On October 1, 2025, the US federal government entered a shutdown after Congress failed to pass appropriations legislation for the 2026 fiscal year. The shutdown, which stemmed from partisan disputes over federal spending levels, foreign aid cuts, and health-insurance subsidies, causing widespread disruption across government operations, has started to affect construction and contractors across the country.
Among the sectors hit hardest is construction, where federally funded projects are being delayed, suspended, or left without payment authorizations. Warning that the shutdown could hurt construction projects, the Associated General Contractors of America (AGC) has called on the Congress to pass a “clean continuing resolution” which would allow infrastructure and public works projects to proceed, according to media reports. According to AGC, the fixed-price contracts already awarded are unlikely to face major disruptions as a result of the shutdown.
The ongoing shutdown is affecting not only direct federal contractors but also state and municipal projects reliant on federal grants or approvals. Infrastructure agencies, including the Army Corps of Engineers, have curtailed some projects. The US Army Corps of Engineers will pause over $11 billion in lower-priority projects in cities including New York, San Francisco, Boston and Baltimore due to the shutdown.
Meanwhile, the White House stated that the shutdown would lead to the layoff of thousands of federal employees. The total number of job cuts could exceed 10,000. However, a federal judge temporarily blocked the administration from proceeding with the planned dismissals.