Government contractors can be affected by the federal shutdown whether or not their projects have no appropriations because any disruption affects the whole supply chain, Federal News Radio reported Thursday.
“Companies can be getting stop-work orders on those types of contracts as well because even though they’re all paid for with FY ’13 funds there’s nobody there to take deliveries,” Larry Allen, president of Allen Federal Business Partners, told the station.
Allen, who was interviewed on “In Depth with Francis Rose,” said firms should meet the uncertainty head on and added they should start planning and rebuilding.
“While you can’t get any new task orders that rely on appropriated funds, this is still a very good time to build your own pipeline, have the discussions with government agencies, with buyers about what their plans are,” Allen said.
According to Lee Dougherty of Fluet, Huber & Hoang, firms could end up dropping subcontractors even if such an action could be legally disputed.
“Even though they believe they may lose a case that’s litigated, they need the cash now, and so they’re willing to risk that litigation in order to maximize the cash flow today,” Dougherty told In Depth.