Federal contractors are preparing for a particularly difficult government shutdown if Congress doesn’t pass a funding agreement, with agency staffing reductions compounding the usual strains during a lapse in appropriations.
If a shutdown were to happen Wednesday, the Professional Services Council is advising companies to continue working until they receive a stop work order from the government. PSC sent a letter to congressional leaders late last week, urging them to avoid a shutdown and warning about potential disruptions to government operations.
Stephanie Kostro, president of PSC, said the association provided an early September briefing to members that urged them to identify a point of contact within the government if a shutdown were to happen.
But staffing reductions under the Trump administration – through terminations, early retirements and deferred resignations – have left contracting offices even more short staffed than usual as the government hurdles toward the Tuesday midnight funding deadline.
“We are facing what I would term a perfect storm,” Kostro told reporters Monday.
The White House Office of Management and Budget has also directed agencies to draft plans for reductions-in-force should a shutdown happen.
“That does create an additional pressure for our contracting companies to find folks who can answer those phones, who can answer those emails, who can give them access to facilities, et cetera,” Kostro said.
In a Sept. 18 note to clients, lawyers with PilieroMazza advised companies to communicate with both contracting officers and subcontractors ahead of a potential shutdown.
“It is important to remember that once a shutdown commences, the contracting officer may be furloughed and unavailable, so ideally, you should maintain close contact with your contracting officers for instructions in advance of the shutdown,” they wrote.
But recent staffing reductions, and the threat of more in the future, have left contractors concerned about who will be left inside government to pick up the phone, Kostro said.
“This is a concern that, as we are partners to our federal agency customers, that that partnership goes both ways, and making sure that there is someone not only to send an invoice to and get it approved for payment, but also to receive the deliverables that our companies are providing,” she said.
Potential furloughs
While contractors are typically able to retain staff during a short term shutdown, a longer lapse raises the potential for employee furloughs. Companies can also encourage staff to take leave in the event of a shutdown, Kostro said.
“We are advising them, go ahead, continue work until you receive a stop work order, before you furlough employees, potentially make them or encourage them to take their annual leave for which you’ve already budgeted,” she added.
Changes and cuts to federal contracting under the Trump administration have already led companies to lay off staff.
Kostro said PSC is advising companies to do everything to retain staff through a shutdown. Furloughed employees are likely to seek employment elsewhere, while it can be difficult to hire for some federal contracting positions, particularly those that require a security clearance.
“We are doing everything we can to help our contracting companies through this situation, but we do see that there is a potential for unemployment to rise within our industry,” Kostro said.
Attorneys for Piliero Mazza also said contractors should think through a range of labor and employment issues during a shutdown, including decisions about whether to furlough or layoff staff, and maintain “clear communication” with staff through a shutdown.
“Advanced staff management and planning will be critical to many employers who will have to ramp back up when the shutdown is over,” they wrote.
PSC’s letter to congressional leaders warned about a shutdown’s “destabilizing effect” on the contractor workforce. Federal contractors who continue working through a shutdown are not guaranteed backpay.
“Aside from the impact on individual lives, the result throughout the government contracting industry is a diminished talent pipeline, weakened morale, and the loss of specialized expertise that agencies need to meet their missions,” the letter states. “Prolonged funding uncertainty not only disrupts today’s missions, but also jeopardizes tomorrow’s innovation, resilience, and competitiveness.”
The post Agency layoffs, shutdown create ‘perfect storm’ for contractors first appeared on Federal News Network.