Latest federal shutdown hits contractors hard; At many firms, employee morale suffering

By Peter Behr
Thursday, March 3, 2011; 12:23 PM

From The Washington Post archives

Published: December 22, 1995, Friday, Final Edition

Two of the top computer technicians at Automated Information Management Inc. in Lanham turned in their resignations yesterday, one small sign that the partial federal shutdown is having a troubling impact on smaller contractors in the Washington area.

AIM Vice President Warren Steen had to lay off the two technicians early in the week because the Labor Department, whose contract pays their salaries, does not have a new budget and has ordered Steen's firm and other vendors to stop work.

In response, the technicians are headed for jobs with rival companies whose federal contracts are secure, or for companies that do not do business with the federal government, Steen said.

"We're starting to lose employees who can't afford to be out of work and not get paid," he said.

For the second time in a month, many of the Washington area's 10,000 federal contractors are trying to grapple with frozen contracts, disrupted projects, furloughs and juggled vacation schedules -- and a heightened sense of anxiety about the future. The billions these companies receive from the government annually are a cornerstone of the region's economy.

And unlike the first shutdown before Thanksgiving, this time there is a sharp division in the contracting community between the haves and have-nots -- as the departures from Steen's company demonstrate.

The fallout has been minor so far for contractors, such as EDS Government Systems, that work with departments whose 1996 appropriations bills have been approved. Those agencies include the Defense, Energy, Agriculture, Transportation and Treasury departments and the General Services Administration, company executives said.

But for such firms as AIM, whose employees' livelihoods depend on contracts with the Labor and Commerce departments, the Environmental Protection Agency, the National Aeronautics and Space Administration and other departments closed by the furloughs, the immediate consequences have been painful and the outlook is more and more worrisome.

James H. Wilson Jr., director of environmental services for E.H. Pechan & Associates Inc., a small Springfield-based EPA contractor, said the emotional whiplash of the stop-start-stop federal funding battle has damaged morale among the company's employees and even made him question his commitment to federal contracting services.

"In the long run, people like me are going to ask: Is this a trend that's going to continue? Is this a business I really want to be in?" asked Wilson, 44, who studied both engineering and public policy as preparation for a career dealing with issues of governance.

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