The beating heart of small business: An ominous threat grows louder

Open to work.

Open to work.

Open to work.

My LinkedIn feed feels like a modern version of Edgar Allen Poe’s, The Tell-Tale Heart – the open to work refrain in place of a heartbeat, representing an obsessive, unwavering descent into irrationality bordering on madness: “Louder it became, and louder… Louder, louder…”

Those of us who support the government can’t drown out the sound.

Another day, another colleague is sounding the alarm to their network searching for employment. Another beat, another devastating story of someone’s world collapsing. These are incredible government contracting employees – people I’ve admired and emulated in my own work – who have suddenly been cast aside by the institutions they’ve served.

As federal contractors, we live and operate in a distinct market filled with companies who fulfill missions for the multifarious agencies that comprise the United States federal government. We come from different backgrounds, provide varied capabilities and expertise, but the refrain over the last two months remains the same:

“…my company received so many T4Cs (terminations for convenience) that I was furloughed”

“…95% of our business is with USAID and nearly all of our contracts have stop work orders or terminations”

“Unfortunately, recent federal contract cuts have forced us to make difficult decisions, resulting in the furlough of a majority of our team”

“The administration has decided veterans, taxpayers, and hard-working civil servants should move forward without the expertise and dedication of my colleagues”

These quotes come from small businesses who have become casualties in the war on government efficiency.  And yes, though seemingly dramatic, I use those terms intentionally. What else would you call a series of strategic attacks deployed with little remorse in the name of some greater good?  Make no mistake – the small business community is under attack.

As I scroll through the Department of Government Efficiency’s wall of receipts, I find myself disheartened. I see contracts for subjects like the Child Nutrition Access and Accountability Through Technology Conference, SNAP Employment and Training, and Foster Care Awareness – all seemingly worthwhile programs that have found themselves on the cutting room floor. Taking a step beyond the what, I look at the who, and I am struck by the revenue variance of a small business who once held a nanoscopic piece of the otherwise behemoth federal budget.

There have long been barriers to entry when it comes to contracting with the federal government, and one of the unequivocally impactful blockades is access to capital – otherwise known as the difference between being large or being small. Federal procurement practices have been enacted to address disparities between the haves and the have-nots, all with the goal of increasing economic development for historically disadvantaged groups.

By encouraging small businesses to participate in federal contracting, we increase competition, have more hands-on participation, and encourage a diverse pool of thought. However, if there are no palatable contracts for small businesses to bid on, and fewer opportunities designated as socioeconomic set-asides, then our small business community will suffer, and solid, hardworking American companies will ultimately close their doors.

When it comes to taking a chainsaw to government spending, the companies with economic and political resources aren’t going to be the ones getting cut down. In a recent article, the New York Times shows the cuts DOGE has cited don’t include a single contract from Lockheed Martin, RTX, Boeing and Northrop Grumman — four of the largest defense contractors.

In an effort to avoid the chainsaw, smalls are grasping at ways to pivot, diversify, become essential, and ultimately DOGE-proof themselves in an increasingly volatile market.  Although it’s true that the sign of a healthy business is one that can adapt, the fallout from these contract terminations will echo like the sound of a beating heart under the floorboards of the GovCon industry.

Lisa Shea Mundt is the co-owner/founder of The Pulse of GovCon.