An employee leaves the state operated U.S. Space & Rocket Center which serves as the visitor center for the nearby NASA Marshall Space Flight Center. No longer is it just smaller federal contractors that are worried about the government shutdown. | David Goldman/AP Government Shutdown Even giant federal contractors feeling shutdown's bite The historic length of the political impasse is reverberating at the Fortune 500 level, making it one of the most economically damaging in history.

Boeing has halted testing for a multibillion-dollar rocket program designed to return astronauts to the moon. The Rand Corp. is bracing for work stoppages. Booz Allen Hamilton is transferring employees to projects with agencies whose funding hasn’t run out.

Federal government contractors and consultants have furloughed tens of thousands of employees, and the numbers will only grow as the nearly monthlong shutdown drags on — even at some of the biggest, most powerful companies that carry out much of the government’s work.


Plenty of smaller contractors are already suffering. One 70-person technology company, Tethers Unlimited, has had to lay off 20 percent of its workforce because it hasn't been paid.

But now the historic length of the political impasse is reverberating at the Fortune 500 level, making it one of the most economically damaging shutdowns in history.

"For larger companies, it is starting to cost them larger sums of money," said Kevin Kelly, a top lobbyist at Clark Hill whose clients include United Launch Alliance, a joint venture between Boeing and Lockheed Martin. "They have to find ways to draw down. The big guys have deeper pockets, but at the same time, it is costing them. It comes right off their bottom line. The anxiety factor goes up by the day."

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“We think we’re in the tens of thousands” of affected contractors, said David Berteau, president of the Professional Services Council, a trade group that represents a host of federal contractors.

At Booz Allen, the company has covered pay for employees whose work has dried up, but it’s not clear how long the company can sustain that.

“We’ve been covering those impacted employees since the shutdown began," said James Fisher, a company spokesperson, noting that the Department of Homeland Security and the Commerce Department are among its affected clients. "We are now focusing on redeploying them to other open contracted assignments that are currently funded by the government."

But as the shutdown drags on, that could prove more difficult because such transfers often require approval from government workers who are furloughed.

“In some cases, there’s no government people to make those approvals,” Berteau said.

Government-funded research centers that provide expertise to a host of agencies are bracing for impacts as well.

"Several of our federal government clients have been shut down," said Jeffrey Hiday, a spokesperson for the Rand Corp., which is most known for its work for the Pentagon but also has contracts with HHS and the Commerce, Justice and State departments, among others — all of which have operations on ice due to the shutdown.

Like many organizations, however, Rand is reluctant to go into detail about when and how the shutdown will force cutbacks. Hiday said he "can't get into specifics of precisely when/whether things might start to bite."

Others institutions that rely on federal funding say they are also feeling the pinch, such as the Jet Propulsion Laboratory, which builds and operates robotic spacecraft for NASA and is run by Caltech.

"If the current shutdown were to continue through the end of the month, we may have to consider some adjustments on a mission-by-mission basis," said Veronica McGregor, a JPL spokesperson.

For many, that point is just around the corner. Timothy Roe, a 57-year-old contractor working on drone integration for the Federal Aviation Administration, was temporarily reassigned to a different client when his company’s government work cut off. His employer, which POLITICO agreed not to identify because he is not authorized to speak on behalf of the company, initially allowed him to use a week of paid time off for next year.

But the project he’s working on is scheduled to last only another week at best, after which Roe will probably have to file for unemployment.

“I have an uncertain future,” Roe said in an interview. “Even though it’s horrible what’s happening to federal employees, there are many people beyond that.”

Contractors such as Roe point to a double standard compared with federal workers, who typically receive back pay after a shutdown ends. Trump signed a bill this past week to guarantee payments to federal workers, but contractors are excluded.

Sen. Tina Smith (D-Minn.) and several other Democrats on Wednesday introduced legislation to guarantee contractors’ back pay of up to $50,000. But it’s unclear whether it will get Republican support, and some assert it doesn't go far enough.

“I’m always going to be behind, and I’m always going to feel depression and stress,” said Tamela Worthen, a security guard who’s furloughed from her job at the Smithsonian. “I don’t care if you do get back pay — that’s still not going to be enough to pay late fees, creditors and all that.”

Worthen said she has been unable to afford medicine to treat her diabetes, high blood pressure and cholesterol, in addition to the costs associated with regular doctor visits. She fears her conditions may be worsening under the stress of not being able to afford her mortgage and bills — a cycle that seemingly has no end. She’ll still have to pay penalties to creditors, she said, and her credit score could be permanently damaged. She worries her car might get repossessed.

“You’re not going to get out of the hole even if you go back to work,” Worthen said. “People who have money don’t know what it’s like not to have money and get backed up with bills.”

Some two dozen contract workers, led by the Service Employees International Union, marched to the office of Senate Majority Leader Mitch McConnell on Wednesday to present him with their unpaid bills and demand an end to the shutdown.

“I cry every day — every day — because I don’t know what I’m going to do,” said Audrey Murray-Wright, a 58-year-old contract custodian. Her company’s agreement with the State Department expires at the end of the month, she said, and she’s already been furloughed from her primary cleaning job at the Smithsonian.

It may also be too late for Tethers Unlimited, a company based in Seattle that is designing solutions to clean up space debris and to transport humans and supplies in orbit, to recoup losses. It took the drastic step of laying off a dozen of its 70-some employees as a result of the shutdown.

"The people at NASA and the people in other parts of the government who process the invoices we've submitted to the government to be reimbursed for the work we did in the last quarter of 2018 have been furloughed," said Rob Hoyt, the company's CEO. "Those invoices are just sitting there as long as the shutdown is going on. That has put a real crimp in our cash flow."

Compounding the problem is the fact that some of the company's contracts with the Defense Department, which is not affected by the partial government shutdown, are managed by the Interior Department, which is affected. "We had a payment that was supposed to made on the 24th of December and it got turned off," Hoyt said.

But no longer is it just smaller federal contractors that are worried. And Boeing is a prime example.

Tests of key components to ensure that the company's Space Launch System rocket can withstand its demanding mission have been halted at NASA's Marshall Space Flight Center in Alabama and Stennis Space Center in Mississippi, Boeing project manager John Shannon told POLITICO. “[So] that work has come to a halt during the shutdown," he said.

Hoyt predicted that more impacts are coming for such biggies. “I can’t name names, but this morning, I was at a meeting at a much larger aerospace company," he said. "I was told that they may have to start laying people off in February if the issue isn’t resolved. They are a much bigger company."

Said Kelly, whose clients work for myriad agencies ranging from DHS to Commerce and the EPA: "It is only going to get worse."

Jacqueline Klimas contributed to this report.