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Shutdown ends, but angst for contractors remains

McLEAN, Va. — Federal employees are back to work, but the possibility of another government shutdown looms, creating angst for the web of contractors who work in the Washington area and beyond.

Nailing down the scattershot effect on that group is difficult, but one thing is clear: While furloughed federal employees had their back pay reinstated at the end of the 16-day shutdown, no such provision is made for contractors. Those who weren’t paid during the shutdown were out of luck. Some contractors lived in limbo leading to and during the shutdown, unsure of the status of their contracts. And with the possibility of another shutdown in January, some contractors remain in that limbo.

Tim Pleus, project manager for Tysons Corner contractor OBXtek, leads a team of about 10 people working on a website development contract for the U.S. Department of Agriculture. In the days before the shutdown, Pleus said he and his superiors were relatively confident their contract would not be affected and that work could go on as normal.

Then, the afternoon of Oct. 1, OBXtek received word that the contract was indeed encompassed under the shutdown.

OBXtek faced a choice. Put the 10-worker team on furlough, or carry them on the payroll “at risk,” meaning that if the contract weren’t resumed in time, the company could not recover any money.

OBXtek kept the employees on the payroll. Chief operating officer Dale Spencer said they felt an obligation to stand by their employees.

“We have a really good team of people, and they are devoted to the company, and the company is devoted to them,” Spencer said. “It was a pretty easy decision for us.”

Come January, though, if another shutdown hits, the decision will be tougher. Pleus said work will have progressed, and it would be hard for the contractors to work if their government counterparts are furloughed.

During the shutdown, immediate attention was focused on the furloughed government workers, whose numbers are precise and easily quantifiable. The effect on the contracting world is harder to measure, said Stan Soloway, CEO for the Professional Services Council, an Arlington-based contractors’ association.

A variety of factors come into play, Soloway said: Agencies are funded under different budget protocols. Some contracts require the government to pay its vendor on a firm, fixed price. Some contracts call for workers to be paid an hourly wage.

In Northern Virginia, home to many defense and security contractors, the effect was softened because the Pentagon was exempt from the shutdown early on. Many security contracts were deemed essential. Mike Veronis, director of federal business development for Basis Technology, said his company’s contract was in that group. The company provides intelligence agencies with software that standardizes the transliteration of foreign names was deemed essential.

Veronis, whose company is based in Cambridge, Mass., but has a large presence in Herndon, Va., said companies that provide national security contracts are better insulated from the shutdown fallout than others. Still, he said the general uncertainty that continues to stalk the federal budget is a concern for all contractors.

“As a company, given our business model, we’re going to be OK. But uncertainty is always worse than clarity,” he said.