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Shutdown could spell trouble for contractors

April 8, 2011

By Robert Brodsky rbrodsky@govexec.com

Federal contractors operating at agencies throughout the government and at private sector locations across the nation will bear a heavy burden if the government shuts down on Friday night.

A shutdown would prevent contractors from being paid for most services. They would be unable to renew expiring awards, or even enter the federal facilities where they had been working.

As of Friday morning, however, agencies could not provide details on the number and types of contracts that would be halted during a shutdown.

Energy Department spokeswoman Stephanie Mueller said, "Even if much of the government is shut down, we expect to continue performance of contracts and financial assistance instruments for a limited time."

The Defense Department, the largest procurer of goods and services in the government, did not immediately provide data on contracts that will be affected during a shutdown. But in a message to Pentagon personnel on Thursday, Deputy Secretary of Defense William J. Lynn III said, "Generally, contractors performing work on contracts funded prior to a shutdown, whether supporting excepted activities or not, may continue working and will be paid out of the obligated funds, subject to further direction from the contracting officer."

Defense contractor personnel are expected to report to work on Monday, April 11, to be briefed on their status, Lynn said.

For their part, many federal contractors declined to comment on their shutdown preparations, or if their particular contracts had been halted yet.

According to a survey conducted by the Small and Emerging Contractors Advisory Forum, an industry association representing more than 400 small and midsize firms, a government shutdown would have minimal effect, at least in the short run. Fifty-five percent of respondents reported they would operate as usual during a shutdown while 38 percent suggested they would ask employees to use personal leave during that period. 

You can read the rest of this article, and more about the SECAF survey results, at GovernmentExecutive.com