Trump's shutdown puts $295 million a day in federal contracts at risk

US President Donald Trump won't back down on his wall. Photo/Getty Images.

If recent history is any guide, federal contractors could be out more than US$200 million (NZ$295 million) a day in lost or delayed revenue from the partial government shutdown, based on data compiled by Bloomberg.

The companies run the gamut, from businesses that provide upgrades to flight communications and air traffic systems, to producers of anti-malarial and HIV medicines in Africa, to operators of government cafeterias.

Since December 22, thirteen major federal departments and agencies have closed as Republicans and Democrats argue over whether Congress should provide President Donald Trump with money to build a wall along the US border with Mexico. Those agencies have mostly stopped awarding new money for contracts.

In the fiscal year that ended October 1, those agencies announced US$89.3 billion in obligations to contractors, an average of US$245 million each day, according to reports from federal databases. The Department of Homeland Security, NASA, and the State Department accounted for more than half those funds.

The data don't reveal which companies aren't getting paid. But using reports from federal databases, Bloomberg Government calculated the contractors that received the most money in obligations from those 13 agencies in the latest fiscal year. Near the top of that list are a number of publicly traded companies, including Boeing, General Dynamics and Leidos Holdings.

"We are actively monitoring the situation and await direction from our government customers," Erin Tindell, a spokeswoman for Leidos, said by email. "A relatively small portion of our business is impacted by the recent government shutdown."

Some contractors will be able to avoid a drop in revenue, at least for now. Huntington Ingalls Industries Inc., a shipbuilder in Newport News, Virginia, was able to secure new obligations worth more than $930 million for two cutters from the U.S. Coast Guard on Dec. 21, the last day before the shutdown.

"Our cash flow has not been impacted," Beci Brenton, a spokeswoman for Huntington, said by email.

Chemonics International Inc., a closely held Washington, DC-based company that provides services for the US Agency for International Development, asked the agency to move up its obligations in preparation for the shutdown, according to spokeswoman Jane Gotiangco.

"We can operate at full levels through at least February," Gotiangco said by email. "However, we are concerned about our fellow implementers who are small businesses and will be more challenged by this shutdown."

The California Institute of Technology, Boeing and General Dynamics didn't immediately respond to requests for comment.

Even contractors that eventually get paid will see a delay in that revenue.

Just like federal employees, some contractors will be exempted from the shutdown based on the nature of their work, in which case their employees will be paid. But for the rest, their workers will be furloughed, forcing contractors to make hard choices about whether to keep those workers on.

"Now you've got a group of employees who are on a time-and-material contract, or a cost-reimbursement contract, and they're not working," said Alan Chvotkin, executive vice president and counsel for the Professional Services Council, which represents federal contractors. "So now the company has to decide whether to pay those employees out of whatever revenue they might have available to them."

"It's a cash-flow issue," Chvotkin said in a phone interview.

Whatever financial pain the shutdown inflicts on government contractors won't be evenly spread across the country. In the fiscal 2018 year, thirteen congressional districts received more than US$1 billion each in contract awards from the agencies affected. Of those, most are currently represented by Democrats.

- Bloomberg