The complicated scenario for some contractors post-shutdown
Eric Crusius, partner at Holland & Knight, discusses how contractors were impacted by the shutdown and what they have to do to get up and running again.
This week, federal employees are back at work after the longest government shutdown in history. While furloughed feds are back at the office, getting contractors up to speed after the shutdown could be very complicated. Eric Crusius, partner at Holland & Knight, says that contractors must do a few things to get back afloat.
“One thing they really need to do is put in a request for equitable adjustment with the contracting agency they have. That requires them getting their costs together for the wind-down, and their cost for the wind-up again,” Crusius said. “They have 30 days generally speaking to put in for those costs. I recommend trying to get it in before the next few weeks because there could be another shutdown.”
While larger contractors could move employees to different projects during the shutdown, smaller contractors don’t have that option. Crusius told Government Matters that shutdowns can have a worse effect on contractors than most would think.
“There’s a misnomer out there that contractors have huge, 20-30% margins. The reality is in government contracting today with LPTA and all those other contracting methods, contractors have 3-5% margins,” Crusius told Government Matters. “If there’s any kind of disruption or any kind of weird thing that happens, they’re going to have an enormous problem getting over that bound that they have”