The 160 workers at Transylvania Vocational Services were still filling orders this week. But the company is running on reserves, and jobs are at risk. The biggest customer – the federal government – has stopped paying its bills.
TVS is a federal contractor in western North Carolina that supplies products such as dry milk and baking mix to food banks around the country and to relief efforts in Africa. A few days ago, CEO Jamie Brandenburg met with employees, many of whom are disabled, to say the company’s reserves could support their work through the middle of February, while he searches for commercial business not vulnerable to a government shutdown.
The partial federal shutdown, now in a record fourth week, means missed paychecks for more than 800,000 government workers. But it also threatens an untold legion of workers in private companies that do business with affected agencies.
“Most of what’s getting a lot of attention from the public is the federal employees,” Brandenburg said, “and I’m very sympathetic. But when the government opens back up, they get back pay. The contractors are getting overlooked.”
TVS is one of almost 10,000 companies that hold contracts with federal agencies affected by the government shutdown, according to an analysis of government contractor data by The Washington Post. The data, although incomplete and frozen by the shutdown, still shows a snapshot of the risk to contractors, their employees and communities. The overall average value of their work: about $200 million a week.
No one knows how many workers are affected, and overall estimates of total federal contract workers range from hundreds of thousands to millions. It’s also unknown how many have had to stop work, but company and industry officials say financial pressures on contractors are building.
At R3 Government Solutions, an Arlington, Virginia-based company that helps federal agencies with workforce planning and management of information technology resources, a few of its contract workers serving FEMA have been sent home without pay, said Chairman and Chief Operating Officer Glenn Hartung. He has kept others on payroll for fear that they will be poached by a competitor.
“The people that are being furloughed are without pay, and the people that we’re paying we’re not sure how long we can continue to do that,” Hartung said. “It’s basically kind of a turmoil.”
Agency contractors include large corporations that are not threatened. “We are watching the situation carefully, but the impact thus far on our operations has been negligible,” said Jeff Davis, a vice president at General Dynamics, where subsidiaries have worked with affected agencies like the National Oceanic and Atmospheric Administration, Environmental Protection Agency and Transportation Security Administration. But the shutdowns may be creating more stresses at smaller companies, where federal contract work easily plays a larger role. About two-thirds of contracts with agencies affected by the shutdown were worth less than $10,000 a week, according to estimates from contracting data.
ADDITIONAL COMPLICATIONS
At New Editions Consulting, a Falls Church, Virginia, company that helps make government websites more accessible to people with disabilities, about eight of 60 workers were told to halt work on a federal contract but were put on other work. The reassignments affect the company’s overhead and profit margins, since the work can’t be billed to the government. “These people have families; they have kids; they have mortgages,” said the company president, Shelia Newman. “So I’m going to keep them on as long as I can.”
Other companies have scheduled necessary training for workers idled by the shutdown or considered suggesting they take vacation days. Contract workers, unlike employees of the federal agencies affected by the shutdown, have not gotten back pay for work lost during shutdowns.
Even with federal contracts that aren’t officially suspended, companies can become mired in shutdown-related complications. Government background checks aren’t available. Notices may not be published in the Federal Register. There may be no federal employees available to approve completed contracted work or to make payments, issue an export license or to approve new contract workers. Contract employees who work alongside government employees can’t go to work even if they want to if the building is shuttered. In many cases, the impact on contract employees will never be widely known because the government keeps no records on them, and companies are often reluctant to talk publicly about their contract work for competitive reasons. “There’s a lot of understandable concern that you don’t want to ever offend one of your customers,” said a contractor official.
Contracting companies and their workers do almost everything for federal agencies. They’re the source for the vehicles, books, furniture, food and almost all of the other goods the federal government buys. However, the purchase of products accounts for only one-fifth of contract spending with agencies affected by the shutdown. The other four-fifths is for services.
Contractor-supplied services can involve supporting government offices and programs, from clerical and keyboarding work to budget analysis and specialized studies. “The feds are the decision-makers,” said Alan Chvotkin, executive vice president of the Professional Services Council, a national trade association of federal government contractors. “But it may be a contractor who is compiling all the data in a form for the decision-maker to use.”
Other contracts for services range from housekeeping and security for government-owned properties to research and development for space exploration.
FLEXIBILITY, SKILLED WORKERS
Federal agencies use contractors as a supplemental workforce because they can readily scale up or down to meet varying service demands, Chvotkin said. And it gives agencies access to specialized services and highly skilled workers. “Much of the products and many of the services that the federal government uses in their own performance, as well as in providing services to citizens, are done by federal employees and contractors working together,” Chvotkin said.
Growth in government contracting also is fueled by political considerations, including limiting the size of the federal workforce and minimizing government’s competition with business, said Paul Light, a professor of public service at New York University. He estimates the overall federal contractor workforce at 4 million, about double federal civilian employment. “It’s a small economy in its own right,” he said.
The District of Columbia, Virginia and Maryland may have the most at risk in the fallout from the shutdown because they account for 37 cents of each $1 of products or services delivered under contracts held by shuttered agencies.
At the NASA Goddard Space Flight Center in the Maryland suburbs, researchers say the shutdown is interfering with important scientific work. Meredith Elrod is a planetary scientist who works as a contractor on NASA’s Maven project, an ongoing mission to study the atmosphere of Mars.
Elrod’s project has only a few weeks of funding left. “It’s all kind of vague as to whether we have money or not,” Elrod said. “We get different answers about whether or not we can work, and we have no guarantee that we’re ever going to get back pay.”
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