Promising Practices Promising PracticesPromising Practices
A forum for government's best ideas and most innovative leaders.

Do Contractors Need to Take Out Government Shutdown Insurance?

Image via igor kisselev/

Now that it looks like a deal to reopen the government  and raise the debt ceiling is upon us, I’ve been thinking about where this leaves the government services industry. If the shutdown ends today, we’ll all get back to work, assess the damage, and begin digging out of the hole this lost time has dug. In a month or so, it might seem like we’re back to normal, but I think that’s a bit of a leap.

At the beginning of the shutdown, I posited that this kind of instability in budgeting and appropriations might be the new normal. We’ve had essentially the same debate between Republicans and Democrats since 2010 about entitlement spending and government revenue/taxes with no resolution. The fundamental positions have not changed despite many skirmishes and an election. All signs now point to a 2014 mid-term that might tweak at the margins but will still likely result in a Republican controlled House and a Democratically controlled Senate.

So what does that mean for the government services industry? If we continue to see short-term deals that postpone the reckoning, I think contractors are going to seek ways to insulate themselves from business disruption due to possible future shutdowns.  At first this might simply amount to larger rainy day funds. That of course will have negative effects, pulling money away from other productive uses (investment, training, etc.).

However, if there are repeated disruptions, I think businesses will begin to seek some form of shutdown insurance to stabilize finances and guard against a catastrophe. One form of this could be an actual shutdown insurance policy underwritten based on how much of a company’s work is deemed “essential” or “nonessential.” Whether any institution will offer such a product is something I don’t know.

A second form of “insurance” might come from contractors seeking higher fees from work that is likely to be disrupted to cover down times. Although contracting is extremely competitive, there comes a point at which companies that have cut to the bone will simply go out of business during extended or repeated shutdowns. Additionally, other businesses that might have entered the government space would pursue work elsewhere rather than take on the additional risk. That would eventually reduce the pool of companies competing and raise costs.

I don’t know how likely either of these scenarios are but I do feel like companies will begin to need to make adjustments to this new normal in order to survive going forward. What do you think companies will do if this is the new normal?

Image via igor kisselev/

Alan Pentz is a partner and co-founder of Corner Alliance, a Washington-based consulting firm that focuses on helping government clients build strategies to stay relevant in and capitalize on today's shifting technological landscape. He is a former Capitol Hill staffer and holds an MBA from the University of Texas at Austin. Contact him at, or follow him on Twitter at @apentz

Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Going Agile:Revolutionizing Federal Digital Services Delivery

    Here’s one indication that times have changed: Harriet Tubman is going to be the next face of the twenty dollar bill. Another sign of change? The way in which the federal government arrived at that decision.

  • Cyber Risk Report: Cybercrime Trends from 2016

    In our first half 2016 cyber trends report, SurfWatch Labs threat intelligence analysts noted one key theme – the interconnected nature of cybercrime – and the second half of the year saw organizations continuing to struggle with that reality. The number of potential cyber threats, the pool of already compromised information, and the ease of finding increasingly sophisticated cybercriminal tools continued to snowball throughout the year.

  • Featured Content from RSA Conference: Dissed by NIST

    Learn more about the latest draft of the U.S. National Institute of Standards and Technology guidance document on authentication and lifecycle management.

  • GBC Issue Brief: The Future of 9-1-1

    A Look Into the Next Generation of Emergency Services

  • GBC Survey Report: Securing the Perimeters

    A candid survey on cybersecurity in state and local governments

  • The New IP: Moving Government Agencies Toward the Network of The Future

    Federal IT managers are looking to modernize legacy network infrastructures that are taxed by growing demands from mobile devices, video, vast amounts of data, and more. This issue brief discusses the federal government network landscape, as well as market, financial force drivers for network modernization.

  • eBook: State & Local Cybersecurity

    CenturyLink is committed to helping state and local governments meet their cybersecurity challenges. Towards that end, CenturyLink commissioned a study from the Government Business Council that looked at the perceptions, attitudes and experiences of state and local leaders around the cybersecurity issue. The results were surprising in a number of ways. Learn more about their findings and the ways in which state and local governments can combat cybersecurity threats with this eBook.


When you download a report, your information may be shared with the underwriters of that document.