Contractors, customers both hurt by short-term budget extensions

For nearly six months, the federal government has operated under temporary funding measures, leaving many agencies and contractors in limbo, unable to plan or execute new initiatives.

Congress passed the latest in a string of continuing resolutions this week, and President Barack Obama signed it today. The newest temporary funding measure gives lawmakers until April 8 to reach an agreement on 2011 appropriations or again face a government shutdown. But operating on a string of stop-gap measures, with no solid ground for planning or spending authorizations, is untenable, according to many experts.

John Palguta, vice president of policy at the Partnership for Public Service, described funding as a “huge part of the planning process” and said that continuing resolutions make it hard for agencies to gather important data.

“Long-range planning is very difficult under a series of continuing resolutions because there is so much you don’t know,” Palguta said.

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Media reports have indicated that many in the government feel they have been operating in chaos and confusion. “Officials at various agencies have frozen hiring, canceled projects, delayed contracts, reduced grants and curtailed training, travel and upgrades in information technology,” wrote Robert Pear in the New York Times.

Pear cited examples of disruptions at the Social Security Administration, the Securities and Exchange Commission and the Defense Department. Short-term budget extensions can also interrupt the execution of government contracts.

Elizabeth M. Robinson, the chief financial officer at NASA, said: ‘Most agencies have pushed the renewal of major contracts into the winter and spring. Uncertainty has slowed down our spending. That uncertainty takes a toll,’” Pear wrote. 

Government IT projects could suffer because of ongoing budget constraints. When the budget cycle starts getting disrupted, it creates a lot of issues with resource allocation, said Gary Labovich, a senior vice president at Booz Allen Hamilton.

Labovich said that assigning staff becomes a challenge for vendors if IT projects are stopped or slowed down. “We have to move key people on to other work,” he said. “We don’t have the luxury of keeping people on the side until the government figures out” its budget.

From the government perspective, budget interruptions can lead to inconsistency in personnel and result in derailed IT projects, Labovich added. 

Overall, the effect of the budget dispute on government operations varies by agency.

Palguta said that while some agencies have been asked to take on more responsibilities, they have not received an increase in funding. The six continuing resolutions that have been enacted so far fund agencies at 2010 levels.

Agencies “can’t continue to do the same work or do more work with the same or fewer resources,” Palguta said, adding that, at some point, agencies might have to reduce the types of services they offer.

The strain on agencies has also, unsurprisingly, hindered federal managers and their employees’ abilities to do their jobs, according to sources. This type of environment – with the possibility of a shutdown looming in the background – reduces productivity due to lower employee engagement, Palguta said.

“The continued reliance on temporary funding measures and the creation of a crisis atmosphere with repeated threats of a shutdown is not a responsible or a smart way to govern,” wrote Max Stier, president and CEO of the partnership, in Politico. 
 
Despite signing the latest CR, Obama has signaled that he is unwilling to continue the trend of short-term measures. At a news briefing earlier this month, he said it is “irresponsible” to keep running the government based on two-week extensions.

Now it’s up to Congress to come up with a solution that will ensure the government remains fully functional for the remainder of 2011.