Small Contractors In Kansas City May Soon Feel The Pinch Of The Government Shutdown
Some 19,000 federal government workers are scattered across the Kansas City area. As the federal government shutdown continues, most of them are looking at a second missed paycheck.
Many small businesses with government contracts are also dealing with uncertainty, although there is one certainty: Things can change quickly.
“I just got a notice that we're not going to get paid on one project," said Randy McAlexander, general manager of Medvolt, a contractor based in Colorado Springs that just opened a Kansas City office. The company is currently doing a landing strip project at Fort Riley.
At 11:00 a.m. Friday when he first spoke to KCUR all was fine. An hour later, he had a problem. "They furloughed the Bureau of Indian Affairs representatives that control our contracts.” Just like that $20,000 McAlexander was counting is now in limbo.
McAlexander says Medvolt, does $60 to $70 million a year in business with the federal government, primarily the Pentagon. In a company that size, a missed payment of $20,000 isn't too bad.
"I'm fairly comfortable with what's going on right now. We talked to our clients and our customers and they're fairly comfortable that they're not going to be affected and shutdown. So we're not sweating at too bad," he said.
Infinite Energy Construction in Martin City isn't sweating either.
But there is confusion. "I'm just not really sure which particular part of the government is going to be subject to a furlough or a shutdown," said Nilson Goes, who runs operations for his family-owned firm that also does a lot of business with the Defense Department, including numerous projects at Whiteman Air Force Base, home of the B-1 bomber.
That DoD business seems to be fine. But he said that there might be issues with his FAA contracts - he’s just not sure.
In the 23 year history of the company, this is not its first government shutdown. But this, Goes said, is different. “This one's a little unique because it doesn't, it seems to be a little less defined than others if that makes sense. On the other ones, it seemed there seemed to be a little more structure even in the unknown.”
As a contractor for the government, there is lots of structure.
There are almost 2,000 pages of regulations.
There is an entirely new language of acronyms to learn: SAM, SAT, SIN, SIP, SOW. And that's just the S's.
But there is one big advantage to government contracting, Washington generally pays on time, said Medvolt's McAlexander. "Oh, absolutely. It's a safe way to do contracting."
Even though the federal government has shutdown 18 times since 1976, everyone believes government contractors will eventually be paid as they have in the past.
Late payments come with interest. Although Goes said that interest wouldn’t be enough to cover the cost of, say, interest on a line of credit.
No matter how long the government is shutdown, Goes said, there are people counting on him to complete projects.
“The soldiers and the people that rely on Whiteman Air Force base are not too concerned about in the whole grand scheme of things about a government shutdown due to politics. They need to have something done and so we need to be able to support that.”
Many government contractors are now focused on the end of the month.
That’s when invoices go out and the government pays.
If the shutdown drags on into February, small contractors might then begin to feel the pain.