The partial government shutdown is hurting contractor employees in some ways worse than federal employees.
That is because, while many federal employees have either returned to work or appear likely to be given back pay after the shutdown, many of their contractor counterparts aren’t as lucky.
Companies most hard-hit are those with new contracts dependent on fiscal 2014 funding or with projects that require access to closed federal buildings or that require oversight from feds that have been furloughed.
At the Virginia-based professional services firm FCi Federal, which holds about a dozen federal contracts, 22 of the company’s employees have been furloughed, most of whom support the Homeland Security Department’s Federal Law Enforcement Training Centers, according to CEO Sharon Virts.
“We’ve had people working for us 15 years, and they are in the unemployment line right now because they are on furlough,” Virts said. “They shut down pretty much all training centers.”
She said the company will support benefits for those employees while they’re out of work, but, unlike their government counterparts, they have no expectation of pay. The company’s furloughed employees are able to use paid leave and others in the company have donated their paid leave to support their colleagues.
For the most part, they are employees making a modest income, about $10 to $15 an hour, Virts said. “When something like this happens, it makes it tougher.”
In terms of morale, she said her biggest concern is the potential rise of an us-against-them mentality between federal and contractor employees. There’s also the possibility employees could decide to leave. But, she added, “I hope the way we have treated our employees, they feel they were taken care of as best we could” and decide to stay.
Scott Miller, the company’s president, said FCi Federal contracts with the Nuclear Regulatory Commission, the U.S. Courts and the State Department may also be at risk as the shutdown continues, which could nearly double the number of furloughed employees.
Alan Chvotkin, executive vice president for the Professional Services Council, said some companies are permitting idled employees to take paid leave while they are furloughed or use other types of leave status, like temporary leave without pay or training activities where employees can still receive pay while not working on their usual assignments.
“If you furlough an employee, they may or may not come back,” Chvotkin said. For smaller and mid-tier companies, there is far less flexibility, and some have been forced to furlough employees.
Color of money issues
The Pay Our Military Act, which President Obama signed Sept. 30, provides funding for military members and those who support the military, including civilian employees and contractors. At an Oct. 10 hearing, DoD comptroller Robert Hale said the department was still deciding “how to apply POMA to contracts using fiscal year ‘14 funds,” and “we’re not sure how long our vendors are going to accept IOUs.” Hale said most DoD contracts today are funded with fiscal 2013 funds.
Contractors supporting civilian agencies like the Environmental Protection Agency and NASA aren’t as fortunate, especially if they were supporting operations that have been scaled back or ended during the shutdown.
Following the Defense Department’s decision to call most of its 350,000 furloughed civilian employees back to work, Lockheed Martin said 2,400 of its employees would be furloughed, down from 3,000 workers as first planned. About 2,100 employees work on civilian agency programs and 300 work on DoD programs, the company said in a statement last week. They were forced to stop working because their work site is closed, there’s no government employee to inspect their work or a stop-work order was issued.
There are other impacts from the shutdown on contractors.
Several agencies, including DoD, NASA and the General Services Administration, have pushed back deadlines for major contracts or canceled industry days. And agencies have issued a flurry of stop-work orders to a number of their contractor staff, which basically means no work and no pay for those employees. But there even appears to be an exception to that rule.
“The expiration of obligated funds does not automatically require a stop-work order,” said Army spokesman Matthew Bourke. “If a contract requires additional funds and does not support an excepted activity, a stop-work order may be issued.”
“The longer this goes, I have a great concern that individuals that have great skills that are so desperately needed, whether as contractors, may just exit the market place,” said Chvotkin.
“We compete constantly as contractors for limited talent, with government, banks and [the] Googles and the rest of the world ... who are looking to attract those same people.”