The Shutdown Is Hitting Differently Across The Contractor Community

Interview transcript:

Terry Gerton We are in week two of a shutdown, and shutdown is affecting the government contracting community differentially right now. Some have contracts as a result of the One Big Beautiful bill from July, and others are waiting. What are you hearing from across the community?

Jim Carroll Really, uncertainty. And there are different impacts for different contracts, and therefore different government providers and different for our 400 members. Some folks are operating on ’25 money and so they are continuing, but there’s the concern that even that money could go away and not be able to service it. And of course there’s a lot of contractors that are sitting at home with complete uncertainty as to whether they will get a paycheck. It’s not like the government employees.

Terry Gerton So, what’s your advice to folks in the government contracting community right now?

Jim Carroll If they have a contract that is shut down, it’s to see if they can assign people, diversify a little bit, get over to a funded contract. And of course, it’s to look at that contract to make sure because on most firm fixed price contracts, they might get paid, you know, even during these stoppages. And so, you know, there’s a lot of contractual language that might allow for payment even during a stop work order. Sadly, it’s not on every contract. And then, of course, the other is to stay in touch as much as you can with the contracting officer. The concern is even when a bill gets signed, even if it’s just a CR, getting the government restarted is not easy and it’s a big hit financially.

Terry Gerton Are you seeing any realignment of the prime-subcontractor space as a result of the shutdown?

Jim Carroll Not yet. We’re wondering, you know, if there will be, and one of the things we’re obviously watching is if the government, if the administration shutters some places permanently. They threatened that last week, over the weekend; they said, you know, they would only take that measure if there does not appear to be a resolution. And we hope that this week doesn’t prove to be even more disastrous, quite frankly.

Terry Gerton So PSC has some checklists for contractors during this time.

Jim Carroll We do, and our members are utilizing this checklist to sort of go down to find exactly the things that they need to do. And they can also contact us, they can email us. But we’re giving our members some guidance on what to do during these shutdowns. And so we are trying to help our 400 members, which represent, let’s see, it’s probably over a million employees across the country who are potentially impacted by this. And so it’s been an interesting year. You know, what’s that old proverb? “May you live in interesting times?” We’re living in interesting times, Terry. And so we’re trying to help as much as we can.

Terry Gerton Well, you mentioned that in some ways this shutdown is a continuation of the last eight months of the Trump administration, between stop work orders and terminations for convenience and agency disassembly. Does this feel different at this point to your contractors?

Jim Carroll It does, sadly. You know, the shutdowns are not new. And certainly continuing resolutions are not new in recent years. You know, we’ve had anywhere from two to five continuing resolutions in each year before we get a final, full-year bill. And so the idea, you know, of CRs are not new, sadly. The idea of shutdowns aren’t new. It was back in 2018, in December, during President Trump’s first term where the government was shut down for 35 days. This one does feel different because I don’t see a resolution easily happening. Both sides seem to be pretty dug in and I do think part of the reason this one feels differently is because so many people, so many companies, so much government agencies have been impacted since January of this year. So it’s critical that we sort of band together and show our strength. I took the CEOs of several of my companies in last week to the White House on Friday, even though there was a government shutdown, to meet with OMB. And we’ve had good productive conversations. We have more meetings coming up. We’re continuing to push on behalf of the industry.

Terry Gerton I’m speaking with Jim Carroll. He’s the CEO of the Professional Services Council. Well, tell us about those meetings with the White House because as you say, even in a government shutdown, some business is still getting done and I know you’ve been meeting on several different topics.

Jim Carroll We have. We had two meetings in the past 10 days at the White House. One was on artificial intelligence. And so many of the companies that are members have stepped up, really embraced AI and are using it to produce better, faster results for the government, for their contracts. And so we had a meeting with about 10 or 12 members of PSC who are heavily involved in the AI space. At the end of last week, as I said, even though there was the shutdown in place, we had a meeting with the deputy director of OMB, Eric Yoland, who gave us very good advice in terms of how did we do business with the federal government. And that was a great meeting. Terry, we’re supposed to be taking a bunch of our members that do DHS work to California next week. And what we’re trying to do is figure out if that meeting is still going to happen. And then at the end of the month, we are having another meeting at the White House on financial technology, on FinTech. So many of our members are also getting involved in that space and providing new and novel solutions. We’ve had several FinTech companies join PSC recently. And so we’re getting into these government agencies, getting into the White House as much as possible to make our voice heard.

Terry Gerton And what are you hearing in response? Because not a lot of folks have that kind of access.

Jim Carroll You know, we’re very fortunate to have this access, and this is why we really believe PSC is the leading voice for industry in DC. What we’re hearing is a desire to implement some of the things that contractors have been asking for for years, which is to do a more open and transparent process of identifying the problem and asking for solutions, as opposed to just putting out an RFI, you know, to develop a specific solution to a problem. They want to identify the problem and have us come up with unique solutions. They want to do that. They want to make sure that we’re not just operating on time and materials or, you know, cost plus; that we are actually getting to results-oriented contracting where we are producing the result and getting paid for it. We have new and novel ideas, we’re constantly evolving. PSC is evolving, that’s how we’re getting more involved in the FinTech space and the AI space and working groups on that. And we are evolving and thankfully, so many in the government recognize that PSC is leading this charge in some of the emerging tech. And so we’re able to bring our members in with us.

Terry Gerton You know, just before the shutdown, Jim, another big chunk of the FAR rewrite dropped. Are you seeing that the words from OMB and the procurement and GSA match the FAR rewrites?

Jim Carroll For the most part, yes. I mean, I think there is some unity in that. I think the concern we have, and we did raise this with OMB, is that the comment period, we’re hearing that it’s going to continue to be very truncated. And these are very complicated issues. And having just a few weeks to produce comments might not get the best results for the government. So we’re asking them to give us as much time as an industry to respond to these proposals so that they can actually produce the result that they want. We’re working together with the government. And so we’re happy to have that partnership and the open dialog. What we hope is that, of course, that the implementation now takes place of a way to make the government more efficient.

Terry Gerton Well, even with the shutdown, it sounds like PSC has a lot on its plate.

Jim Carroll It does. I think we’re busier than ever, which is actually, you know, the role of Professional Services Council to be able to help our contractors and help the people with whom they deal, the government employees, the contracting officers, the heads of these departments, as much as possible. And so I hope by the time we speak with you next week, the shutdown will have ended.

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