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A neglected casualty of a government shutdown

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.

About the Author

Trey Hodgkins is senior vice president of the Information Technology Industry Council's IT Alliance for Public Sector.

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Government Cyber Insider tracks the technologies, policies, threats and emerging solutions that shape the cybersecurity landscape.

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Reader comments

Mon, Oct 5, 2015

If they do a shutdown then we should all go home, traffic controllers, BOP gaurds, Judges, all personnel no one show up close doors. No, skeleton crews that way then maybe the Senators and Congress man can feel the wrath of the people so we are not blamed for there stupidity and politics that they are playing. Maybe then people will vote them out and stick new people in there. Tire of all the BS that goes on in Washington. Just get it right, What would God do...Amen.

Thu, Sep 24, 2015 Steve Goodrich Washington DC

Couldn't of said it better Trey, thank you. Huge and costly impact on helping government meet its mission. And the uncertainty makes great talent look for better opportunities to serve

Thu, Sep 24, 2015 Fed Up Fed

I take issue with the concept that Contractor tallent will be hard to find because contractors wages are below Federal wages. That is not the image the companies give COR and COTR. The contractors charge 30-60% more per seat in many cases. If the contractor employees are under paid they need to go after their board of director's pay!! Fact is the statement in this article is not true. Many employee's of contractors have asked me why I stay in an underpaid Federal position when I could bring home 1.5 times as much pay a month working for their companies! The Contracting numbers routinely bear this out! Someone with no experience right out of college in my field gets 30% more than I do and I have over 20 years experience?? Further after the 2013 shut down there was no shortage of contractors clammering to interview and present us with their market research portfolios for review.

Thu, Sep 24, 2015 Peter

My biggest criticism of this article though is that the big question is not asked: why are the feds so damn reliant on contracting in the IT sector right now? IMHO the ReThugs that have a stick up their butts about gov't spending need to take gut-check of their re-election bankrolls and force agencies to bring the vast majority of their staffing in-house.

Thu, Sep 24, 2015 Puregoldj

Great article. We need more such articles pointing out to the clueless bozos in Congress that shutting down the government has real consequences; for the effectiveness of government organizations, for thousands of contractors who have real jobs supporting the Federal staff (also real jobs), for all the individuals displaced or losing pay because Congress doesn't do its job, and ultimately for the taxpayer, who of course, has to pay for their stupidity. Remember last shutdown, when the guys responsible for the shutdown were completely stunned and outraged that gee, when you shut down the government, National Parks are closed, your constituents don't get their checks, work is stopped on some projects in their districts/states, and other stuff that's just supposed to naturally occur. Now, the extremists are using as an excuse an obviously bogus, edited tape of Planned Parenthood by an extremist group devoted to destroying that organization, that millions of women count upon for basic health services. We've seen the same movie countless times over the past several years; some folks devoted to destroying an organization trying to entrap people in that organization, then editing the tape to make it look like something criminal is occurring; it gets continuous loop play on TV (usually Fox News), everyone gets excited, politicians have something to rant about, etc., but when there is an objective investigation, oops, turns out the tape was severely edited, and nothing like what it claimed to show actually occurred. Remember Shirley Sherrod? Give us, the taxpayers (especially us Federal staff and contractors) a break!

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