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  • Shutdown shocker:
    Contractors feeling pain of federal agency closures
    Shutdown likely to continue until deal reached on debt ceiling

    The stunning federal government shutdown of all non-essential operations is now in its second week, with no end in sight.

    On Oct. 1, about 800,000 federal workers went on furlough without pay, and most federal agency offices closed their doors and turned off their websites, after Congress failed to approve spending for the 2014 fiscal year that began that day.

    Since then, procurement activity has slowed to a crawl and many vendors are struggling with contract work cancellations, delays and uncertainty. Contractors also are being impacted by government contracting officials being unavailable, federal agency offices being closed and cancellations and postponements of many federal events and conferences.

    Congress subsequently approved relief for most defense employees, and Defense Secretary Chuck Hagel recalled to work about 350,000 civilian defense employees on Oct. 7.

    The current shutdown follows several years of threats by conservative Republicans to shut down the government to gain leverage in political battles, including the October 2012 fight over sequestration of spending.

    In this round, Republican leaders in the House refused to approve spending for fiscal 2014 without provisions to defund and weaken the “Obamacare” health care law of 2009. President Obama and Democratic leaders disagreed and demanded a “clean” spending package without Obamacare provisions. The result is the first federal government shutdown in nearly two decades.

    A previous shutdown occurred from December 1995 to January 1996 in a standoff between President Bill Clinton and Congress. In that event, federal offices stayed closed for 21 days.

    Without funding, the White House ordered federal agencies to cease all non-essential operations as of Oct. 1.

    Unlike last year’s threats of closure during Congress’ sequester debate, which had weeks of discussion about the consequences of potential furloughs and layoffs, the most recent talk became a very real government shutdown with relatively little warning.

    At this time, political analysts are forecasting that the shutdown is likely to continue until nearly Oct. 17, when the U.S. Treasury has indicated that the nation’s debt limit will be reached.

    At press time, GOP House Speaker Rep. John Boehner, R-OH, was calling for the president to negotiate unspecified terms in exchange for reopening the government and lifting the debt ceiling.

    President Obama has said a deal with Congress to end the government shutdown must also extend the debt ceiling limit.

    Obama said in an Oct. 8 news conference he would talk to Republicans about anything as long as it does not involving "hanging threats of government shutdown or economic chaos over the heads of American people."

    Obama also called on Boehner to bring a “clean” spending bill without Obamacare conditions to the House floor for a vote. Some analysts are saying there is enough support among House moderates of both parties to pass such a bill. The Senate already has approved a clean spending bill.

    "Let's stop the excuses. Let's take a vote. Let's end this shutdown, right now," Obama said.

    Economists warn that failure to increase the debt limit would cause a dramatic increase in interest rates that likely would send the U.S. economy back into recession.

    "If there was a problem lifting the debt ceiling, it could well be what is now a recovery would turn into a recession or even worse," Olivier Blanchard, an International Monetary Fund economist, told CNN.

    The House passed a bill to provide back pay to furloughed federal workers, but no relief bill has been under consideration for contractors.


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