Shutdown’s end just the beginning as contractors face months-long recovery

The government shutdown might be over, but the impact will linger and be felt by contractors for months.

The Professional Services Council estimates that for every day of a shutdown it takes three-five days to recover. The industry group expects that a full recovery will take until mid-March 2026.

“We know from history that departments and agencies—and their contracting partners—will continue to feel the impact of this shutdown for months to come,” said PSC CEO Jim Carroll “There are challenges in digging out from back-logged invoices, rescinding stop work orders, and flowing payments throughout the supply chain. These challenges can be significant.”

In a statement, PSC laid out three steps agencies need to take:

• Re-start invoice processing and payments as quickly as possible.
• Rescind stop work orders.
• Take contracting actions such as awards, task orders and options.

A quick return to making awards will give contractors much needed work and restore confidence in federal contracts, PSC said.

PSC highlights how payments flowing is critical for primes, subs, vendors and the rest of the economic ecosystem that supports the federal government and its missions.

There is also the fact that unlike their public sector counterparts, there is no mechanism for contractors to recoup lost wages.

“Through no fault of their own, millions of American workers have gone more than six weeks without a paycheck. Unlike civil servants and military personnel, there is currently no federal mechanism to support backpay for contractors,” said PSC President Stephanie Sanok Kostro.

PSC quoted the Congressional Budget Office on the impact of the shutdown on gross domestic product. CBO calculated that the fourth quarter GDP will be 1.5% lower because of the shutdown. Some of that will be recovered, but CBO said that between $7 billion and $14 billion will be permanently lost.

“The shutdown put real people and real missions at risk,” said PSC Board Chair Zach Parker, who is also CEO of DLH Corp.