Area companies and government agencies braced on Monday for the possibility of employee furloughs, funding delays and other ills in the wake of a federal government shutdown that could occur starting Tuesday unless a last-hour budget agreement is reached.
Workers at Bethesda defense giant Lockheed Martin and other federal contractors face not getting their paychecks for the duration of a shutdown, which happened during the last government shutdown that ran for three weeks in 1996.
Federal employees received back wages once the budget issue was resolved, but contractors were not reimbursed.
About $3.7 billion in federal contracts to companies in the Washington, D.C., region — which is more than 20 percent of the total contracts held by businesses then — were hurt by funding delays during the 1996 shutdown, according to a Congressional Research Service report.
If a shutdown occurs Tuesday, Lockheed will keep its facilities open and employees will continue to receive pay and benefits “unless we receive guidance from our customers,” company officials said in a statement emailed by spokeswoman Jennifer Allen.
Lockheed is among the federal government’s largest contractors, with $47.2 billion in sales last year.
The budget showdown is primarily over congressional Republicans wanting to see deeper spending cuts and changes to, or even a repeal of, the 2010 health care reform law, while many Congressional Democrats and the Obama Administration do not want significant changes to the law.
The new fiscal year starts Tuesday.
Nymeo Federal Credit Union — which has offices in Frederick, Gaithersburg, Germantown and Adelphi — will let customers who are furloughed because of a shutdown to reduce temporarily or even skip loan payments. Its offices in federal buildings such as the National Institute of Standards and Technology in Gaithersburg likely will close, but other branches will be open and have increased staff.
In the event of a shutdown, agencies and contractors deemed critical to operations, such as those in national security, will remain working.
Some contracts awarded by federal agencies are specified that awardees have the ability to find private funding for those projects. That’s the case with Rockville-based Standard Solar, which builds and installs solar electric systems, when it was recently selected by the U.S. Army Corps of Engineers, Engineering and Support Center to develop photovoltaic solar systems on Army facilities.
Standard Solar was one of 22 companies chosen under the Multiple Award Task Order Contracts program, which qualifies those businesses to compete for future solar projects.
“The awarded companies have been qualified by the U.S. Army to have the capacity to bring private sector funding to each of the awarded projects, so funding is not impacted by government shutdowns or extended sequestrations,” said John Finnerty, director of business development for Standard Solar.
The Greater Washington Board of Trade recommends that companies that contract with the government develop a plan and even a task force to deal with the implications. Arrangements with regular contractors and suppliers should be confirmed in writing, and detailed documentation of correspondence should be kept in case future disagreements arise, officials said in a report.