Contractors brace for possible government shutdown

The threat of a federal government shutdown is even more bad news for a  defense industry struggling to weather sequestration.

Following a summer of Pentagon furloughs and with other sequestration cuts  starting to sink in, the government — caught between a gridlocked Congress and a  dug-in White House — is marching to the brink of a complete halt, which industry  sources say could do irreparable damage to defense firms.

“A shutdown means that there’s no additional funding that is  made available for contracts,” said Elizabeth Ferrell, a partner at McKenna Long & Aldridge who’s worked in government contracts law for more than 30 years.  “So with very limited exceptions, there are no new contract awards, no  additional funding obligated to existing contracts, contractors are faced with  performing when there are no government people around, government people will be  furloughed.”

Defense contractors would have to work in a vacuum, she said, when normally  they rely on give-and-take with government employees. “The government will cease  to function, except for a very limited number of essential people,” she  predicted.

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