Reductions in force could make bad situation worse for federal contractors during government shutdown

The Trump administration’s threat of mass layoffs if congressional Republicans and Democrats do not reach a government funding agreement past Tuesday could make it harder for federal contractors to get guidance about operating under a shutdown. 

The Professional Services Council, a trade association of federal contractors, is urging its members to keep in touch with their contracting officers. Such employees would handle continued access to necessary government facilities or personnel, invoices and, potentially, stop work orders. 

But what happens if a contractor’s designated officer loses their job? 

“When we saw the [Office of Management and Budget] memo come out last week regarding plans to identify folks for potential termination of employment, that does create an additional pressure for our contracting companies to find folks who can answer emails [and] who can give them access to facilities etc.,” said PSC President Stephanie Sanok Kostro during a press briefing Monday. 

Kostro added that some companies are already struggling with contacting contractor officers due to those employees leaving federal service, especially because of voluntary separation incentives like deferred resignation. 

“So as we move through this period of uncertainty, who is going to be left there to answer questions and to receive [contractor] deliverables? It does cause some concern to companies,” she said. “There are folks asking those questions now going, ‘Hey, I'm having a hard time reaching folks. Is it going to get better or worse?’ I think the answer is to be determined.”

While some federal contracts will stop work in the event of a shutdown, others will continue on, particularly if they’re funded by appropriations from past fiscal years. PSC officials explained, however, that problems emerge when contractors need an action by or information from a federal employee who is furloughed. 

PSC CEO Jim Carroll referenced this issue in a Sept. 26 commentary for Government Executive urging against a government shutdown. 

“Federal contractors are vital to mission success, yet during funding uncertainty, they often face delayed guidance, unpaid disruptions and limited support,” he wrote. “Agencies should ensure timely communication, fair reimbursement and clear direction to help contractors manage operations and protect jobs.”

Carroll, who also sent a letter to congressional leaders warning against a lapse in federal funding, said during Monday’s briefing that he is worried that this impending shutdown will especially harm contracting companies. 

“Sometimes these shutdowns are a blip in the overall economic stability of the country. This one feels differently,” he said. “It feels like there might be more long-lasting financial impact to the economy if this were to go on.”