Though all personnel working in and with the federal government struggle to figure out what will happen to them if the government shuts down Jan. 19, contractors face the added uncertainty of what their companies will do with them if they cannot work on federal contracts.
“A contractor may or may not receive advance notice whether they will or will not need to shut down. Some do not find out until the shutdown occurs and they try to show up for work and the base or agency is shut down,” said Anthony Anikeef and Bob Korroch, co-chairs of government contracts at Williams Mullen law firm.
“For contractors working at their own site, they may be left totally in dark. If, after seeking guidance, one receives no direction, then a company may have to continue trying to perform to avoid assertion they are in breach (even if they are unsure whether they will be paid). A company that receives directive to stop which continues work does so at risk and at peril of not getting paid because they had no authority to continue working.”
Contractors face similar options to federal employees if their contracts with the government aren’t funded during a shutdown:
- Furlough – Employees are told not to come in to work until the shutdown ends or the company can find a way to pay them.
- Paid leave – If companies receive a stop work order from the agency they contract with, employees working that contract may be placed on paid leave, with the company digging into its own pockets to pay those employees with the hopes of recovering that money later.
- Alternative work – Some contracting companies may be able to assign employees to other projects or work that doesn’t rely on federal funds.
Some contracts would be able to continue through government shutdown, because they are either deemed essential or funded in a way that doesn’t rely on annual congressional appropriations. These contractors would most likely continue the work they had been doing.
However, according to Dennis Kelly, president and CEO of Buchanan & Edwards, which contracts with the government, mere uncertainty about contractors’ fate during a shutdown can cause damaging stresses to employees.
“The uncertainty related to financial security causes severe stress on employees. It’s a distraction also, taking up time and resources even ahead of a shutdown actually happening,” said Kelly.
“If the stress on employees is too hard and too long, it can even lead to loss of talent from government industry to other private-sector markets where employees see as less of a risk. This is a loss for businesses, as well as the federal agencies we serve.”
Kelly, Anikeef and Korroch all said that most contractors should be working to establish open communication through a shutdown, though the extent of and planning for that communication can depend on the size and age of the company.
“Larger companies with more personnel and more sophisticated and diverse operations are likely to have some form of plan. Smaller companies less likely,” said Anikeef and Korroch.
“At a basic level many (most) seem to set up a communications system for employees to check or to receive updated notices. A newer company which has not been through one of these may find itself unprepared and surprised.”
Kelly also recommended regularly updating contingency plans for shutdowns to keep employees apace of all potential outcomes.
“It’s always good for companies to have set plans that address any possible pending crisis. Buchanan & Edwards maintains a contingency plan just like our customers and we would highly recommend that companies develop and refresh their own from time to time. While the current industry remembers shutdowns like 2013, we are very aware of the heyday of government shutdowns in the ’70s and ’80s. That historic context validates the need for us to annually refresh our contingency plan,” said Kelly.
For updates on Congress’ budget debate and government closure, follow Federal Times’ Shutdown Watch.