Written by Anthony O. Maceira
The federal government has reached Day 20 of the shutdown, with Congress still unable to agree on Fiscal Year 2026 appropriations. Disputes over spending levels, health-care subsidies, and foreign-aid rescissions have extended the funding lapse beyond initial expectations, forcing agencies to rely on contingency plans and excepted operations.
The MZLS Government Affairs team in Washington, D.C. assesses that the stalemate is likely to continue at least until early November, given the absence of a viable continuing resolution on the legislative calendar. Each additional week compounds economic losses, delays agency actions, and heightens compliance exposure for regulated industries and federal contractors.
Core national-security and public-safety functions remain funded, but civilian agencies are under growing strain. The federal judiciary has begun furloughing non-essential personnel; the National Nuclear Security Administration has suspended most non-critical work; and the Federal Aviation Administration continues to report air-traffic-control shortages leading to flight delays. Education and childcare programs such as Head Start are beginning to close as grant funding expires.
Treasury officials estimate the shutdown is reducing U.S. GDP by roughly $15 billion per week, while more than 10,000 federal employees have already been placed on furlough or unpaid status. Contractor cash-flow and grant-reimbursement delays are widening across multiple sectors.
With no funding vehicle advancing, both chambers have recessed intermittently, and any continuing resolution would not take effect before November’s first week. The Office of Management and Budget (OMB) has directed departments to prepare for a prolonged lapse and identify long-term “excepted” operations, signalling that short-term continuity plans are transitioning into extended-shutdown protocols.
Federal pass-through funding to Puerto Rico—especially for transportation infrastructure, health services, and housing—is being closely monitored by the island’s federal-affairs office for potential delays as oversight offices operate with limited staffing. Local entities reliant on federal reimbursements or technical assistance should prepare for possible slower draw-downs once appropriations resume
Expect limited agency engagement through the end of October.
Maintain documentation, reassess project timelines, and prepare for incremental agency reactivation in early November if a continuing resolution is enacted.
Unless Congress acts within the next ten days, the shutdown will extend into November, intensifying fiscal and operational strain across government, industry, and territorial programs. Clients with federal-contract, regulatory, or funding exposure should treat current conditions as a sustained disruption—documenting impacts, preserving rights, and coordinating early with counsel and policymakers to position for recovery once appropriations resume.
The MZLS Washington office continues coordinating with congressional and agency staff as contingency planning expands toward November.
Photo by Louis Velazquez on Unsplash
