This isn’t the Trump administration’s first rendezvous with a federal shutdown, but it is the first time that the government has shut down with a significantly leaner federal workforce, courtesy of the scalpel (and chainsaw) work by the Department of Government Efficiency.
And this time around, federal contractors are feeling the pains of working with a smaller government post-DOGE.
“There’s a lack of clarity and more murkiness on contract status and I think part of that is the dust is still settling post-DOGE,” says RJ Blake, the CEO and founder of Blake Willson Group, an Arlington, Virginia-based accounting firm that works with the federal government. “In addition to lack of bandwidth, operating skeleton crews in procurement shops creates a perfect storm [of uncertainty.]”
Blake estimates that about half of his contracts are essential and therefore won’t be impacted by the shutdown. But the other half, he says, might be. He’s not sure. Neither are the contracting officers he’s working with.
If a government contract is considered essential, contractors can continue working on it at all times, including during a shutdown. That’s not the case for all contracts, some of which might be considered nonessential and face financial consequences, particularly the dreaded stop work order, which freezes activity until further notice.
“A lot of contract officers are saying: ‘Hey, I don’t know. I’ll let you know when I know,’” Blake says, adding, “and we’re talking up as late as yesterday. It’s hour-by-hour, and that’s been a lot more apparent than in the past.”
Perhaps that’s not surprising considering the mass consolidation efforts undertaken by the Trump administration this year, which slashed billions of dollar worth of federal contracts and is aiming to cut 300,000 civil servants from the workforce by year-end. To make matters worse, those efforts could continue. President Trump threatened to cut the federal workforce even more in the event of a shutdown, going a step further past a furlough. That said, permanent cuts have yet to be announced.
The government last shut down near the start of Trump’s first term, closing up shop for 35 days, starting in December 2018 and bleeding into the new year. That also happens to be the longest federal shutdown in U.S. history.
A shutdown is frustrating for everyone, but the nonpolitical players take the biggest hits. Hundreds of thousands of federal workers who are furloughed, along with those who must continue working, but forgo their pay until the government re-opens.
And then there are the contractors that work with the government. Rachel Klein, the owner of the Santa Clarita, California-based Fire Starter Studios/Solaris Media, says that she spent two years working to obtain a General Services Administration [GSA] certification that allows her business to side-step the bidding process in federal procurements and deal with the government more directly which in theory should boost opportunities for the business.
It took her about two years and cost her roughly $10,000. The company had just gotten their pricing list up and was ready to go, she says, but now that the government has shut down, it’s a slap in the face.
“I’m a Democrat, and my business partner of 20 years is a Republican, and the two of us have been just fine at opposite ends of the aisle,” Klein says. “But neither one of us think that fiscally responsible policies are happening right now when it comes to small businesses because we just want to sell stuff, make stuff, and do stuff.”
The economic impacts of a shutdown largely are dependent on the duration of one. But make no mistake, even a truncated shutdown packs a punch. New data from the Society for Human Resource Management (SHRM), an Alexandria, Virginia-based human resources trade association, shows that a shutdown lasting up to three days could negatively impact the day-to-day for 25 percent of companies, with growing concerns that they could fall short of financial targets. If a shutdown timeframe lengthens to a week, 49 percent of respondents say they might veer off course from the year’s financial goals.
What’s particularly unique to this shutdown is the blatant politicization, according to Deniece Peterson, vice president of federal market analysis at Deltek, a Herndon, Virginia-based software and information solutions firm. She points to banners sprawled out on federal webpages assigning blame to Democrats for the government shuttering.
A banner on the Small Business Administration’s webpage reads: “Senate Democrats voted to block a clean federal funding bill (H.R. 5371), leading to a government shutdown that is preventing the U.S. Small Business Administration (SBA) from serving America’s 36 million small businesses.”
The message goes on to claim that for every day the government remains closed, it’s the Democrats that are responsible for preventing 320 small businesses from accessing SBA aid each day. Republicans control all three chambers of the government, but Democratic lawmakers are holding out votes to approve federal funding in an attempt to wrestle back money to keep healthcare premiums low and reverse cuts to Medicaid.
Peterson says she hasn’t seen this kind of hyperpolitical rift before.
“It’s very challenging for everyone involved, but especially for contractors who have to rely on government workers that may or may not still be there, may or may not be furloughed, and may or may not have the experience and confidence to make decisions,” Peterson says.
Melissa Angell
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