While they’re not yet feeling the full effect of federal across-the-board spending cut, the local contractors who rely on the federal government for much or all of their business have long since been feeling the effects of uncertainty.
Anticipating budget cuts of some fashion, federal agencies have been using tactics like delaying issuing new contracts, reducing the scope of contracts and extending existing contracts to retain flexibility, local business leaders say.
Staci Redmon, president and CEO of Strategy and Management Services in Springfield, said her company has bid for contracts only to find out afterward that the procurement was delayed or canceled, leaving her business to absorb the up-front costs for developing on bids with no return.
The 120-person company has eliminated a few positions, and “we’re definitely on a hiring freeze,” Redmon said. She is concerned about the possibility of layoffs if the current climate persists.
“It’s kind of left everyone in a limbo state,” she said. “As a business, we can’t even plan. We don’t even know what the remainder of the fiscal year looks like.”
Ed Jesson, president of OBXTek in Tysons Corner, also is hoping for certainty. His company has delayed the purchases of computers and equipment, and while they haven’t experienced layoffs yet, “I suspect it’s coming,” he said.
“None of our customers seem to know what the impact is,” Jesson said. The 178-employee IT services firm gets 100 percent of its business from federal agencies. “There is a lot of apprehension on the part of our employees.”
Not all types of contracts are being equally affected. Moe Jafari, president of HumanTouch in Tysons Corner, said the professional services that his company provides have been deemed essential services and therefore their contracts have been spared so far.
Nevertheless, HumanTouch is planning for cutbacks, just in case.
“You have to plan for the worst and hope for the best,” Jafari said. “We are seeing our clients are in that mode right now and we are right alongside them.”
All three said they are hoping Congress will reach a broader budget agreement later this month.
“Take the Democrat/Republican thing out of the equation and compromise to do something,” Jesson said. “We’ll adapt.”
Redmon said her company already is starting to adapt by pursuing contracts with local and state governments and other businesses to offset the losses from the federal level.
“We also realize that we have to talk to our government clients in a completely different language now,” Jafari said, saying they need to make it clear how their services will make the best use of scarce taxpayer dollars.