WT Business Beat

By Nick Wakeman

Blog archive
Nick Wakeman

Contractors relish return, but fret about future shutdowns

Obviously, contractors are happy that the government shutdown is over, but it might still take a little bit of time to assess the financial damage that has been done to their businesses.

“We’ll have a damage assessment in another week, but most of our impacted contracts went 10 working days without service,” one executive told me. “We’ll need a few weeks to get back to where we were, but the shutdown will certainly affect profitability for the year.”

Lost revenue is a big issue for all the companies I spoke with, even if the number of employees is relatively small. One executive told me he only had two employees furloughed, “but that still costs us slightly more than $100,000 in lost revenue.”

The shutdown is long enough that many companies won’t make their planned revenue numbers for 2013, which were already in jeopardy because of sequestration.

For many, bonuses and other financial incentives for employees are probably nixed for this year.

Nearly everyone expects everything to be back up and running normally by Monday, but the next few days might be rough.

“We need the various agency contracting officers to rescind the stop work orders,” an executive said. “While I am hopeful we will be back to work no later than Monday, the financial drain continues.”

Some companies ran into a double-jeopardy of sorts because they had a contract term end with the end of the fiscal year, but contracting officers weren’t available to sign the next option.

Things like that will take a few days to work out.

In addition to lost revenue and profits, companies also expended a lot of management resources focused on planning for furloughs and what-if scenarios and responding to employee questions and concerns.

Some companies praised their government customers for how quickly they bounced back from the shutdown.

One exec said that a contracting officer at the Environmental Protection Agency started making calls Wednesday afternoon when the resolution to the shutdown seemed assured. The contracting officer was still making calls at 10:30 Wednesday to coordinate the return of contractors.

“She was really proactive,” the exec said.

As contractors recover over the weeks ahead, the possibility of another shutdown looms. The continuing resolution runs through Jan. 15, so Congress will need to pass another spending measure before then.

Several executives expressed hope that Congress has learned a lesson and won’t risk a shutdown.

“My rational self believes that the stupid political strategy the Republicans tried this time won’t be repeated,” an executive said. “That said, the hard-core Tea Party types seem unrepentant, and I worry that we could be dealing with more of the same come January.”

If that happens, the ability to help employees weather another shutdown will be severely limited, another executive said.

Revenue projections will also need to be reworked downward.

What contractors want more than anything else is visibility. “It is difficult to run a business when our outlook is capped at 90 or 120 days,” another executive said. “It’s very difficult to plan, invest or think strategically when we are doing business in this sort of environment.”

Some companies also will be doing some interesting analysis post-shutdown.

One executive told me that his company will be looking at which agencies were shut down and which ones were largely unaffected.

“We are more likely to pursue opportunities with those that are less of a risk,” he said.

For his company, that could mean more defense work and less civilian work.

I wonder if the shutdown will be a watershed for the market, where we talk about how things were pre and post shutdown. I guess it’ll depend on the next few months.

Posted by Nick Wakeman on Oct 17, 2013 at 11:24 AM


Reader Comments

Please post your comments here. Comments are moderated, so they may not appear immediately after submitting. We will not post comments that we consider abusive or off-topic.

Please type the letters/numbers you see above

What is your e-mail address?

My e-mail address is:

Do you have a password?

Forgot your password? Click here
close
SEARCH
contracts DB

Trending

  • Dive into our Contract Award database

    In an exclusive for WT Insider members, we are collecting all of the contract awards we cover into a database that you can sort by contractor, agency, value and other parameters. You can also download it into a spreadsheet. Read More

  • Is SBA MIA on contractor fraud? Nick Wakeman

    Editor Nick Wakeman explores the puzzle of why SBA has been so silent on the latest contractor fraud scandal when it has been so quick to act in other cases. Read More

Webcasts

  • How Do You Support the Project Lifecycle?

    How do best-in-class project-based companies create and actively mature successful organizations? They find the right mix of people, processes and tools that enable them to effectively manage the project lifecycle. REGISTER for this webinar to hear how properly managing the cycle of capture, bid, accounting, execution, IPM and analysis will allow you to better manage your programs to stay on scope, schedule and budget. Learn More!

  • Sequestration, LPTA and the Top 100

    Join Washington Technology’s Editor-in-Chief Nick Wakeman as he analyzes the annual Top 100 list and reveals critical insights into how market trends have impacted its composition. You'll learn what movements of individual companies means and how the market overall is being impacted by the current budget environment, how the Top 100 rankings reflect the major trends in the market today and how the biggest companies in the market are adapting to today’s competitive environment. Learn More!