Small government contractors are choosing between laying off employees and going out of business.
New data from the U.S. Chamber of Commerce suggests the extended government shutdown is having a significant adverse effect on 41,000 small businesses across all 50 states.
Small government contractors have lost $2.3 billion in revenue thus far 34 days into the shutdown, with another $29 billion at risk if the shutdown continues, Neil Bradley, executive vice president and chief policy officer at the U.S. Chamber of Commerce, told reporters Thursday.
Contractors at many of these 41,000-plus small businesses “aren’t getting paid and in many cases will never get paid” as the government shutdown halts work on billions of dollars’ worth of goods and services contracts, Bradley said.
Compounding the problem, more than one-third of those small businesses that perform government work “don’t have cash reserves to sustain” themselves through the shutdown, said David Berteau, who represents hundreds of companies as head of the Professional Services Council.
Berteau, who spoke with Bradley on a call with reporters, said small businesses essentially face two choices: lay off employees or go out of business. The Chamber of Commerce delivered a letter to President Trump and Congress Thursday urging a third option—reopening government—but an agreement seems far-fetched as competing proposals in the Senate and House failed Thursday.
“The current shutdown–now the longest in American history–is causing significant and in some cases lasting damage to families, businesses, and the economy as a whole. The harm is well-documented and continues to compound with each passing day,” reads the Chamber of Commerce letter, which was signed by more than 600 local and state organizations.
Thus far, 800,000 federal employees remain furloughed and tens of thousands of contractors have been laid off due to the shutdown. California, Virginia, Maryland, Texas and the District of Columbia have the most small business contractors in the country, but even Midwestern states like Iowa have hundreds.
The effects on contractors will compound, Berteau said, with each new stop-work order issued by the unfunded agencies, which include the departments of Homeland Security and Agriculture, as well as NASA.
In addition, Berteau called on the government to bring back furloughed contracting personnel long enough to at least sign off on invoices from work performed by companies in October, November and December. Money to pay those invoices was obligated before the shutdown, but the invoices require signatures from feds who are currently furloughed. SAIC, a large defense and tech contractor, publicly said they haven’t been paid for as much as $50 million in work performed last year.
“The government is usually very good at paying invoices, and right now they’re not,” Berteau said.
NEXT STORY: The Pain of the Second Missed Paycheck