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Sunday, December 3, 2023

How Are Government Contractors Impacted by Shutdown? Laying Off Employees, Floating Benefits, Urging End to Impasse

The ongoing partial government shutdown is affecting more than just the federal workforce. Government contractors are also feeling the effects, and unlike federal employees they aren’t entitled to receiving back pay once the government gets funded again.

“Nothing is going to move forward unless [the government] gets moving,” said Mike Smith, the former DHS director of strategic sourcing and now a vice president at GovConRx at the annual meeting of the Government Technology & Services Coalition, a group of government contractors working specifically in homeland and national security and owners of Homeland Security Today.

The Professional Services Council, a trade association for government contractors, believes the number of impacted contractors stands in the tens of thousands. David Berteau, president of the PSC, told Politico that the shutdown was costing contractors an estimated $1.5 billion per week.


No Back Pay for Contractors

The shutdown could cost government contractors $200 million per day, or $1.5 billion per week, Bloomberg reported.

“However, unlike federal civilian employees, no one provides them with back pay to cover their lay-offs,” Berteau wrote in a letter to House and Senate leadership urging an end to the shutdown. “These contractors work side-by-side with their government counterparts, motivated by the same goals of public service and safety. They deserve to be treated the same as their federal civilian counterparts. PSC urges Congress to provide the same redress for government contractors as it does for federal civilian employees.”

MORE: Charting a Post-Shutdown Course for DHS Contracting Opportunities

Boeing has reportedly stopped work on a multibillion dollar NASA rocket project that would send the U.S. back to the moon and Booz Allen Hamilton is moving staff to projects that are fully funded, according to Politico. But the shutdown has impacted smaller firms harder. Mark Patton, the chief operating officer of HSG LLC, told the Wall Street Journal that the company’s line of credit had been exhausted, company executives are keeping the firm afloat with their personal funds and HSG might have to lay off employees and hire them back when government functions resume.

“I’m out of cash. I don’t know how to continue to support these employees. We are not a large company by any means,” Patton said. “It’s a hellacious situation to be in.”

Small-business owner Rebecca Andino, CEO & founder of Highlight Technologies, reported that “16 of our 200 employees and over a dozen subcontractors are furloughed.” She avoided a catastrophic hit because of a diversified portfolio and luck that some of her larger contracts were either funded or they were already authorized to continue work.

“As a business owner, I feel so responsible for each employee,” she said. “Each person took a risk taking a job with my company and my part of the deal is to give them work and a paycheck. But if we don’t have revenue coming in, it’s difficult to keep paying the employees.”

Andino allowed employees to “go into ‘negative’ PTO to an extent, so they can continue to be paid and avoid taking leave without pay.”

“We also gave back a pot of ‘use it or lose it’ leave that had been forfeited back to the company. And we asked all employees if they would be willing to donate some or their PTO to help their colleagues – we calculated that if everyone donated just one hour of leave, that would be one day of pay for all of our furloughed employees,” she added. “We got a wonderful response. Currently 42 employees (and counting) have contributed anywhere from 1 to more than 10 hours, with some incredibly generous people donating several days of leave.”

Alba M. Alemán, CEO of Citizant, has been posting regularly on LinkedIn, and has penned an open letter to the president calling for an end to the shutdown. Her firm designs and delivers IT transformation solutions to the U.S. government and has a number of contracts with the Department of Homeland Security. “Navigating the end to the shutdown so that a million plus hard-working Americans can go back to doing their jobs of protecting and serving millions of other hard-working Americans makes YOU the hero,” Aleman recently wrote in her appeal.

Alemán has started a petition on the We the People website to “Negotiate in good faith to fund/reopen all gov’t agencies & protect the national and economic security of all Americans” in hopes that contracting firms will band together to urge for an end to the impasse.

Devon Russell, a government contractor who works at the Smithsonian, told ABC7 that the government shutdown could be easily fixed, “and it’s very unfortunate for everyone that’s paying for this situation.”


James Cullum
James Cullum
Multimedia journalist James Cullum has reported for over a decade to newspapers, magazines and websites in the D.C. metro area. He excels at finding order in chaotic environments, from slave liberations in South Sudan to the halls of the power in Washington, D.C.

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