Stopgap Spending Measure Doesn’t Fix Federal Contractors’ Problems

Government contractors—some of which experienced layoffs, were forced to halt work on government contracts and haven’t been paid for months of invoices—are not out of the woods yet.

The three-week stopgap spending measure signed by President Trump Jan. 25 ended the 35-day government shutdown, but rebooting the government is a much slower process than closing it down, said David Berteau, who represents hundreds of companies as head of the Professional Services Council.

Depending on their internal policies, agencies go back to work after a shutdown performing mission-related activities, paying invoices and executing other functions.

Yet it could take weeks for some stop-work orders to lift and contract revenue to begin flowing to contractors again, which is particularly challenging for small- and mid-size contractors that have already gone weeks without cash flow, Berteau said.

And it’s still a time of “uncertainty” for contractors, Berteau said, given another shutdown could come as early Feb. 15 if a deal isn’t in place. For some companies, three weeks is not enough time to onboard employees, and even if they wanted to, rehires could be for naught if the government shuts down again.

“It’s going to be hard to get everything done in those three weeks you need to get done to be back where you were,” Berteau said. “The more affected you were by the shutdown, the harder it is to get back.”

Some contractors “may be in a holding pattern,” Berteau said, watching whether an extended deal takes shape. Regardless, PSC is advising contractors to “do everything you can to get paid for work that has been done.”

Berteau said some of his member companies have unpaid invoices from work in October, November and December that were interrupted by the shutdown. Finally, Berteau said PSC is encouraging companies to bid on as many new opportunities as they can.

According to Ron Rheude, senior consultant at The McKelvey Group, there should be no shortage of opportunities for contractors in the coming weeks, with an expected influx of proposals from government imminent as federal contracting officers and acquisition officials get back to work.

Rheude said a large number of government solicitations were delayed during the shutdown, and proposals submitted by industry pre-shutdown “sat in limbo” in shuttered agencies. This will push back award dates for many government contractors. In addition, Rheude said he expects “a number of re-proposal activities,” wherein the government revises periods of performance or other mechanisms within solicitations due to the shutdown.  

“The delays you see as a result of the shutdown will extend well beyond mid-February even if they piece things together on a [continuing resolution],” Rheude said. “The effects are going to be long-lasting.”