 
distribute pertinent information to the right people in sufficient 
detail, in the right form, and at the appropriate time to enable them 
to carry out their duties and responsibilities.[Footnote 30] Without 
documentation of how the shutdown was implemented, agencies may not 
have timely, appropriate information that could help inform planning 
and implementation efforts in the event of a future shutdown. 

Selected Departments' Longer-Term Effects from the Shutdown on 
Operations and Services are Difficult to Assess: 

The selected departments did not report any longer-term effects from 
the shutdown on operations and services and indicated that it is 
difficult to assess the effects from the shutdown in isolation from 
other budgetary events, such as sequestration. However, officials 
raised concerns about how the timing of the shutdown, occurring soon 
after sequestration, affected the morale of its employees. The impacts 
of sequestration on the workforce, which included reduced employee 
travel, training, and monetary awards, affected employee 
morale.[Footnote 31] According to department officials, this effect on 
employee morale was further exacerbated by the lapse in appropriations. 

According to HHS officials, once the shutdown ended, the department's 
functions were fully reestablished and operations were back to normal 
within 6 months of reopening. Department officials do not anticipate 
any longer-term effects from the shutdown on departmental operations 
and services. However, according to HHS officials, the morale of HHS 
employees was low as a result of being furloughed. Also, the longer 
the shutdown lasted, the more challenges arose that they had to 
unexpectedly manage. For example, furloughed federal employees were 
eligible to apply for unemployment insurance benefits, which the 
Department of Labor is responsible for administering. HHS needed 
guidance on how to instruct its employees to apply for unemployment 
insurance since each state has different rules and procedures. HHS 
officials said they could not provide general guidance to all 
employees. After the shutdown, the department had to work with OPM to 
instruct its employees on how to repay the insurance benefits since 
they received back pay. At the component level, NIH officials stated 
the longer-term effects of the shutdown are much harder to detect than 
any immediate disruptions to the operations of the agency. According 
to NIH officials, there are also less tangible impacts, such as 
external partners' decreased trust and confidence in NIH to continue 
funding their research after it is approved. 

According to DOT officials, they are unable to identify any longer-
term effects of the shutdown on their operations and services at the 
department level. However, DOT officials commented that the shutdown 
lowered the morale of their employees. Officials explained that 
furloughed employees were concerned about when they could return to 
work and whether they would be paid. 

DOE officials stated that the shutdown did not have any longer-term 
effects on operations and services at the department level. Because 
the shutdown came early in the fiscal year, the impact on agency's 
operations and services was minimized. A DOE official indicated that 
as a result of the department's annual data collection in August-
September on programs that could be affected by a lapse in 
appropriation DOE officials were able to reevaluate budget priorities 
to maintain programs in order to minimize effects on operations and 
services. The data collection is to determine unobligated balances and 
which programs may have insufficient funds for payroll on October 1. 

Selected Components, Grant Recipients, and Contractors Faced 
Challenges Related to Grants and Contracts during the Shutdown: 

Planning Helped Selected Components Manage the Shutdown's Effects on 
Grants and Contracts, but Grant Recipients and Contractors Faced Other 
Challenges: 

The effects of the shutdown on contracts and grants management were 
more pronounced at the component level than at the department level 
for the three selected departments we reviewed.[Footnote 32] 
Department-level officials provided contract and grants management 
guidance from OMB to their components. For example, DOE, HHS, and DOT 
provided guidance to program offices at EM, NIH, and FTA, 
respectively, that were responsible for implementing that guidance. 
DOT reported that grants management is typically coordinated at the 
component level, so managing shutdown-related activities for contracts 
and grants at the component level was consistent with standard 
practices. HHS reported the same for contract and grants management. 
Officials at DOT and HHS stated that conducting program oversight at 
the component level helped minimize the effects of the shutdown at the 
department level at DOT and HHS. DOE noted disruption in its 
departmental oversight of contracting activities in its field offices. 

Grants Management Activities Effectively Ceased at NIH and FTA during 
the Shutdown: 

All NIH and FTA grants management officials were furloughed and were 
generally unavailable to assist grantees. According to NIH officials, 
appropriate assistance would have been provided if an incident had 
arisen in which a grant supported an excepted activity, such as the 
protection of human life and property, but this situation did not 
occur. 

At NIH, the grant peer review process used to assess grant 
applications had to be rescheduled, adding to potential grant 
recipients' uncertainty about the timing of their research. NIH had to 
reschedule the review process for over 13,700 grant applications. 
According to NIH, these applications were scheduled to be reviewed by 
over 8,000 reviewers in over 400 panels during the time of the 
shutdown.[Footnote 33] According to NIH, the average delay from the 
original panel date to the rescheduled panel date was 46 days, but 
after the shutdown NIH and the external peer reviewers were able to 
act quickly and complete this process in time for all but 31 
applications to meet the next milestone in January 2014. NIH reported 
that deferring 31 applications to a later date is well within the 
typical range of applications normally deferred for reasons other than 
a government shutdown. 

Text box: 

The National Institutes of Health's Peer Review Process for Grant 
Applications: 

The National Institutes of Health (NIH) handles approximately 80,000 
research applications and engages approximately 20,000 reviewers per 
year during three annual peer review cycles. The NIH dual peer review 
system is mandated by statute and all applications are subject to peer 
review.[A] 

The first level of review is carried out by a Scientific Review Group 
composed primarily of nonfederal scientists who have expertise in 
relevant scientific disciplines and current research areas. Selection 
of scientists for peer review panels for the various study sections is 
a multi-step process and it takes months to vet and balance scientific 
expertise. NIH officials coordinate the nomination process, peer 
reviewer vetting, and meeting schedules for the peer review cycle. 

The second level of review is performed by National Advisory Councils 
or Boards within NIH's Institutes and Centers. Councils are composed 
of both scientific and public representatives for their expertise, 
interest, or activity in matters related to health and disease. 
Appointed members usually serve a 4-year term (or usually 6-year terms 
in the National Cancer Institute) and require approval by the 
Secretary of the Department of Health and Human Services or in some 
cases by the President of the United States. Only applications that 
are recommended for approval by both the Scientific Review Group and 
the Advisory Council may be recommended for funding. Final funding 
decisions are made by the NIH Institute and Center Directors. 

Source: GAO analysis of NIH information. GAO-15-86. 

[A] See 42 U.S.C. § 289a. NIH outlines the requirements of the peer 
review at Scientific Peer Review of Research Grant Applications and 
Research and Development Contract Projects, 42 CFR Part 52h. 

[End of text box] 

Side bar: 

Grant Drawdowns: 

Programs funded in whole or part with federal grant funds may initiate 
a request for federal funds to be disbursed through a process called a 
drawdown. Grant recipients may draw down grant funds for anticipated 
or actual expenditures made under the terms of the grant award or 
authorizing language of the federal grant program. These disbursements 
may be authorized in advance of actual program expenses or as 
reimbursement of expenditures made by the state. When there is a lapse 
in federal funding, the method by which federal grant funds are 
provided to the recipients can determine the severity of the 
consequences of a federal government shutdown. 

Source: Congressional Research Service. GAO-15-86. 

[End of side bar] 

NIH and FTA grant recipients' access to funds varied depending on 
agencies' grant processing systems and policies as well as the timing 
of grant milestones. While grants management officials were furloughed 
and unavailable, according to NIH officials, the bulk of NIH grants 
allowed recipients to continue to draw down funds during the shutdown. 
The exception was if the drawdown request triggered a Payment 
Management System internal control flag.[Footnote 34] For example, 
some of the controls compare requests to previous quarter draws, check 
if reporting requirements are all met, and verify that the funds 
requested are within the grant's budget period. NIH officials said 
that there were two holds triggered during the shutdown for NIH grants 
that were resolved by the excepted employees. Among all Payment 
Management System users, 561 payments triggered a hold during the 
shutdown. According to HHS officials, of these 561 payment requests, 
84 requests valued at $65 million were paid despite the hold and 477 
requests valued at $165 million were not paid. Grantees were notified 
about each payment that was rejected and instructed to resubmit after 
the shutdown ended. 

Like NIH, FTA grants management officials were furloughed and 
unavailable to answer questions or provide assistance to grant 
recipients. However, FTA did not process any new grant awards or make 
payments to its existing recipients during the shutdown. According to 
FTA officials, this had a minimal effect because FTA's grant 
processing system is typically offline and unavailable in early 
October for end-of-year closeout processing and no new grant awards 
are processed. Specifically, FTA officials told us that FTA had not 
awarded any grants from October 1 to 16 in the 5 years prior to the 
shutdown. FTA does, however, normally make payments on existing grants 
in early October, but no payments were made during the shutdown 
because employees were furloughed. 

Contract Activities Generally Continued at EM and NIH, but Resulted in 
Disruptive Personnel Actions and Program Challenges for Some 
Contractors: 

While contract activities generally continued at EM and NIH, some 
contractors experienced disruptive personnel actions and program 
challenges. For example, EM did not furlough any federal contracting 
employees during the shutdown because most of its programs were exempt 
at the beginning of the shutdown and the agency had multi-year 
appropriations available, but several EM contractors that operate and 
maintain EM facilities experienced reductions because EM issued stop 
work orders.[Footnote 35] These reductions included layoffs or forced 
use of annual leave for 61 contracted employees at EM's Portsmouth 
Paducah Project Office and 1,715 contracted employees at its Savannah 
River Remediation Site. Agency officials also told us that the looming 
possibility of employee furloughs and the potential termination of 
contracts decreased morale among contractor employees in the weeks 
leading up to the shutdown. 

Although the availability of multi-year funding gave EM some 
flexibility to fund contracts, EM officials were still limited in 
their ability to manage contracts and meet programmatic requirements. 
EM officials told us that if EM had more advance notice of a potential 
lapse in funding, federal and contractor personnel would have been 
better able to strategize as to how to prepare for the funding lapse 
and would have slowed work at the end of fiscal year 2013 to carryover 
more funds into fiscal year 2014 so that work on contracts could 
continue. EM officials also reported challenges with keeping 
equipment--particularly equipment for nuclear processes--running and 
staffed at necessary levels during the shutdown. For example, 
officials told us that at the Savannah River Remediation Site they had 
to reduce contractor support for operating melters--equipment that 
processes nuclear waste into more stable forms such as solid glass for 
safer long-term storage--to the lowest possible levels during the 
shutdown. The officials also said that if the shutdown had continued 
much longer, existing funding for even the minimum level of staffing 
and operation would have been in jeopardy. Officials told us that 
melters can never be shut down because if the temperature of the 
melters fell below a certain threshold, the melters would not restart 
and would therefore become permanently unusable. The officials said 
that DOE was in the review process for excepting the melters from the 
shutdown if the shutdown had continued past October 31, 2013. 

Side bar: 

Contract Option: 

Option means a unilateral right in a contract by which, for a 
specified period of time, the government may elect to purchase 
additional supplies or services called for by the contract or may 
elect to extend the term of the contract. Generally, once the 
specified period within which the option may be exercised has passed, 
the option can no longer be exercised. 

Source: GAO analysis and the Federal Acquisition Regulation 2.101. 
GAO-15-86. 

[End of side bar] 

Conversely, NIH officials told us that most of their contracting 
officials were furloughed during the shutdown and that having limited 
staffing and systems made it hard to complete excepted activities 
during the shutdown. For example, some of the agency's computer 
systems that are used to locate and assemble contract data were 
unavailable during the shutdown and many of the officials who run 
reports and analyze data were furloughed. As a result, the excepted 
officials had to manually search through other means to obtain the 
information they needed to inform decisions, such as identifying 
contract options that were set to expire. Officials reported that one 
NIH contract had an annual option that expired during the shutdown, 
and 24 additional contracts had options that would also have expired 
if the shutdown had continued through November 1, 2013. The contract 
option that expired--an administrative support service contract--
received a stop work order during the shutdown and resumed work after 
the government reopened with no additional implications. After the 
shutdown ended, NIH officials reported having sufficient time to 
exercise the options of the 24 other contracts with options set to 
expire. 

Unlike EM, NIH officials reported that the agency did not have the 
flexibility of multi-year or no-year funding to maintain contracting 
activities and NIH did not have a reserve of available funds from 
previous years to support contracts during the shutdown. However, 
according to NIH officials, the agency's primary system for managing 
contracts is typically offline for 6 days at the beginning of each 
fiscal year for scheduled maintenance, during which time limited 
contracting activities are typically logged into the system. As a 
result of this scheduled down time at the beginning of the shutdown, 
NIH officials reported that contracting activity was not significantly 
behind schedule when the government resumed full operations. 

NIH and EM Reported Returning to Normal Levels of Contract Activity 
and NIH and FTA to Normal Levels of Grant Activity Soon After 
Government Reopened With Minimal Expected Longer-Term Effects: 

NIH and EM officials indicated that they returned to normal levels of 
contracting activity and operations within a few months and do not 
foresee any longer-term effects from the shutdown on their contract 
activity and ability to meet future milestones. NIH officials reported 
that contracting activity and programs returned to normal levels of 
activity within 1 month, and EM officials reported that some programs 
required 4 months to return to pre-shutdown levels of contract 
activity. 

According to EM officials, a longer shutdown would have severely 
affected EM contractors and their employees. Specifically, EM 
officials reported that if the shutdown had continued for another 
week, reductions were expected for an additional 1,500 contractor 
employees from two contractors. Notices of the planned layoffs had 
already been issued for these contracts prior to the government 
reopening. Furthermore, EM contractors also planned to issue personnel 
notices on October 21, 2013, which could have potentially affected 
another 5,000 contractor employees. 

FTA and NIH officials indicated that their agencies returned to normal 
scheduling and timing of grant activities soon after the shutdown. FTA 
officials said that they were able to recover quickly because grant 
milestones were not scheduled to occur during the shutdown. Further, 
FTA does not anticipate any longer-term effects on grants management 
activity as a result of the shutdown. According to NIH, the NIH 
employees and stakeholders involved in the peer review process and 
panels for grant applications worked extra hours to get back on 
schedule after the government reopened, but did not track the hours or 
costs associated with this extra work. Because of their efforts, NIH 
officials said they did not miss the next milestone, the second level 
of peer review held in January 2014, and anticipated no longer-term 
effects on grants activity. 

Officials from associations representing NIH grant recipients noted 
that while the longer-term effects of the shutdown on scientific 
research are hard to determine and cannot be quantified, there were 
other effects from the shutdown that may influence grant recipients 
and their future research.[Footnote 36] For example, officials from 
the associations that we interviewed said some of the grant recipients 
they represent have reported decreased morale and question if they 
should rely on federal assistance for their research going forward. 
Additionally, one association official expressed concern that the 
shutdown could contribute to scientists working on smaller, more 
narrowly-defined projects because of financial concerns for future 
grants, rather than pursuing more innovative, larger projects that 
would be dependent on a higher cost grant for which the federal 
government would likely be the primary source of funding. 

Further, officials from associations representing grant recipients, 
including those that receive NIH grants, noted that there may have 
been a loss of research involving the life cycles of live organisms. 
Prior to the shutdown, NIH determined which officials should be 
excepted to ensure the welfare of all live specimens in NIH 
facilities, including over 1.8 million animals. However, according to 
an official from an association we interviewed, preserving live 
specimens at the grant recipient level could have been challenging if 
the recipient was not able to receive the needed funds to continue the 
research during the shutdown. These officials from associations we 
interviewed did not provide a specific example of where this problem 
occurred during the shutdown. However, according to NIH, for some 
experiments a break in protocol would render the research property 
(both animate and inanimate) useless and require some of it to be 
destroyed. 

Side bar: 

Research Involving Organism Life Cycles: 

Live specimens—whether cellular or animal colonies—require attention 
and specifically timed interactions and analysis during the course of 
an experiment. A scientist from one of the associations we interviewed 
explained that it is necessary to maintain the same biological 
characteristics throughout the experiment by providing attention at 
specific intervals. Even if the cellular or animal colonies are 
maintained, interrupting these intervals may result in lost research 
or resources. 

Source: NIH documents and an official from an association representing 
grant recipients. GAO-15-86. 

[End of side bar] 

Federal Contractors and Grant Recipients Faced Uncertainty during the 
Shutdown, but Indicated that the Effects Would Have Been Greater If 
the Shutdown Had Continued Longer: 

Communication Leading Up to and During the Shutdown Contributed to 
Uncertainty: 

Some associations with expertise in federal contracts and grants 
reported that there was limited guidance leading up to the shutdown 
from departments about how their federal contractors and grant 
recipients would be affected by a potential shutdown. According to 
officials from NIH and some associations with expertise in federal 
contracts and grants that we interviewed, the lack of guidance 
contributed to the uncertainty that contractors and grant recipients 
experienced regarding how the shutdown would affect their ability to 
continue their work. On September 17, 2013, OMB issued guidance to 
agencies on planning for a potential shutdown, which included 
instructions on how agencies should manage grants and contracts during 
a lapse in funding. However, according to officials at the three 
departments we reviewed, per OMB's advice they did not notify their 
contractors and grant recipients about the possible shutdown until on 
or after September 26--3 business days before October 1. According to 
OMB staff, OMB was cautious about advising agencies to notify 
contractors and grant recipients until it appeared likely that the 
shutdown was an imminent possibility, in order to avoid unnecessary 
disruptions to agency operations. 

According to association officials, grant recipients and contractors 
across the government had difficulty obtaining accurate, timely 
information about how their programs would be affected once the 
shutdown began. Grant and contract management officials who were 
furloughed could not communicate with grant recipients or contractors 
to respond to questions or provide other contract and grant support 
services. Further, officials were generally not available to correct 
problems on automated payments to grant recipients, as was the case 
with HHS's Payment Management System. Problems could be addressed only 
if the program was funded with funds from a prior fiscal year (i.e., 
exempt from the lapse in appropriations) or was otherwise excepted, 
for example if it met the life and safety exception. 

Side bar: 

Bridge Funding: 

Some grant recipients provided short-term interim funding to maintain 
certain grant activities during the shutdown. These funds may have 
been repaid with federal funds after the shutdown. For the purposes of 
this report, we refer to this as bridge funding. 

Source: GAO analysis. GAO-15-86. 

[End of side bar] 

Another source of uncertainty for federal grant recipients was whether 
agency programs could continue if they had authorizations that lapsed 
on September 30, 2013. The authorizations for certain large programs 
including the Supplemental Nutrition Assistance Program (SNAP), 
managed by the U.S. Department of Agriculture, and Temporary 
Assistance for Needy Families (TANF), managed by HHS, expired 
September 30, 2013. While SNAP continued during the shutdown by using 
funds authorized under the American Recovery and Reinvestment Act of 
2009 that were available through October 31, 2013 and TANF continued 
by using unexpended prior year balances, the National Association of 
State Budget Officers and Federal Funds Information for States 
reported that some states had questions as to whether they would be 
repaid for providing bridge funding to keep the programs operating 
past October 31, 2013. HHS issued a statement on September 30, 2013 
saying that in the event of a shutdown, the underlying TANF statutes 
remained in place and states would be permitted to use their unspent 
federal TANF funds from prior years for expenditures allowable under 
the TANF statute. The Continuing Appropriations Act, 2014, allowed for 
states to be reimbursed for expenses they incurred to keep grant 
programs operational.[Footnote 37] 

Contractors and Grant Recipients Experienced the Shutdown Differently 
Based On Their Specific Circumstances: 

The effects of the shutdown on federal grant recipients varied based 
on the timing of milestones and the availability of funding. As the 
Congressional Research Service reported, it is difficult to determine 
the exact impact of a federal government shutdown on grant recipients 
because the impact will vary depending on the current stage of each 
individual grant award at the time of the shutdown and the duration of 
the shutdown. Additionally, the impact may vary within a grant program 
and across programs and agencies.[Footnote 38] The timing of 
milestones was a key factor for both federal grant applicants and 
grant recipients because of the resulting effects on the review 
process timeline for grant applications and the availability of funds 
for current grant recipients. Officials from associations with 
expertise in grants that we interviewed said that grant recipients 
with funding available during the shutdown reported to the 
associations that there were minimal effects from the shutdown. 

At a government-wide level, Grants.gov, the online portal to apply for 
federal grants which is maintained by HHS, was online and accepting 
applications, but HHS's Grants.gov support was decreased from 10 
officials to 1 official. According to HHS, 6,725 applications were 
submitted to Grants.gov during the shutdown, over 10,000 fewer 
applications than during the same period in 2012. On October 21, NIH 
began processing the error-free applications submitted during the 
shutdown or in the two days prior to it. 

Two of the associations with expertise in federal grants that we 
interviewed--the National Association of State Budget Officers and 
Federal Funds Information for States--both noted the importance of 
grant award type in determining the effects of the shutdown on grant 
recipients. For example, grant programs that receive mandatory advance 
appropriations for the first quarter, such as HHS's State Medicaid 
Grants, and those funded in authorization acts, such as the Children's 
Health Insurance Program, generally continued during the shutdown. 
Discretionary programs, such as FTA's Transit Formula Grants, and 
programs functioning as appropriated entitlements without advance 
appropriations, such as HHS's Social Services Block Grant, generally 
were affected by the shutdown as funding was not available for new 
grants and furloughs of agency grants management officials could have 
affected the recipients' ability to draw down prior year grant funds. 
Once the shutdown ended, recipients of discretionary grants whose 
funding was disrupted by the shutdown were eligible for reimbursement 
from the agencies that manage the grants. 

There were exceptions to how grant programs functioned during the 
shutdown. Officials from associations with expertise in federal grants 
that we interviewed, reported uncertainty among states as to the 
difference in funding for mandatory and discretionary federal grant 
programs. Specifically, at least one state publicly reported it was 
uncertain about how a mandatory grant with administrative costs funded 
with a discretionary grant would be affected by the shutdown. For 
example, unemployment compensation is a federal-state partnership and 
the state is entitled to a grant from the Department of Labor to cover 
the necessary costs of administering the program. While states were 
responsible for making unemployment compensation payments during the 
shutdown, states were unclear when they would be reimbursed for the 
administrative costs incurred during the shutdown. 

The degree of disruption caused by the shutdown varied among 
contractors at NIH and EM as well. Whether or not a federal contract 
was allowed to continue during the shutdown depended on a number of 
variables including the availability of funds and the extent to which 
contract employees required supervision by federal employees or access 
to federal facilities to conduct their work. For example, NIH 
contractor employees that are located with and receive technical input 
from federal employees or access to federal facilities were generally 
furloughed while contracted EM employees generally continued their 
work at most sites. However, the DOE contingency plan noted that while 
multi-year and no-year funds would be used initially DOE might need to 
review the activities of its contractors depending upon the length of 
the shutdown, the need for government oversight, and the availability 
of prior-year funding. Only those activities where the suspension of 
the function of the contract would imminently threaten the safety of 
human life or the protection of property would be permitted to 
continue. 

Officials from industry associations that represent federal 
contractors told us that the impact of the shutdown on contracted 
employees across the government varied. Some contractor employees were 
reportedly laid off during the shutdown and furloughed contractor 
employees were not necessarily paid by their employer during or after 
the shutdown. For furloughed contractors, several circumstances 
influenced whether they could be paid during the shutdown, including 
whether work was allowable based on the terms of the contract that 
they worked on, the availability of other assignments, and whether 
their company chose to or was able to compensate them out of its own 
pocket if contract funds were unavailable. Specifically, one 
association we interviewed told us that small businesses with federal 
contracts were reportedly less prepared to weather the shutdown than 
larger contractors with revenue sources other than the federal 
government. In addition to furloughs, some companies with affected 
contracts required employees to use leave or take paid or unpaid time 
off if they were unable to reassign employees to training or other 
nongovernment projects. Contractors who were waiting on their 
contracts to be renewed at the beginning of the fiscal year also faced 
added uncertainty as to whether their work would continue once the 
government reopened. 

Effects of the Shutdown on Grant Recipients Would Likely Have Been 
Greater If the Shutdown Had Continued: 

While some grant recipients were able to obtain bridge funding so that 
programs and services funded through federal grants would continue, 
this was not sustainable over the long term and was challenged by the 
uncertainty of the situation. As the Congressional Research Service 
reports, in cases where the state is the primary grant recipient and 
is tasked with administering a program that is partially or fully 
funded by federal grants, the state has the discretion to decide 
whether to cover any gaps in federal funding to maintain normal 
program operations, or whether to suspend program operations during 
the lapse in federal funding. In some cases, suspending program 
operations may include furloughing state employees.[Footnote 39] Some 
states have large numbers of federally funded state employees and at 
least eight states furloughed state employees during the shutdown. 
According to an official from one national association representing 
recipients of federal transportation grants that we interviewed, 
transportation entities which use the funding for operational costs 
were especially vulnerable. Some local paratransit services which 
provide transportation to seniors and persons with disabilities, 
including providing the elderly with rides to doctors' appointments, 
expressed concerns about possible disruptions stemming from a lack of 
funding if the shutdown continued. During the shutdown, the 
association officials said that some of these entities had developed 
plans to prioritize life sustaining travel, but that their flexibility 
to continue operations was limited if the shutdown continued. 

Similarly, an association official representing research grant 
recipients noted that some NIH grant recipient institutions had made 
plans to bridge the funding during the shutdown, but that this was not 
an option for all grant recipients and was not sustainable over the 
long term. As one university wrote in a press statement, it could 
temporarily use cash reserves in unrestricted fund balances to cover 
any federal shortfall. However, doing so would affect its cash flow 
and if the shutdown lasted a few weeks, the university expected the 
shutdown to have a direct effect on the student academic experience 
and the university's ability to continue to do research. Affected 
funding would include graduate student funding, post-doctorate 
funding, and other academic professionals and faculty funding. 

During the shutdown, it was an issue for states to maintain sufficient 
cash flow to bridge funds for federally-funded grant programs. Even if 
a state wanted to use its funds to continue services for a federally 
funded program, it might not have had sufficient liquid assets to do 
so quickly. At least 12 states publicly reported that funding for 
certain grant programs was only confirmed through October, meaning the 
funding may not have been available if the shutdown had continued into 
November.[Footnote 40] Some of these states had expected to 
discontinue certain federally-funded programs or services if the 
shutdown had extended into November, while others expressed 
uncertainty over how they would have proceeded if the shutdown had 
been longer. For example, the State of Kentucky had expected to run 
out of funds for several programs before November 1 including SNAP, 
TANF, the Special Supplemental Nutrition Program for Women, Infants, 
and Children (WIC), and the Low Income Home Energy Assistance Program. 
Similarly, the State of Colorado noted that if the federal government 
had not resumed operations or some other remedy had not been put in 
place, the Colorado WIC program would not likely have been able to 
serve participants in November. 

Economic Effects of the Shutdown on GDP Were Limited: 

Estimates of the Economic Effects of the Shutdown on Real GDP Growth 
Ranged From 0.2 to 0.6 Percentage Points: 

We identified and reviewed the analysis of several economic 
forecasters who predicted the effects of the October 2013 shutdown on 
the national economy; however, there were no studies or academic 
research focused on estimating all the economic effects of the 
shutdown.[Footnote 41] The forecasters we identified predicted the 
effect of the shutdown on the real GDP growth in the fourth quarter of 
2013--which included the time of the shutdown--to be from 0.2 to 0.6 
percentage points as a result of lost productivity of federal workers. 
[Footnote 42] These forecasts were conducted either during or soon 
after the shutdown ended. None of the economic forecasters we 
interviewed further analyzed the effects of the shutdown since it 
ended or plans to conduct future analysis as part of a formal study. 
The economic forecasters we interviewed do not anticipate the shutdown 
having any longer-term effects on national economic activity.[Footnote 
43] 

In January 2014, the Bureau of Economic Analysis (BEA), the agency 
whose national economic statistics provide a comprehensive view of the 
U.S. economy in the form of summary measures such as GDP, estimated 
the direct effect of the shutdown on the real GDP growth in the fourth 
quarter of 2013 to be a reduction of 0.3 percentage points, which is 
within the range of estimates provided by the economic forecasters 
that we identified. According to BEA, the shutdown did not have an 
impact on current-dollar federal compensation since Congress 
authorized retroactive compensation for furloughed workers.[Footnote 
44] BEA derived this estimated effect on real GDP from real federal 
government compensation, one of the components of GDP. BEA adjusted 
real federal government compensation estimates based on the number of 
furloughed employees and the number of furlough days, for the 
reduction in hours worked by federal workers to account for a 
reduction in services.[Footnote 45] Thus, BEA estimates show a decline 
in real GDP based on the lost productivity of the furloughed workers. 
BEA could not quantify the effects of the shutdown on other components 
of GDP and the national income and product accounts, such as personal 
consumption expenditures or private wages and salaries, since they 
were embedded in the source data that underlie BEA estimates and could 
not be separately identified. 

Other Economic Effects of the Shutdown: 

The economic forecasters we interviewed believed the other economic 
effects of the shutdown to be minimal and they generally limited their 
analyses to the effect of the shutdown on direct effects of government 
spending, specifically real federal compensation, as discussed 
earlier. For example, one economic forecaster who did factor in some 
of the indirect effects of the shutdown told us that he estimated the 
loss in real GDP growth to be 0.36 percentage points, out of which 
only 0.03 percentage points could be attributable to loss of support 
services or procurement of other services by the federal government 
such as food and janitorial services. 

Given the challenge with identifying and analyzing the detailed micro-
level data that would let them capture all the ripple effects through 
the economy, these economic forecasters did not take all the indirect 
or multiplier effects into account.[Footnote 46] These economic 
forecasters told us that effects such as impact on consumer and 
investor confidence were harder to quantify since it is not possible 
to isolate the effect of the shutdown from the general political 
uncertainty at the time of the shutdown. 

One of the economic forecasters we interviewed believed that at the 
economy-wide level, when one aggregates the effects over time and 
across economic participants, these effects cancel each other out 
because of substitution between activities and goods. For example, the 
money that was not spent by furloughed federal workers at restaurants 
near their work places may have been spent at restaurants around their 
residences or at grocery stores.[Footnote 47] In addition, two of the 
four economic forecasters told us that furloughed federal workers may 
have delayed some purchases rather than canceling them altogether 
because they were paid retroactively. 

Though the economic forecasters we interviewed generally did not 
analyze all the indirect or multiplier effects of the shutdown on the 
national economy, the economic forecasters told us that they expect 
the indirect effects to have been minimal due to several factors: 

* Duration and timing of the shutdown. Given that the shutdown lasted 
for 11 working days, two of the forecasters we interviewed believed it 
had a modest effect on the national economy. For example, according to 
the analysis of one economic forecaster, defense gross investment 
funding is usually set contractually about a year before expected 
delivery so a shutdown was unlikely to delay private production or 
construction of defense-related capital from one quarter to the next. 
[Footnote 48] Also, if the contractors know that the funding is secure 
and will be forthcoming eventually, this economic forecaster said a 
brief shutdown would be unlikely to have an impact on defense gross 
investment. Similarly, research projects are more likely to have been 
delayed, rather than canceled, given the temporary nature of the 
shutdown. We were also told that the timing of the shutdown somewhat 
constrained its visible impact on the economy because it occurred in 
the earlier part of the fourth quarter. Specifically, delays in 
federal spending which occur within a quarter have no impact on the 
growth rate of federal spending across different quarters, according 
to the economic forecasters we interviewed. 

* Expectations of federal workers regarding retroactive pay. Two of 
the economic forecasters we interviewed said the furloughed federal 
workers expected to be compensated for the time of the shutdown, which 
prevented major changes in the economic behavior of these employees. 
Federal employees have historically received retroactive compensation 
from previous government shutdowns and the day before the shutdown, 
Congress authorized that members of the armed forces and civilian 
employees who support these members would receive retroactive 
compensation.[Footnote 49] Both of these factors increased federal 
employees' expectations that they would receive retroactive 
compensation once the shutdown ended. This expectation caused them to 
delay rather than reduce consumer expenditures. 

Conclusions: 

The October 2013 government shutdown was disruptive for the selected 
departments' and components' operations and services. According to 
selected department officials, the time spent preparing to furlough 
federal employees and determining which programs could continue took 
resources away from the departments' daily operations. The shutdown 
also disrupted federal grants and contracts delivery at our selected 
departments and components as a result of employee furloughs and 
payment or work disruptions. Among other factors, the selected 
departments were aided in managing the uncertainties of the shutdown 
by their experience with preparing for prior potential shutdowns. 

The three selected departments reported that their contingency plans 
were important in directing their shutdown activities and that these 
plans generally represented how the shutdown was implemented. 
According to the departmental officials, the departments did not 
update their contingency plans after the shutdown ended to reflect how 
they managed the shutdown. OMB requires agencies to submit plans and 
update them when changes in funding occur and every 2 years starting 
August 1, 2015. However, OMB does not direct agencies to formally 
document lessons learned from planning for and implementing a 
shutdown, as well as resuming activities following a longer shutdown, 
such as the October 2013 shutdown which lasted more than five days. 
Federal standards indicate that agencies should identify and record 
pertinent information to enable officials to carry out their duties. 
Without documentation of how the shutdown was implemented and lessons 
learned from a longer shutdown, agencies may not have timely, 
appropriate information that could help inform planning and 
implementation efforts in the event of a future government shutdown. 

Recommendation for Executive Action: 

In its annual update of Circular No. A-11, we recommend that the 
Director of OMB instruct agencies to document lessons learned in 
planning for and implementing a shutdown, as well as resuming 
activities following a shutdown, should a funding gap longer than five 
days occur in the future. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Secretaries of DOE, DOT, and 
HHS; and the Directors of BEA, OMB, and OPM. We received technical 
comments from DOE, DOT, HHS, BEA, and OPM which we incorporated into 
the final report where appropriate. In oral comments received on 
September 11, 2014, staff from OMB discussed our findings, 
conclusions, and recommendation. In response to this discussion, we 
made minor revisions to the recommendation language to reflect the 
importance of agencies having timely and appropriate information after 
a longer shutdown. On September 19, 2014, OMB staff did not state 
whether they agreed or disagreed with the recommendation. However, OMB 
staff said they agreed on the value of documenting lessons learned and 
will take into consideration the recommendation as OMB develops next 
year's annual update of Circular No. A-11. OMB staff also provided 
technical comments, which are incorporated into the report where 
appropriate. 

As agreed with your office, unless you publicly announce the contents 
of this report earlier, we plan no further distribution until 30 days 
after the report date. At that time, we will send copies to the 
appropriate congressional committees, BEA, DOE, DOT, HHS, OMB, OPM, 
and other interested parties. In addition, the report will be 
available at no charge on the GAO website at [hyperlink, 
http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-6806 or jonesy@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. GAO staff who made key contributions to 
this report are listed in appendix II. 

Sincerely, yours: 

Signed by: 

Yvonne D. Jones: 
Director, Strategic Issues: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

You asked us to describe the effects of the federal government 
shutdown. This report describes (1) how the shutdown of the federal 
government affected selected agencies' operations and services, 
including the immediate and potential longer-term effects; (2) what is 
known about how the shutdown affected federal contracting and grants, 
including the immediate and potential longer-term effects, as reported 
by the selected agencies and associations with expertise in grants and 
contracts; and (3) what economic studies or reports state about the 
effect of the government shutdown on national economic activity. 

For this review, we selected three departments and three departmental 
components to serve as nongeneralizable case studies: the Department 
of Energy (DOE) and its Office of Environmental Management (EM); the 
Department of Health and Human Services (HHS) and its National 
Institutes of Health (NIH); and the Department of Transportation (DOT) 
and its Federal Transit Administration (FTA).[Footnote 50] These 
departments and components were selected based on the following 
criteria: (1) having grants or contracts valued over $1 billion in 
fiscal year 2013, as reported on USASpending.gov; (2) the percentage 
of federal employees expected to be furloughed as reflected in the 
department contingency plans; and (3) the potential for longer-term 
effects from the shutdown on operations, grants, or contracts based on 
our determination using department contingency plans, the dollar value 
of grants and contracts programs in fiscal year 2013, and background 
research (including the Office of Management and Budget's (OMB) report 
on the shutdown).[Footnote 51] We selected a component within each 
department in order to obtain detailed examples of how components were 
affected by the shutdown in terms of operations and services as well 
as grants and contract activity. 

We assessed the reliability of OMB's furlough data in its report, 
Impacts and Costs of the October 2013 Federal Government Shutdown for 
use in the limited purpose of background information.[Footnote 52] We 
checked OMB's data by comparing the data to the planned furlough data 
agencies reported in their shutdown contingency plans, and we checked 
the data for reasonableness and the presence of any obvious or 
potential errors in accuracy and completeness. We also interviewed 
selected OMB staff knowledgeable about the data and clarified the 
process whereby the data were collected and verified. Additionally we 
assessed the reliability of the federal grants and contracts data as 
reported on USASpending.gov for the limited purpose of case study 
agency selection and background information. We assessed the 
USASpending.gov data for accuracy and completeness based on our recent 
report on the reliability of USASpending.gov data.[Footnote 53] While 
the report noted inconsistencies with USASpending.gov reporting, we 
determined that selected individual data elements that we used for 
this report had sufficiently low percentages of unverified information 
and therefore could be used for the limited purposes of case study 
selection and background information. We believe these data to be 
sufficiently reliable for the purposes of this report. 

To describe the effects of the shutdown on the three departments' and 
components' operations and services, we reviewed the documentation 
from the department (including the contingency plan and guidance to 
employees) and components (including details on programs affected by 
the shutdown) and interviewed relevant departmental and component 
level officials regarding steps they took for planning for and 
implementing the shutdown and the effects of the shutdown on 
operations and services. We reviewed OMB documentation (including its 
November 2013 report on the effects of the shutdown,[Footnote 54] 
guidance to agencies on preparing contingency plans and operating 
during a shutdown (OMB Circular No. A-11[Footnote 55] and OMB 
Memorandum M-13-22);[Footnote 56] reviewed Office of Personnel 
Management (OPM) guidance to agencies; and interviewed OMB staff and 
OPM officials. The information obtained from the selected agencies is 
not generalizable to the rest of the government, but is descriptive of 
the preparation and implementation of the shutdown and the effect of 
the shutdown for the selected agencies. We did not assess whether 
departments correctly implemented the shutdown or whether decisions to 
except certain programs or employees were in accordance with the law. 

To describe what is known about how the shutdown affected contracts 
and grants at the selected departments and components and contractors 
and grant recipients as reported by associations with expertise in 
grants and contracts, we reviewed documentation from the selected 
departments and components (including guidance to the recipients of 
grants from the components and contractors employed by the components) 
and interviewed officials managing grants and contracts within the 
selected departments and components. We targeted our review of grants 
to HHS and NIH and to DOT and FTA. We targeted our review of contracts 
to HHS and NIH and to DOE and EM. We also reviewed documentation on 
how federal grant recipients in general were affected by the shutdown 
as identified through background research from national associations 
as well as the Congressional Research Service. We interviewed relevant 
officials from national associations which either represent 
contractors and grant recipients or otherwise have relevant expertise, 
including associations representing recipients of grants from our 
selected departments and components. In selecting associations with 
expertise in grants, we applied the following criteria: geographic 
dispersal of membership; longevity of operations; recommendations from 
the case study departments and components; and our judgment. For 
grants, these included the American Association of State Highway and 
Transportation Officials; Association of American Medical Colleges; 
Association of American Universities; Community Transportation 
Association of America; Federal Funds Information for States; 
Federation of American Societies for Experimental Biology; National 
Association of State Auditors, Comptrollers, and Treasurers; and 
National Association of State Budget Officers. For contracts, these 
included the Professional Services Council and the American Small 
Business Chamber of Commerce. For information concerning the effect 
the lapse in appropriations had on federally funded grant programs to 
the states, we also reviewed documents from various state agencies, 
governors' offices, and state press releases. We did not independently 
validate the information with state officials. 

To describe what economic studies or reports state about the effect of 
the government shutdown on national economic activity, we conducted a 
literature review to identify relevant studies or reports of economic 
forecasts and analysis and economists who have researched the issue. 
We found that currently no studies have been undertaken; however, we 
identified the work of several economic forecasters from financial 
services firms who had analyzed and written about the effects of the 
shutdown on the national economy. We reviewed the identified research 
predicting the effects of the shutdown on the national economy and 
interviewed several of the economic forecasters who had conducted 
relevant analyses. Forecasters we interviewed included economists from 
Goldman Sachs,[Footnote 57] IHS Global Insight,[Footnote 58] 
Macroeconomic Advisers,[Footnote 59] and Moody's Analytics.[Footnote 
60] Using the results of the literature review, we also reviewed 
reports and analyses from federal agencies and conducted interviews 
with federal officials at the Bureau of Economic Analysis, 
Congressional Budget Office, Congressional Research Service, and the 
Council of Economic Advisers. At the time of our interviews, the 
economists we interviewed from the financial services firms and 
officials from the federal agencies were not aware of any planned or 
completed studies or reports on the topic since the shutdown ended. 

We conducted this performance audit from April 2014 to October 2014 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Yvonne D. Jones, (202) 512-6806, jonesy@gao.gov: 

Staff Acknowledgments: 

* In addition to the contact named above, Janice Latimer and Thomas 
Gilbert (Assistant Directors), Namita Bhatia Sabharwal, Jessica 
Berkholtz, Amy Bowser, Diantha Garms, Thomas James, Melissa King, 
Thomas McCool, Susan Offutt, LaSonya Roberts, Cynthia Saunders, Shelia 
Thorpe, Holly Williams, and William Woods made key contributions to 
this report. 

[End of section] 

Footnotes: 

[1] Office of Management and Budget, Impacts and Costs of the October 
2013 Federal Government Shutdown (November 2013). In its report, OMB 
covered the executive branch agencies and how their employees and 
programs were affected by the shutdown. 

[2] Pub. L. No. 113-39, 127 Stat. 532 (Sept. 30, 2013). This act 
provided appropriations for the pay and allowances of members of the 
U.S. armed forces and those civilian employees that the Secretary of 
Defense determined provide support to members of the armed forces. 

[3] According to BEA, the GDP growth figures shown here reflect the 
most recent update of BEA's national income and product accounts 
released on July 30, 2014. 

[4] This request was originally made by Senator Warner as Chairman of 
the Senate Subcommittee on Surface Transportation and Merchant Marine 
Infrastructure, Safety and Security, Committee on Commerce, Science 
and Transportation. 

[5] DOE's management of major contracts and projects executed by EM--
those with values of $750 million or greater--is included in GAO's 
biennial report on government operations that GAO identifies as high 
risk. See GAO, High Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). 

[6] For example, see GAO, 2013 Sequestration: Selected Federal 
Agencies Reduced Some Services and Investments, While Taking Short-
Term Actions to Mitigate Effects, [hyperlink, 
http://www.gao.gov/products/GAO-14-452] (Washington, D.C.: May 28, 
2014); and 2013 Sequestration: Agencies Reduced Some Services and 
Investments, While Taking Certain Actions to Mitigate Effects, 
[hyperlink, http://www.gao.gov/products/GAO-14-244] (Washington, D.C.: 
Mar. 6, 2014). 

[7] Goldman Sachs is a global investment banking, securities and 
investment management firm that provides a range of financial services 
to a diversified client base that includes corporations, financial 
institutions, governments, and individuals. 

[8] IHS Global Insight is an economic organization that provides 
economic and financial information on countries, regions, and 
industries using macroeconomic models, data, and software to support 
planning and decision making. The company also provides consulting and 
advisory services for industries, such as automotive, energy, health, 
construction, and consumer goods. 

[9] Macroeconomic Advisers is an independent research firm focused on 
the U.S. economic outlook, monetary policy, and fixed income markets. 

[10] Moody's Analytics provides economic, consumer credit and 
financial data, research, analysis, and forecasting at the global, 
macro, and subnational/regional levels. 

[11] GAO, Data Transparency: Oversight Needed to Address 
Underreporting and Inconsistencies on Federal Award Website, 
[hyperlink, http://www.gao.gov/products/GAO-14-476] (Washington, D.C.: 
June 30, 2014). While the report noted inconsistencies with 
USASpending.gov reporting, we determined that selected individual data 
elements that we used for this report had sufficiently low percentages 
of unverified information to be used for the limited purposes of case 
study selection and background information. 

[12] For the purposes of this report, we will refer to the 16-day 
lapse in appropriations as the government shutdown. For more 
information on lapses in appropriations, please see GAO, Principles of 
Federal Appropriation Law: Third Edition, Volume II, [hyperlink, 
http://www.gao.gov/products/GAO-06-382SP] (Washington, D.C.: Feb. 1, 
2006). 

[13] Office of Management and Budget, Impacts and Costs of the October 
2013 Federal Government Shutdown (November 2013). 

[14] See, for example, GAO, Continuing Resolutions: Uncertainty 
Limited Management Options and Increased Workload in Selected 
Agencies, [hyperlink, http://www.gao.gov/products/GAO-09-879] 
(Washington, D.C.: Sept. 24, 2009); Government Shutdown: Funding Lapse 
Furlough Information, [hyperlink, 
http://www.gao.gov/products/GAO/GGD-96-52R] (Washington, D.C.: Dec. 1, 
1995); Government Shutdown: Permanent Funding Lapse Legislation 
Needed, [hyperlink, http://www.gao.gov/products/GAO/GGD-91-76] 
(Washington, D.C.: June 6, 1991); Funding Gaps Jeopardize Federal 
Government Operations, PAD-81-31 (Washington, D.C.: Mar. 3, 1981). 

[15] 31 U.S.C. §§1341-42. 

[16] Circular No. A-11 section 124.2 was updated in July 2014 and 
directs agencies to update and submit their shutdown plans to OMB 
every 2 years (at a minimum) starting August 1, 2015, or whenever 
there is a change in the source of funding for an agency program or 
any significant modification, expansion, or reduction in agency 
program activities. OMB had previously directed agencies to update 
their plans every 4 years (at a minimum) which would have gone into 
effect August 1, 2014. See Office of Management and Budget, Agency 
Operations in the Absence of Appropriations, OMB Circular No. A-11, 
Sec. 124.2 (Washington, D.C.: July 2014). 

[17] Office of Management and Budget Planning for Agency Operations 
During a Potential Lapse in Appropriations, Memorandum M-13-22 (Sept. 
17, 2013). OMB guidance states that, normally, routine operational and 
administrative activities relating to contract or grant administration 
(including payment processing) cannot continue when there is a lapse 
in funding. Therefore, agency employees who are paid with annual 
appropriations and who perform an activity associated with contract or 
grant administration (including oversight, inspection, payment, or 
accounting) should generally not continue to work during a shutdown. 

[18] Office of Management and Budget, Agency Operations in the Absence 
of Appropriations, Circular No. A-11, Sec. 124.2 (Washington, D.C.: 
July 2014). 

[19] For example, see [hyperlink, 
http://www.gao.gov/products/GAO-14-452]; [hyperlink, 
http://www.gao.gov/products/GAO-14-244]; GAO, Financial Audit: Bureau 
of the Fiscal Service's Fiscal Years 2013 and 2012 Schedules of 
Federal Debt, [hyperlink, http://www.gao.gov/products/GAO-14-173] 
(Washington, D.C.: Dec. 12, 2013); Debt Limit: Delays Create Debt 
Management Challenges and Increase Uncertainty in the Treasury Market, 
[hyperlink, http://www.gao.gov/products/GAO-11-203] (Washington, D.C.: 
Feb. 22, 2011); and [hyperlink, http://www.gao.gov/products/GAO-09-
879]. 

[20] National Association of State Budget Officers, State Expenditure 
Report (Fiscal 2011-2013 Data), accessed July 25, 2014. 

[21] We have reported inconsistencies with USASpending.gov reporting 
(see [hyperlink, http://www.gao.gov/products/GAO-14-476]), but we 
determined that the selected individual data elements that we used for 
this report had sufficiently low percentages of unverified information 
and therefore could be used for the limited purposes of case study 
selection and background information. 

[22] Program direction accounts are funds provided for staffing and 
mission support services for a departmental component. 

[23] NIH's Clinical Center is a facility where NIH conducts intramural 
clinical research in a hospital setting with patients or participants 
who receive not only experimental treatments, but also hospital care. 

[24] The U.S. Merchant Marine Academy is a federal service academy 
that educates and graduates licensed Merchant Marine officers who 
serve America's marine transportation and defense needs in peace and 
war. 

[25] Sequestration is an automatic across-the-board cancellation of 
budgetary resources. Sequestration was first established in the 
Balanced Budget and Emergency Deficit Control Act of 1985 to enforce 
discretionary spending limits and control the deficit. On March 1, 
2013, the President ordered a sequestration to achieve $85.3 billion 
in reductions across federal government accounts. 

[26] Department of Energy: Plan for Operating in the Event of a Lapse 
in Appropriations, DOE O 137.1B (Sept. 30, 2011). 

[27] The Ready Reserve Force is a fleet of cargo ships, owned and 
maintained by the Maritime Administration and managed by commercial 
companies. The ships are used to support the deployment of U.S. 
military forces overseas and in national emergencies. 

[28] Office of Management and Budget, Planning for Agency Operations 
during a Potential Lapse in Appropriations, OMB Memorandum M-13-22 
(Washington, D.C.: Sept. 17, 2013); Agency Operations in the Absence 
of Appropriations, OMB Circular No. A-11, Section 124 (Washington, 
D.C.: July 2013, most recently updated in July 2014). 

[29] OMB Circular No. A-11 defines a short shutdown as 1 - 5 days. See 
OMB Circular No. A-11, Section 124 (Washington, D.C.: July 2014). 

[30] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). The federal standards for internal 
control were revised in September 2014. The revised standards are 
effective beginning fiscal year 2016. See GAO, Standards for Internal 
Control in the Federal Government, [hyperlink, 
http://www.gao.gov/products/GAO-14-704G] (Washington, D.C.: September 
2014). 

[31] [hyperlink, http://www.gao.gov/products/GAO-14-244]. 

[32] We targeted our review of grants to HHS and NIH and to DOT and 
FTA. We targeted our review of contracts to HHS and NIH and to DOE and 
EM. See appendix I for more information on how these agencies were 
selected. 

[33] NIH peer review panelists are scientists with expertise suitable 
for evaluating the proposed work objectively. Panelists are selected 
to cover the necessary range of scientific expertise. These scientists 
are recruited from around the globe. To accommodate the participation 
of foreign scientists, NIH employs emerging technologies to reduce the 
need for international travel including video conferencing. 

[34] The Payment Management System, maintained by HHS, is the largest 
civilian federal payment system for federal grants. The system, which 
made 68 percent of all federal grant disbursements in fiscal year 
2010, allows grant recipients to draw down their federal funds. 

[35] In the context of shutdown furloughs, the term "excepted" 
employees is used to refer to employees who are funded through annual 
appropriations who are nonetheless excepted from the furlough because 
they are performing work that, by law, may continue to be performed 
during a lapse in appropriations. Other employees are "exempt" from 
furlough because they are not affected by a lapse in appropriations. 
This includes employees who are not funded by annually appropriated 
funds. Office of Personnel Management, Guidance for Shutdown Furloughs 
(Oct. 11, 2013). 

[36] We interviewed national associations representing recipients of 
grants or with expertise in the area of grants and contracts. For 
additional information, see appendix I. 

[37] Pub. L. No. 113-46, § 116, 127 Stat. 558, 561-62 (Oct. 17, 2013). 

[38] Congressional Research Service, Federal Aid to State and Local 
Governments: Select Issues Raised by a Federal Government Shutdown 
(Washington, D.C.: Apr. 7, 2014). 

[39] Congressional Research Service, Federal Aid to State and Local 
Governments: Select Issues Raised by a Federal Government Shutdown 
(Washington, D.C.: Apr. 7, 2014). 

[40] The examples of states' funding for their grants programs during 
the shutdown are based on state documents, including press releases, 
and we did not independently validate the information with the states. 

[41] See appendix I for information on the economic forecasters' 
analyses we identified through our literature review and a list of the 
four economic forecasters and other officials at federal agencies we 
interviewed. 

[42] GDP changes from one period to another because of change in 
quantity as well as price. The quantity-change element in GDP is 
referred to as the constant-dollar increase, or sometimes as the 
change in the real component of GDP or in real GDP. 

[43] The officials we interviewed from federal agencies (including the 
Bureau of Economic Analysis, Congressional Budget Office, 
Congressional Research Service, and the Council of Economic Advisers) 
that have researched the topic also indicated that they are not 
planning any research or are not aware of any planned research. 

[44] Continuing Appropriations Act, 2013, Pub. L. No. 113-46, § 115, 
127 Stat. 558, 561(Oct. 17, 2013). 

[45] The timing of when the back pay was actually paid out to 
furloughed federal employees does not affect the estimates because 
compensation of government employees is measured on an accrual basis 
(when the compensation is earned) in the national income and product 
accounts. The furlough was represented as a reduction in the level of 
government services but the same costs of these services were 
maintained in BEA's estimates for the fourth quarter GDP. 

[46] Lower government spending can have multiplier effects that make a 
decline in GDP greater than the initial decline in government 
spending. For example, if federal employees reduced consumption or if 
federal contractors reduced investment as a result of the shutdown, 
then these reductions would also be represented as a decline in GDP. 

[47] Similarly, people who could not visit a certain national park 
during the days of the shutdown may have gone somewhere else or 
returned to those destinations at a later date. For details on how 
national parks were affected by the shutdown, see U.S. Department of 
the Interior, National Park Service, Effects of the October 2013 
Government Shutdown on National Park Service Visitor Spending in 
Gateway Communities (February 2014). 

[48] Macroeconomic Advisers' Macro Focus, Showdown over a Shutdown: 
The GDP Effects of a (Brief) Federal Government Shutdown, Volume 8, 
Number 7 (Sept. 25, 2013). Most defense equipment scheduled for 
delivery late in 2013 was financed out of appropriations authorized in 
2012. Equipment is recorded in defense gross investment when it is 
delivered. When the equipment is delivered there is no impact on GDP 
because the value of the delivery is subtracted from private 
inventories where it accumulated as the equipment was fabricated. 
Ships and structures are recorded in defense gross investment as the 
work progresses and also are paid for with funds obligated out of 
prior obligations. 

[49] Pay Our Military Act, Pub. L. No. 113-39, 127 Stat. 532 (Sept. 
30, 2013). There were also other bills introduced that included 
retroactive pay for all federal employees. 

[50] DOE's management of major contracts and projects executed by EM--
those with values of $750 million or greater--is included in GAO's 
biennial report on government operations that GAO identifies as high 
risk. See GAO, High Risk Series: An Update, [hyperlink, 
http://www.gao.gov/products/GAO-13-283] (Washington, D.C.: February 
2013). 

[51] For example, see GAO, 2013 Sequestration: Selected Federal 
Agencies Reduced Some Services and Investments, While Taking Short-
Term Actions to Mitigate Effects, [hyperlink, 
http://www.gao.gov/products/GAO-14-452] (Washington, D.C.: May, 28, 
2014); and 2013 Sequestration: Agencies Reduced Some Services and 
Investments, While Taking Certain Actions to Mitigate Effects, 
[hyperlink, http://www.gao.gov/products/GAO-14-244] (Washington, D.C.: 
Mar. 6, 2014). 

[52] Office of Management and Budget, Impacts and Costs of the October 
2013 Federal Government Shutdown (Washington, D.C.: November 2013). 

[53] GAO, Data Transparency: Oversight Needed to Address 
Underreporting and Inconsistencies on Federal Award Website, 
[hyperlink, http://www.gao.gov/products/GAO-14-476] (Washington, D.C.: 
June 30, 2014). 

[54] Office of Management and Budget, Impacts and Costs of the October 
2013 Federal Government Shutdown (Washington, D.C.: November 2013). 

[55] Office of Management and Budget, Preparation, Submission, and 
Execution of the Budget, Circular No. A-11 (Washington, D.C.: July 
2013, most recently updated in July 2014). 

[56] Office of Management and Budget, Planning for Agency Operations 
During a Potential Lapse in Appropriations, Memorandum M-13-22 
(Washington, D.C.: Sept. 17, 2013). 

[57] Goldman Sachs is a global investment banking, securities and 
investment management firm that provides a range of financial services 
to a diversified client base that includes corporations, financial 
institutions, governments, and individuals. 

[58] IHS Global Insight is an economic organization that provides 
economic and financial information on countries, regions, and 
industries using macroeconomic models, data and software to support 
planning and decision making. The company also provides consulting and 
advisory services, for industries, such as automotive, energy, health, 
construction, or consumer goods. 

[59] Macroeconomic Advisers is an independent research firm focused on 
the U.S. economic outlook, monetary policy, and fixed income markets. 

[60] Moody's Analytics provides economic, consumer credit and 
financial data, research, analysis and forecasting at the global, 
macro, and subnational/regional levels. 

[End of section] 

GAO's Mission: 

The Government Accountability Office, the audit, evaluation, and 
investigative arm of Congress, exists to support Congress in meeting 
its constitutional responsibilities and to help improve the 
performance and accountability of the federal government for the 
American people. GAO examines the use of public funds; evaluates 
federal programs and policies; and provides analyses, recommendations, 
and other assistance to help Congress make informed oversight, policy, 
and funding decisions. GAO's commitment to good government is 
reflected in its core values of accountability, integrity, and 
reliability. 

Obtaining Copies of GAO Reports and Testimony: 

The fastest and easiest way to obtain copies of GAO documents at no 
cost is through GAO's website [hyperlink, http://www.gao.gov]. Each 
weekday afternoon, GAO posts on its website newly released reports, 
testimony, and correspondence. To have GAO e-mail you a list of newly 
posted products, go to [hyperlink, http://www.gao.gov] and select 
"E-mail Updates." 

Order by Phone: 

The price of each GAO publication reflects GAO's actual cost of 
production and distribution and depends on the number of pages in the 
publication and whether the publication is printed in color or black 
and white. Pricing and ordering information is posted on GAO's 
website, [hyperlink, http://www.gao.gov/ordering.htm]. 

Place orders by calling (202) 512-6000, toll free (866) 801-7077, or 
TDD (202) 512-2537. 

Orders may be paid for using American Express, Discover Card, 
MasterCard, Visa, check, or money order. Call for additional 
information. 

Connect with GAO: 

Connect with GAO on facebook, flickr, twitter, and YouTube.
Subscribe to our RSS Feeds or E mail Updates. Listen to our Podcasts.
Visit GAO on the web at [hyperlink, http://www.gao.gov]. 

To Report Fraud, Waste, and Abuse in Federal Programs: 

Contact: 
Website: [hyperlink, http://www.gao.gov/fraudnet/fraudnet.htm]; 
E-mail: fraudnet@gao.gov; 
Automated answering system: (800) 424-5454 or (202) 512-7470. 

Congressional Relations: 

Katherine Siggerud, Managing Director, siggerudk@gao.gov: 
(202) 512-4400: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7125: 
Washington, DC 20548. 

Public Affairs: 

Chuck Young, Managing Director, youngc1@gao.gov: 
(202) 512-4800: 
U.S. Government Accountability Office: 
441 G Street NW, Room 7149: 
Washington, DC 20548. 

[End of document]