2013 GOVERNMENT 

SHUTDOWN

Three Departments 

Reported Varying 

Degrees of Impacts 

on Operations, 

Grants, and Contracts

Report to the Chairman, Government 

Performance Task Force, Committee 

on the Budget, U.S. Senate

October 2014

GAO-15-86

United States Government Accountability Office
United States Government Accountability Office

 

Highlights of GAO-15-86, a 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

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 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. 

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.

View GAO-15-86. For more information, 

contact Yvonne D. Jones at (202) 512-6806 or 

jonesy@gao.gov
Page i GAO-15-86 Government Shutdown

Letter 1

Background 5

The 2013 Shutdown Impacted Some of the Selected Departments’ 

Operations and Services, but Longer-Term Effects Are Difficult 

to Assess 12

Selected Components, Grant Recipients, and Contractors Faced 

Challenges Related to Grants and Contracts during the 

Shutdown 26

Economic Effects of the Shutdown on GDP Were Limited 38

Conclusions 41

Recommendation for Executive Action 42

Agency Comments and Our Evaluation 42

Appendix I Objectives, Scope, and Methodology 44

Appendix II GAO Contact and Staff Acknowledgments 49

Tables

Table 1: Selected Departments’ and Components’ Missions for 

Fiscal Year 2013 10

Table 2: Selected Departments’ and Components’ Planned 

Employee Furloughs Compared with Actual Furloughs on 

Average 14

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 17

Contents
Page ii GAO-15-86 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

This is a work of the U.S. government and is not subject to copyright protection in the 

United States. The published product may be reproduced and distributed in its entirety 

without further permission from GAO. However, 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.
Page 1 GAO-15-86 Government Shutdown

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.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.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.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 

 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.
Page 2 GAO-15-86 Government Shutdown

private domestic investment were three of the largest contributors to this 

growth.

You asked us to describe the effects of the federal government 

shutdown.

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).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).6 We selected a component within each department in order to 

 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, 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, 

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, GAO-14-244 (Washington, D.C.: Mar. 6, 2014). 
Page 3 GAO-15-86 Government Shutdown

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. 
Page 4 GAO-15-86 Government Shutdown

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,

7 IHS Global Insight,8 Macroeconomic Advisers,9 and Moody’s 

Analytics.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 

 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.

10Moody’s Analytics provides economic, consumer credit and financial data, research, 

analysis, and forecasting at the global, macro, and subnational/regional levels.
Page 5 GAO-15-86 Government Shutdown

based on our recent report on the reliability of USASpending.gov data.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.

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, 1996.12 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.13

 11GAO, Data Transparency: Oversight Needed to Address Underreporting and 

Inconsistencies on Federal Award Website, 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.

12For 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, GAO-06-382SP

(Washington, D.C.: Feb. 1, 2006).

13Office of Management and Budget, Impacts and Costs of the October 2013 Federal 

Government Shutdown (November 2013).

Background

Overview of Shutdowns 
Page 6 GAO-15-86 Government Shutdown

Types of Employee Furloughsa

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). 

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.14

 14See, for example, GAO, Continuing Resolutions: Uncertainty Limited Management 

Options and Increased Workload in Selected Agencies, GAO-09-879 (Washington, D.C.: 

Sept. 24, 2009); Government Shutdown: Funding Lapse Furlough Information, 

GAO/GGD-96-52R (Washington, D.C.: Dec. 1, 1995); Government Shutdown: Permanent 

Funding Lapse Legislation Needed, 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).

Funding Gaps 
Page 7 GAO-15-86 Government Shutdown

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.15

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

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 

 1531 U.S.C. §§1341-42.

Operations during a 

Shutdown

OMB’s Role
Page 8 GAO-15-86 Government Shutdown

basis.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.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.18

 16Circular 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).

17Office 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.

18Office of Management and Budget, Agency Operations in the Absence of 

Appropriations, Circular No. A-11, Sec. 124.2 (Washington, D.C.: July 2014).
Page 9 GAO-15-86 Government Shutdown

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
Page 10 GAO-15-86 Government Shutdown

The 2013 government shutdown came at a time of continuing budgetary 

uncertainty, which we previously reported limits the operations of federal 

agencies.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 Mission 

Health and Human Services 

(HHS)

National Institutes of Health (NIH)

HHS is the federal government’s principal 

department responsible for protecting the health of 

Americans and providing essential human services. 

A component within HHS, NIH is the nation's leader 

in sponsoring and conducting biomedical research. 

Department of Transportation 

(DOT)

DOT is the principal department responsible for 

implementing national transportation policy and 

administering most federal transportation programs. 

Federal Transit Administration 

(FTA)

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 of Energy (DOE) DOE’s missions encompass energy resources, 

scientific and technological development, 

environmental cleanup, and nuclear security. 

Office of Environmental 

Management (EM)

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

 19For example, see GAO-14-452; GAO-14-244; GAO, Financial Audit: Bureau of the 

Fiscal Service’s Fiscal Years 2013 and 2012 Schedules of Federal Debt, GAO-14-173

(Washington, D.C.: Dec. 12, 2013); Debt Limit: Delays Create Debt Management 

Challenges and Increase Uncertainty in the Treasury Market, GAO-11-203 (Washington, 

D.C.: Feb. 22, 2011); and GAO-09-879.

Selected Departments’ 

and Components’ 

Missions 
Page 11 GAO-15-86 Government Shutdown

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.

Budget Authority Duration 
Page 12 GAO-15-86 Government Shutdown

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 2012.20 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.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 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 

 20National Association of State Budget Officers, State Expenditure Report (Fiscal 2011-

2013 Data), accessed July 25, 2014.

21We have reported inconsistencies with USASpending.gov reporting (see 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.

Grants and Contracts

The 2013 Shutdown 

Impacted Some of the 

Selected 

Departments’ 

Operations and 

Services, but LongerTerm Effects Are 

Difficult to Assess

Preparations to Furlough 

Federal Employees 

Affected the Operations of 

the Selected Departments
Page 13 GAO-15-86 Government Shutdown

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.

22 Similarly, DOE officials said the Energy Information 

Administration was the only office within DOE that furloughed employees 

during the shutdown. 

 22Program direction accounts are funds provided for staffing and mission support services 

for a departmental component. 
Page 14 GAO-15-86 Government Shutdown

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

Department and 

component

Total federal 

employees a

Furloughed

b

Continued to work

Percentage 

furloughed c

Planned Actual Planned Actual Planned Actual

Department of 

Energy (DOE) 9,140 8,617 350 523 8,790 96% 4%

Office of 

Environmental 

Management (EM) 1,413 1,348 0 65 1,413 95% 0%

Department of Health 

and Human Services 

(HHS) 79,133 40,512 42,702 37,686 36,431 52% 54%

National Institutes of 

Health(NIH) 19,740 13,698 15,712 4,948 4,028 73% 80%

Department of 

Transportation (DOT) 55,468 18,481 17,992 36,987 37,476 33% 32%

Federal Transit 

Administration (FTA) 529 501 504 28 25 95% 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.

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. 
Page 15 GAO-15-86 Government Shutdown

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.23 According to NIH officials, while it is difficult to 

measure the influence of these services on patients’ health and wellbeing, 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. 

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. 

 23NIH’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.

The Shutdown Disrupted 

Some Operations and 

Services at Selected 

Departments and 

Components
Page 16 GAO-15-86 Government Shutdown

In terms of immediate disruptions within DOT, the Merchant Marine 

Academy, funded by DOT and administered by the Maritime 

Administration, was closed.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. 

 24The 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. 
Page 17 GAO-15-86 Government 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
Page 18 GAO-15-86 Government Shutdown
Page 19 GAO-15-86 Government Shutdown

a

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.

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..

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.

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. 

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.25 DOT officials explained that they have planned 

extensively for continuity of operations in times of budgetary uncertainty 

 25Sequestration 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. 

Mitigating Factors 

Lessened the 

Uncertainties of the 

Shutdown 

Experience with Prior Budget 

Uncertainties
Page 20 GAO-15-86 Government Shutdown

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 1.26 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. 

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. 

 26Department of Energy: Plan for Operating in the Event of a Lapse in Appropriations, 

DOE O 137.1B (Sept. 30, 2011).

Funding Flexibilities
Page 21 GAO-15-86 Government 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.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. 

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. 

 27The 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. 

Ongoing Communication 

Internally and with OMB Staff 

and OPM Officials 
Page 22 GAO-15-86 Government Shutdown

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, 
Page 23 GAO-15-86 Government Shutdown

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.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 

 28Office 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).
Page 24 GAO-15-86 Government Shutdown

prepare and plan in the event of a future shutdown.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.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. 

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.

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 

 29OMB 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).

30GAO, Standards for Internal Control in the Federal Government, 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, GAO-14-704G

(Washington, D.C.: September 2014).

31GAO-14-244.

Selected Departments’

Longer-Term Effects from 

the Shutdown on 

Operations and Services 

are Difficult to Assess
Page 25 GAO-15-86 Government Shutdown

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. 
Page 26 GAO-15-86 Government Shutdown

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.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 shutdownrelated 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. 

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.

 32We 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.

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

Grants Management Activities 

Effectively Ceased at NIH and 

FTA during the Shutdown
Page 27 GAO-15-86 Government Shutdown

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.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. 

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

 33NIH 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.

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.
Page 28 GAO-15-86 Government Shutdown

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.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.

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 

 34The 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.

Contract Activities Generally 

Continued at EM and NIH, but 

Resulted in Disruptive 

Personnel Actions and 

Program Challenges for Some 

Contractors
Page 29 GAO-15-86 Government Shutdown

maintain EM facilities experienced reductions because EM issued stop 

work orders.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.

 35In 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).
Page 30 GAO-15-86 Government Shutdown

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 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 

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 LongerTerm Effects 
Page 31 GAO-15-86 Government Shutdown

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.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. 

 36We interviewed national associations representing recipients of grants or with expertise 

in the area of grants and contracts. For additional information, see appendix I. 
Page 32 GAO-15-86 Government Shutdown

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. 

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 

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
Page 33 GAO-15-86 Government 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.

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.37

 37Pub. L. No. 113-46, § 116, 127 Stat. 558, 561-62 (Oct. 17, 2013).
Page 34 GAO-15-86 Government Shutdown

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.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 

 38Congressional Research Service, Federal Aid to State and Local Governments: Select 

Issues Raised by a Federal Government Shutdown (Washington, D.C.: Apr. 7, 2014). 

Contractors and Grant 

Recipients Experienced the 

Shutdown Differently Based 

On Their Specific 

Circumstances
Page 35 GAO-15-86 Government Shutdown

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 publically 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 noyear 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 
Page 36 GAO-15-86 Government Shutdown

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.

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.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. 

 39Congressional Research Service, Federal Aid to State and Local Governments: Select 

Issues Raised by a Federal Government Shutdown (Washington, D.C.: Apr. 7, 2014).

Effects of the Shutdown on 

Grant Recipients Would Likely 

Have Been Greater If the 

Shutdown Had Continued 
Page 37 GAO-15-86 Government Shutdown

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.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. 

 40The 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.
Page 38 GAO-15-86 Government Shutdown

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.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.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.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 

 41See 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.

42GDP 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. 

43The 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. 

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
Page 39 GAO-15-86 Government Shutdown

retroactive compensation for furloughed workers.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.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.

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.46 These economic forecasters told us that 

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

17, 2013).

45The 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.

46Lower 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. 

Other Economic Effects of 

the Shutdown 
Page 40 GAO-15-86 Government Shutdown

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.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.48 Also, if the contractors know that the funding is 

 47Similarly, 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).

48Macroeconomic 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.
Page 41 GAO-15-86 Government Shutdown

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.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.

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 

 49Pay 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.

Conclusions
Page 42 GAO-15-86 Government Shutdown

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.

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. 

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 

Recommendation for 

Executive Action

Agency Comments 

and Our Evaluation
Page 43 GAO-15-86 Government Shutdown

interested parties. In addition, the report will be available at no charge on 

the GAO website at 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,

Yvonne D. Jones

Director, Strategic Issues
Appendix I: Objectives, Scope, and 

Methodology

Page 44 GAO-15-86 Government Shutdown

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).1 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).2 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 

 1

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, GAO-13-283

(Washington, D.C.: February 2013).

2

For example, see GAO, 2013 Sequestration: Selected Federal Agencies Reduced Some 

Services and Investments, While Taking Short-Term Actions to Mitigate Effects, 

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, GAO-14-244 (Washington, D.C.: Mar. 6, 2014). 

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 45 GAO-15-86 Government Shutdown

the limited purpose of background information.3 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.4 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,

5 guidance to agencies on preparing 

contingency plans and operating during a shutdown (OMB Circular No. A116 and OMB Memorandum M-13-22);7 reviewed Office of Personnel 

 3

Office of Management and Budget, Impacts and Costs of the October 2013 Federal 

Government Shutdown (Washington, D.C.: November 2013). 

4

GAO, Data Transparency: Oversight Needed to Address Underreporting and 

Inconsistencies on Federal Award Website, GAO-14-476 (Washington, D.C.: June 30, 

2014).

5

Office of Management and Budget, Impacts and Costs of the October 2013 Federal 

Government Shutdown (Washington, D.C.: November 2013).

6

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).
Appendix I: Objectives, Scope, and 

Methodology

Page 46 GAO-15-86 Government Shutdown

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 

 7

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).
Appendix I: Objectives, Scope, and 

Methodology

Page 47 GAO-15-86 Government Shutdown

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,

8

IHS Global Insight,

9 Macroeconomic Advisers,10 and Moody’s Analytics.11

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 

 8

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.

9

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.

10Macroeconomic Advisers is an independent research firm focused on the U.S. economic 

outlook, monetary policy, and fixed income markets.

11Moody’s Analytics provides economic, consumer credit and financial data, research, 

analysis and forecasting at the global, macro, and subnational/regional levels.
Appendix I: Objectives, Scope, and 

Methodology

Page 48 GAO-15-86 Government Shutdown

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. 
Appendix II: GAO Contact and Staff 

Acknowledgments

Page 49 GAO-15-86 Government Shutdown

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

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. 

Appendix II: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(451080)
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