October 3, 2013
It's day three of the U.S. government shutdown but most construction firms working on federal contracts haven't been affected.
According to a web page put together by the Associated General Contractors of America, fixed-price construction contracts already awarded aren't affected because they have been funded. Federal aid for state transportation contracts also are not affected.
However, the shutdown has suspended operations on most cost-type contracts, time and materials contracts, IDIQ/MATOC/MACC contracts and contracts yet to be awarded.
AGC of America spokesman Jimmy Christianson said contractors are frustrated with the government but not overly concerned about their work at this point. “It's too early to tell what's going on,” he said.
That sentiment was echoed by Jerry VanderWood at the AGC of Washington. He said he hasn't heard of any huge impacts on local contractors, yet.
Christianson said the shutdown could last until the debt-limit debate later this month. Congress will need to raise the debt ceiling by Oct. 17 or risk a federal default.
“Two weeks is not going to be the end of the world, however, if you have project management decisions that need to be made and the people are furloughed, that makes it more difficult,” he said.
Contractors may also have to wait weeks longer to get permits, Christianson said.
Michael “Mickey” Traugutt, president of Washington Patriot Construction, said uncertainty is what worries him the most.
“No one really knows how long it will last and what the cuts will be,” he said.
Traugutt's Gig Harbor-based firm is working on four Navy projects and has two others in closeout stage. About 85 percent of WPC's business is with the federal government.
All of WPC's Navy projects are funded, and Traugutt said NAVFAC Northwest and its support people are funded for a few weeks. He said furloughs could impact the Navy's ability to manage WPC's work if, for example, a change of conditions or unforeseen condition popped up.
The Navy furloughed some employees last summer due to budget constraints.
“NAVFAC did a good job managing with what they had,” Traugutt said. “I don't see the efficiencies in furloughing people.”
Arill Berg, chief of the Construction Division for the Seattle District Corps of Engineers, said the corps has about two months of funding in reserve for contract administration. He said no one in his division has been furloughed, but there could be a smaller staff in the future.
“It's fairly disruptive for all agencies,” Berg said about the furlough process.
Federal government and federal aid contracts total between $100 billion and $125 billion a year.
Christianson said the AGC can't figure out the impact of the shutdown because economic data from the Bureau of Labor Statistics hasn't been updated since Monday. New numbers on construction activity should have been posted Tuesday.
The BLS website says the agency won't collect data, issue reports or respond to public inquiries during the closure.
“The best thing that a business can have is some sort of certainty,” Christianson said. “We're not getting that right now. That makes it difficult for our industry to plan for new business.”
Traugutt said WPC managers realized last summer that their 4-year-old firm should diversify its client base because of military downsizing. He said the goal is to have a 50-50 mix of public and private jobs.
The last time the federal government shut down — for 21 days — was from mid-December 1995 to early January 1996.
Benjamin Minnick can be reached by email or by phone at (206) 622-8272.