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Contractors Say Shutdown Forced Them to Reprioritize

Many companies received stop-work orders that might have been unnecessary.

As feared, the 16-day government shutdown forced contractors to scramble for cash, revise their schedules, and reconnect with their agency liaisons, according to trade association officials.

“The good news is that most companies are putting folks back to work, which they should have been doing all along had there not been a shutdown,” said Alan Chvotkin, executive vice president and counsel at the Professional Services Council. “Our member survey shows that a large percentage of member companies did receive one or more stop-work orders. And though most, but not all, of those have now been reversed, large numbers of those contracts were unnecessarily and inappropriately stopped.”

Chvotkin said many agencies sent out blanket notices to all their contractors, even though a reading of the law says the notices would not apply to contracts fully funded in fiscal 2013 and contracts that don’t require access to government facilities or significant agency supervision. “So companies are now trying to redo those actions and restart work, which takes significant administrative work and deadlines such as something that was due in 30 days have to be rescheduled.”

Other kinds of associated purchases and activities will have to be recalculated and contract amendments written now, according to Chvotkin. “The implications of that will continue for several more weeks,” he added.

Because few contracts are awarded in October, it is traditionally a month in which companies focus on internal planning. “Now the pipeline of work by all who were planning solicitations [and] evaluations of proposals has been delayed,” Chvotkin said. Noting the spike in company bid protests that hit the Government Accountability Office on Oct. 17, the day the government reopened, he expects a similar spike in proposal activity at the end of November and early December. “Just as there might be a spike in births nine months after Snowmageddon,” Chvotkin said, referring to the blizzard that paralyzed Washington in 2010.

Cash liquidity was also a big contractor issue during the shutdown, said Trey Hodgkins, senior vice president, global public sector government affairs at TechAmerica. “For those with employees that had to be furloughed or who worked without pay, companies were looking to right those financial situations as quickly as possible,” he said. “A second priority was to re-establish connections with government customers who’d been gone for two-plus weeks, and quickly understanding how they want to bring performance back online and what negative ramifications may have occurred on the government side.”

The conversation must then begin, Hodgkins added, in order to help contractors “understand the customer’s position and respond, to reprioritize and restructure schedules, perhaps with overtime.” Many contractors in the first few days were just getting access to facilities they’d been locked out of, he said.

The shutdown, for example, forced a halt to the Federal Trade Commission’s contractor-executed Do Not Call Registry, Hodgkins noted. “If there had been a situation in which the contract ended at end of 2013, they would have simply exercised an option, and for the consumer it would have been seamless,” he said. “But due to the shutdown, there was a break.”

(Image via Olivier Le Moal/Shutterstock.com)