Mike Lisagor


Overlooked victims of government shutdown

Just reading the major news headlines, it is understandable that the public perception is that federal workers are the main victims of the current political stalemate. Unfortunately, this couldn’t be further from the truth.

For every closed government building, hundreds or thousands of contractors have been sent home. The furlough of contracting officers has resulted in delayed awards meaning lost company revenue and laid off employees.

Most people believe contractor employees, like their federal counterparts, will eventually be compensated for lost hours due to the government shutdown. With the exception of certain contract types such as fixed price, this just isn’t the case. Most services contracts are cost-plus or time and materials. That means tough luck!

Lowest price, technically acceptable awards have meant much lower profit margins for services contractors. Small businesses, in particular, lack the resources to sustain their workforce during a furlough. Non-payment means negative cash flow. So, company employees are being sent home and forced to use accrued personal leave. Tens of thousands of new jobless claims have already been filed with more to come.

While few federal workers will lose their jobs, major contractors, like Lockheed Martin and Raytheon, have already announced significant lay-offs. In many cases, agencies that rely on these skilled workers to supplement their workforce will no longer have access to their services.

When (and if) the government opens its doors, so-called non-essential federal workers will most likely be paid the time they were furloughed. For contractors, it’s not a question of essential or non-essential. That train already left the station.

Continued fiscal fighting may be a new reality for government contracting. Smart companies will continue to tighten their belts and look for new markets and opportunities most likely to be funded in the future. Smart employees will do the same but maybe they should also march on Washington, D.C.

About the Author

Mike Lisagor (Mike.Lisagor@govprop.com) is a GOVPROP.com co-founder and chief knowledge officer.

Reader Comments

Sat, Feb 22, 2014

I write federal proposals for a living. After mandatory once a week contractor furloughs, I was let go the second week of the Federal Government shutdown.

Fri, Feb 21, 2014 Reston, Virginia

As a proposal consultant, I too was let go during the Government shutdown. First, we gave in to a mandatory furlough day each week, then the second week along with my mandatory furlough day, I was laid off. My company, a mid tier Defense and Civilian contractor, was looking to reduce costs and cut losses in a bad quater. Because of the shutdown, and no idea when the Government would reopen, there was no way to determine when the Government would reopen and that degree of uncertainty costs the company a lot of money when there was nothing for the Proposal Dept to work on. It was genuinely a shock -- laid off during the Government closure. There was literally no where else to go with the Government Shutdown. I enjoyed my job and loved my company, but laid off during the closure was a heavy blow that not even I could handle with grace. It literally knocked the wind out of my sails.

Wed, Jan 22, 2014

I don't think you have the full story yet. Me as a lonely old many sitting here in my home office developing proposals for a government was furloughed the day of the shutdown! Every day I curse the State of Texas!

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