Nearly 10,000 companies currently hold contracts with the federal government, at an average value per week of a whopping $200 million! (Washington Post January 16, 2019)
While larger companies’ deep pockets and ability to reassign employees provide some cover, smaller companies affected by economies of scale find themselves in a more vulnerable situation. If four of your ten employees work on government contracts that aren’t paying, you may not have the bandwidth to reassign them, leading to lay offs. Even if you can reassign those employees, their work completed for the contract after the shutdown may not be recoverable.
To give you an idea of government contractor work: product purchasing accounts for 20 percent of government spending, and 80 percent is for services, i.e. contractor work. Government agencies use contractors to supplement the federal workforce, which allows them to scale for demand. Contractors keep bathrooms clean, empty the trash in government buildings, compile data for and perform research so that that informed decisions are made, and provide security. Most of this comes to an abrupt halt when the government is closed. (ibid)
Even with federal contracts not officially suspended, a company can become mired in shutdown-related complications. For instance, government background checks stop, Federal Register notices aren’t published, federal employees can’t approve completed contracted work or make payments, issue an export license, or approve new contract workers. Contract employees who work alongside government employees can’t go to work even if they want to if the building is shuttered. (ibid)
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