The end of the longest U.S. government shutdown in history would be a relief for small businesses that depend on federal contracts or funding.<\/b>
\nThe end of the longest U.S. government shutdown in history would be a relief for small businesses that depend on federal contracts or funding. For seven weeks, they\u2019ve been reducing spending, weighing layoffs and looking for stable work while trying to reach shuttered government offices, according to several contractors.
House lawmakers are returning to Washington on Wednesday to vote on compromise legislation that would fund the government through Jan. 30. A majority of Democrats are expected to vote against the bill, which is likely to win approval in the Republican-led chamber.
Small business owners with government contracts say the shutdown has caused payment delays and the cancellation of some projects, and they will be working to make up for lost time and money, if the government reopens.Uncertainty on projects
Jackson Dalton, owner of Black Box Safety, a maker of personal protective equipment, was awarded a $1.9 million federal contract for flashlights the day before the shutdown started on Oct. 1.
The contract, which would account for 6% of his annual revenue, required the company in El Cajon, California, to spend $1 million at the outset. Dalton said he was unable to because the contracting office did not return his emails or phone calls.
\u201cIt\u2019s had a major impact on our cash flow, on our operations,\u201d he said. \u201cOur suppliers are freaking out because they\u2019ve been anticipating this award for like a year. And so they\u2019re trying to spin up and order raw materials to build the goods needed for this contract.\u201d
The only government communication Dalton said he\u2019s received during the shutdown was an emailed stop work order. The contact called for the work to be performed in 120 days.Considering non-government projects
Eric Veal is owner and president of Interactive Knowledge in Charlotte, North Carolina, which creates digital interactive experiences for museums, educational organizations and cultural spaces with a staff of eight. About 60% of his work this year has come from contracts with the Smithsonian Institution. The Smithsonian is partly funded by the federal government and partly funded by private donors and other sources.
\u201cFederal employees are not able to work at all, and invoices and projects are at a complete halt,\u201d Veal said. Since the Institution isn\u2019t completely funded by the government, some staff was still working during the shutdown, but it\u2019s \u201cjust difficult to complete the work without a full staff.\u201d
He cut down on expenses and was considering laying off some employees if the shutdown stretches past mid-November.
\u201cOur cash flow is affected, and so we are having to make small-level changes in terms of expenditures,\u201d he said. \u201cWhat we have not had to do yet is consider any type of staffing changes or, you know, major changes, but we, we\u2019ve got, we\u2019ve a date on the calendar that we will start to consider doing those things. And that\u2019s really Nov. 15th.\u201d
The shutdown has made him think about focusing more on work in the private sector.
\u201cWe rely on these contracts for the bulk of our work,\u201d Deal said. \u201cSo the shutdown is making us second-guess that decision, in terms of really hitching our wagon as heavily as we had to Smithsonian. \u2026 We are considering really lessening our reliance as a company on federal contracts.\u201dA distraction from policy issues
The shutdown has made it harder for small businesses to focus on other policy issues they advocate for in Congress. About 2,000 small business owners attending a summit on Oct. 29-30 summit in Washington, D.C., organized by Goldman Sachs 10,000 Small Businesses, met elected officials, policymakers and other speakers to discuss issues like artificial intelligence, accessing capital and employee retention.
Participant Joe Gelardi, whose company in Virginia Beach, Virginia, provides operational support, management and technology services to defense agencies and original equipment manufacturers like Lockheed Martin and General Dynamics, said the shutdown overshadowed what the businesses were trying to accomplish.
\u201cAll of us planned for many months to come here (Washington) because we\u2019re trying to help be proactive advocates for the small business community, to help work with legislators in the House and the Senate, to craft policy that will help to make more firm conditions for growth for small businesses across all industries,\u201d Gelardi, president and CEO of Vectrona, said. Instead, the conference ended up \u201cbeing overshadowed by the fact that this shutdown is in place.\u201d
Meanwhile, the shutdown has impacted his business, which provides technology and training for members of the military to operate complex equipment, he said. The government not operating has caused delays in processing new contracts, bids and proposals, and creates \u201ca lot of uncertainty,\u201d he said. Gelardi said he hasn\u2019t been paid for some contracts, but his team has kept working.
\u201cThat is just one example of what\u2019s happening all over the defense space. Companies are being asked to carry the load, and we do it in most cases because we don\u2019t want to let our customer down, we don\u2019t want to harm the relationship, we want them to be able to trust us,\u201d he said. \u201cBut it\u2019s really unfortunate that the federal government is transferring the burden of that and asking us to be the ones to carry that cost and find a way to fund the work and manage.\u201dContracts canceled
Karen Jenkins, president, CEO and founder of management consulting firm KRJ Consulting, said the shutdown has affected her business based in Columbia, South Carolina, as much as the COVID-19 pandemic did. A contract she won last year that was supposed to have a renewable option this year was canceled, she said.
\u201cThere were other contracts that we were tracking that we were going to pursue this year and had a high probability of winning because we probably had the best past performance and rate and things of that nature, but they were pulled,\u201d Jenkins said. \u201cHopefully and prayerfully, when the government does reopen and with all the furloughs, that they\u2019re going to need some additional capacity. And we are just trying to hold on for dear life to see if we can maintain so that we can be that resource for the government when it reopens.\u201d<\/p>\n