A neglected casualty of a government shutdown

It can be tough for contractors to recover from a shutdown, which has broad implications for the effectiveness of agencies' IT operations.

Trey Hodgkins

Trey Hodgkins argues that any government shutdown would exact a high toll on contractors and their employees -- and on the work they do for federal agencies.

It's a common misconception (and even a punch line) that a government shutdown saves money. That couldn't be further from the truth. In fact, the 16-day government shutdown in 2013 blew a $24 billion crater in the economy that put a freeze on hiring, left a hole in workers' pockets and affected the government's ability to carry out its functions.

The Oct. 1 deadline to pass a budget that funds the government is one week away. Sadly, although there has been much discussion of a short-term continuing resolution (CR) to keep the government open and operating beyond Sept. 30, the drumbeat of news reports cast doubt on that outcome.

Although the focus will naturally be drawn to the impact on federal agencies and their workers, it's important that we bear in mind the high cost a shutdown will have on government contractors, their employees and the services they provide. A shutdown can have a broad range of impacts on contractors depending on what is deemed essential, what has been funded already and will continue, or what work has been funded but is ordered to stop.

During the 2013 shutdown, varied situations emerged. One disabled veteran-owned small business couldn't hire the new employees it needed, causing their remaining employees to double their hours to meet the performance requirements of their government contracts.

More common was the story of a contractor whose operations came to a complete halt because it could no longer bill for its work, and its employees were temporarily furloughed without pay. Another contractor who had funding and planned to continue working was given a stop-work order and had to shutter its operations.

In the national capital region, more than 10,000 stop-work orders for contracts and numerous temporary layoffs occurred in the weeks that followed.

Unlike agencies and their employees, who return to work after a shutdown ends and find operations funded and lost wages restored, contractors are not made whole. For contracted work that must go on during a shutdown, the resulting costs are paid for by internal cuts, hiring freezes, increased costs for taxpayers or a combination of these. Until Congress resolves funding, some contractors must keep their employees ready and available to begin working again and will have to dig into already thin operating margins to keep payroll going while there is no work to be done.

Other contractor employees will face layoffs or furloughs until their employers can start billing again for work performed, but they will likely have to consider those wages lost.

Then there is the long-term damage to the talent pool. Finding, attracting, hiring and retaining skilled workers are increasingly difficult for contractors working in the public sector because wages paid by the government are usually below those that can be found in the private sector. Holding onto employees in the midst of a shutdown makes that effort all the more difficult.

Companies, too, will reassess the value of doing business with a customer that cannot efficiently and regularly fund its operations. The private sector doesn't hold such risks, so government shutdowns tarnish any attraction companies might have to the federal market. When contractors take their extensive experience and knowledge elsewhere, the government and taxpayers suffer.

Unfortunately, even averting a shutdown will have consequences because a CR will likely fund the government for only a portion of fiscal 2016. Under a CR, agencies can fund only ongoing operations, not new contracts, and that leaves the government stuck with older networks and systems rather than being able to reap the benefits of newer, more advanced information technologies.

Put another way, the inability to complete the appropriations process forces the government to meet mission and constituent needs with less secure, efficient, interconnected, interoperable or capable technologies.

Fiscal certainty is essential to moving the government into the 21st century and the digital era. It is also critical for the government contractor community to maintain business viability, sustain cash flow and retain a skilled workforce. Congress and the president have a shared responsibility to return to the hard work of enacting appropriations on time to fund the year ahead. Only then will government agencies be able to successfully plan and effectively invest in the innovative technology sorely needed to help increase the security, efficiency and ability to accomplish their work successfully on behalf of the American people.

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