Small businesses with federal contracts sweat out the delay in enacting a budget

October 19, 1990|By Dan Fesperman | Dan Fesperman,Washington Bureau of The Sun

WASHINGTON -- When members of Congress defend their budget procrastination by saying that at least the delay hasn't hurt anybody, Al Peabody winces.

Working out of his home in Annapolis, Mr. Peabody runs one of thousands of small businesses under contract to the federal government, and he is definitely feeling the pinch of budget uncertainty.

"Right now, we're just kind of sitting around twiddling our thumbs," said Mr. Peabody, who translates scientific and technical documents from Russian to English for the Defense and Commerce departments.

"It's real tough on guys like me, especially when you're using your checks to pay your mortgage."

Government work, which produced about $100,000 in contracts last year for his business, provides about 75 percent of the revenues for Mr. Peabody's company, which also employs a proofreader, two typists and his wife, who does the administrative chores.

Also feeling the effects of a tardy budget are Bill Byrd and his $800,000-a-year company based in Washington, Business Promotion Consultants Inc.

Mr. Byrd, whose company does all of its business -- providing, ironically, procurement support services -- with the government, had planned on enough growth this year to double his work force of four employees. "Of course, that is in jeopardy now," he said, though so far his company has stayed busy with its pre-October backlog.

The vastness and complexity of the federal procurement network make it virtually impossible to say how many small businesses are affected, but such companies annually do about $31.6 billion worth of business with the federal government, about 17 percent of the government's total annual contracting tab of $184 billion.

Mr. Peabody said that what especially bothers him is, "I have a feeling that General Dynamics [a major defense contractor] is still going to be getting its money. It's the mom-and-pop companies that are going to get hurt."

That gripe is on target, federal officials say. The companies most likely to be hurt are small businesses that provide services contracted on an as-needed basis. For them, orders are being put on hold. Robert A.

Welch of the Commerce Department's procurement office said, "Orders that would have gone out by now have not gone out. We don't have the requisitions, so we don't have the money."

Companies that fill government orders for weapons systems, or that supply products or services needed daily, haven't felt much of an effect so far, officials say, because they're taken care of by the stopgap budget resolutions Congress passes whenever another deadline passes.

But even some of the small companies still getting business are bothered by the uncertainty.

"Uncertainty is the catchword," said Doug Stevens, senior vice president of IMC Inc., a Northern Virginia firm with about 100 employees that provides information systems to

six government agencies. "It hasn't cost us money, except in the informal sense that management spends much too much time thinking about what we're going to do in the next two weeks instead of thinking about what we're going to do in the next year."

For Mr. Byrd, the uncertainty has been unnerving enough to make him consider seeking contracts with private businesses as well.

Mr. Peabody hopes he can recoup some of the lost work once a budget is worked out, though he expects a paperwork delay to prevent much from coming his way for about two weeks after Congress acts.

"I'll be trying to do 12 months' work in 11 months, or 10," he said. "The way I look at it, I've been furloughed since the first of October."

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