Some small businesses are on the brink after Trump's spending cuts affect contracts

[BumRushDaShow]

Source: ABC News

February 25, 2025, 8:10 PM


A Maryland-based technology consulting firm said it cut 20% of its staff when a federal funding freeze left the business unable to pay its bills. A career-development company in Colorado said it lost out on four of every five dollars in revenue when the federal government canceled all of its contracts.

An Alaska-based logistics firm scrubbed mentions of diversity, equity and inclusion, or DEI, from hundreds of federal documents within 36 hours to salvage millions in government funds, the company said.

A cost-cutting spree carried out by President Donald Trump's administration has put thousands of public employees out of work, but the slash-and-burn approach has also spilled over into the private sector, crippling some small businesses with ties to the federal government and weakening a federal agency tasked with supporting small firms, according to interviews with seven small business owners, as well as small business advocates.

Companies connected to the U.S. government account for about 7.5 million jobs, the Brookings Institution found. That figure amounts to roughly 4.5% of the nation's workforce.

Read more: https://abcnews.go.com/Business/federal-spending-cuts-cripple-small-businesses-government-ties/story?id=119182985

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I don't know WHO the fuck they thought many of these government contracts were going to (hint: it WASN'T all large corporations although obviously they still get the majority). So much of the recent government contracting focus WAS pushing to have purchases go to small businesses, notably that by minorities/women/vets. The top priority in the government contracting world, was the Alaska Native businesses. This is how they got their foot in the door and could ( *insert "business jargon"* ) GROW THEIR BUSINESS.

What they will rarely report is that when it comes to actual "tasks" - there are almost twice as many CONTRACT employees than actual civil service employees. E.g., those background checks within the FBI aren't really being done by FBI FTEs - THAT task is contracted out.

[Hugin]

1. I have talked with several contractors who are working support contracts...

Last edited Wed Feb 26, 2025, 08:54 AM - Edit history (1)

For various Federal programs and agencies over the last few weeks. Even though their contracts are still in place and funded for at most a few years. They are idled because there’s no support to do and no oversight. It’s all just disappearing.

So DOGE and Musk are literally pissing away tens of millions of dollars a day in services that the US government has already PAID FOR.

It’s not about efficiency. The M$M needs to get that through their thick skulls.

[BumRushDaShow]

2. Most of those contracts

have a provision allowing the government to choose to NOT exercise later option years, so they shouldn't be surprised if that happens, if/when some idiot "orders" contracting officers to cancel the rest of the options.

[Hugin]

4. That's the biggest concern that was mentioned...

Of course, these people are vested in their own livelihood and futures first and foremost. By in large, they do feel that they are providing important and vital services as a part of their jobs.

That’s what happens when someone who doesn’t know shit about how things work comes along and chops off the top of a pyramid willy-nilly. Waste. Horrendous waste of both resources and good will.

[BumRushDaShow]

6. Probably 90% of the current Congress

has no "institutional knowledge" about how the government got where it is today. I had started fed work right at the beginning of Raygun's 2nd term, where there was the push for eliminating civil service FTEs to be replaced with a "cheaper", "more ( *insert business jargon* ) 'agile'" workforce, began to take shape. It happened on the heels of major civil service reform passed at the tail end of Carter's term. There had already been a long dry period of hiring in many agencies including my own, where when I started, the next youngest person in my lab, was 15 years older than me.

Whole swaths of government services - IT (hardware/database/support), Customer Service Call Centers, Administrative Support, Training, were contracted out, with some token FTEs doing oversight. Once personal computers and LANs were installed during the '90s, entire secretarial pools were eliminated and employees typed up their own reports.... in word processors.

They still have this 1950s vision of government and they are in for a rude awakening. Back in the '90s during the last big reorg, it was nightmarish but the legislation passed back then was to do the transition over a period of about 5 years, NOT all at once in a couple months.

[cstanleytech]

5. Yup. It's not about efficiency but about malicious destruction.

[S/V Loner]

3. I am so thankful I sold my business...

back in May and retired. 100% of my business was with the DOD. It actually solved two dilemmas for me. One was having to continue to deal with all the supply chain uncertainty and… Two. Not having to deal with the moral question as to whether or not I would work with what I consider a Fascist regime. Truth is that would have been an easy decision as I was the only employee.

[BobTheSubgenius]

7. Another type of business hard up against it these days?

Bakeries, of all things. The price and lack of availability of eggs is pushing some bakeries to shutter their businesses. One establishment that is (or was) noted for one cake in particular could no longer make their house specialty, which involved 30 eggs. I don't know what it is, or how many servings it yields, because it was presented to me anecdotally.

Fortunately, and unfortunately at the same time, my wife is a KILLER baker, but is sugar-detoxing and eating very limited carbs. She never leaned towards exotic confections like that cake must be, but what she does make is stellar. I dabble, once in a while, but lean towards things that are too complex or too expensive to do very often at all. For a New Year's dinner a few years ago, I made a Ferrero Rocher cake, and the hazelnut flour alone was punishing. About $40 for just that ingredient, and I can't imagine what it would cost now.

Strangely, you can't believe how hard it is to impart a strong hazelnut flavour without making your recipe out of hazelnuts themselves. I located and used an entire (tiny, as extracts are) bottle of hazelnut extract in one recipe, and it was barely flavoured at all.

[Betty Boom]

8. Contracting things out, always costs more money

Trust me on this. As a retired federal manager, I saw it over and over every time a new administration would impose freezes on federal hiring or make the government go through some useless exercise to determine jobs that could be done by CONTRACTORS rather than federal employees. The whole thing took thousands of hours of effort to try and implement. Then there’s the whole Competitive contracting process for personal services, which is to have contract people come in and do what federal employees would normally do. Each of those contract staff ends up costing a significantly higher amount than if they were government hires. You’re not just paying for that person‘s salary and benefits, you’re paying for the profit to the contracting company for which they work. And you get much less reliable work because the turnover is constant whereas federal employees tend to stay put and they learn the agency they work for and therefore you’re not in constant retraining mode.

[BumRushDaShow]

9. And then

when there is a furlough due to a government shutdown and a STOP WORK order is issued, they will not be paid (unless the contract company eats that cost while they are idle because the government will not do any retroactive payment like they do for the FTEs).

Still... they outnumber the civil servants by almost 2 - 1.

Am also a retired federal manager.

[Betty Boom]

11. Ahhh...then you remember A-76

When W came into power and everybody went through that completely useless exercise that took thousands of hours of time and resulted in reliable people being replaced with contractors who had no institutional memory and no agency loyalty.

One of the low points of my career was dealing with that bullshit.

And you hit on another issue. The difficulty of managing a mixture of government and contract staff and the morale issues that result from contract staff not being compensated during shutdowns or government closures for weather, etc. Youre essentially managing an enterprise that consists of different classes of citizens

[BumRushDaShow]

12. OMG - my brain has now lost a file!!!

A-76!!!!!!!!!!!!!! I blanked that out and it had become such a buzzword. That is when they eventually tore through our Administrative staff (including the fiscal people) who were terrified that their positions would be eliminated. I think they sort of got around it by reclassifying them and then "regionalizing" the administrative functions where staff in certain districts did a specialized function (like handling travel) and others would do other functions - each doing their functions for the entire region. With attrition, positions were not filled.

I remember when I first started in the '80s when just our fiscal staff had like 10 people. When I retired, we were down to like 2.

And agree it was horrible with the contractors and FTEs who were working together - especially during shutdowns.

I was lucky in the '90s with the Gingrich shutdown where my agency was one of the very very few that actually had funding but most of the rest of my multi-department/agency building was empty. It was eery as hell going in there every day. I was still there during the 2013 Carnival Cruise "Green Eggs and Ham" shutdown and I know the contractors were mostly out of luck although it's possible that one of them - BAH - may have paid them something. I had retired by the time of the "longest in history" one in 2017 - 2018 and I know that was covered extensively here on DU - especially with Chef José Andrés and his World Central Kitchen coordinating food pantries for furloughed employees in the D.C. metro area.

[Betty Boom]

13. I worked both of the long shutdowns

The one you called the Gingrich shut down, and then the longest one. I heard something recently that will really make you laugh because it shows how ignorant the vast majority of Americans are about how government works. Apparently it was floated that musk was going to start working on a list that would eliminate people who had been classified as non-essential employees. Working, of course, from the lists that are compiled during shutdowns. And I saw some ignoramus say well hell if they’re not essential, what the hell are we paying them for?

This is what you get when you put people in charge who don’t understand the nuances of the language or how things work. I had to explain to a relative that during a government shut down due to a budget not being passed you are not allowed to do any work. The only people who work are the ones who need to keep the lights on and need to be there to be responsive to any inquiries from Congress, etc. relative to the budget. You send “ Non-essential” Employees home because they’re not pERMITTED to work.

PS — I hadn’t thought about a 76 in years, but now I’m stuck on something as a memory. Maybe you can help. I feel like a lot of the jobs that we ended up Contracting were low level, clerk typist type jobs. But wasn’t there like some element of where they could keep their jobs if they took a downgrade. — but then also those jobs were made as having no promotion potential, so essentially dead end.

[BumRushDaShow]

14. Agree that so many have no clue

During the 2013 shutdown, we were read the riot act about not even opening the laptop at all during the shutdown.

I.e., it would be a violation of the Anti-Deficiency Act.

And we utilized call trees to communicate status and had to watch TV or listen to the radio to find out any other details. There were only a handful of supervisors (generally the higher level managers) who were designated to operate. But the first lines...? Nope.

And I blame the media for their obsession with the National Parks every time there is a lapse. I suppose because it makes it easy for a reporter and camera operator to go somewhere on location in the D.C. area to point a camera at a NPS sign indicating a park was closed due to the shutdown. Who cared about any other function???

ETA - and I am still SMH about "A-76". The term became a verb.

[Betty Boom]

15. They used to talk about it as the Washington monument threat

That’s a classic thing that I recall first hearing about back in graduate school. That party leaders and the press would zero in on the Washington monument being closed to tourists during shutdowns I guess they don’t talk about that now. They use the national parks generically as the stand in.

[Bengus81]

10. Fire all the people who mow and do landscape work at the WH

Let that shit get a foot tall and blow in the wind. Funny,no talk about doing that eh Trump?