Government shutdown cost contractors $12 Billion: Chamber report

Businesses that contract with the federal government lost $12 billion in the first four weeks of the government shutdown, according to a report from the U.S. Chamber of Commerce released Thursday.

The report, which the Chamber is sending to members of Congress, shows that 65,500 small businesses across the United States are losing around $3 billion per week from the shutdown.

Companies affected by the shutdown include providers of high-tech machinery, office supplies, and landscaping services, according to the report, which was shared with CNBC before its public release.

Maryland and Virginia have the most government contractors at risk from the shutdown, according to the report.

But other states, including Alabama, California, Florida, and Texas, also have significant numbers of companies that have seen contracting revenue dry up since the shutdown began Oct.1

“For many of these small businesses, federal contracts represent a sizable portion of their overall revenue,” Neil Bradley, executive vice president and chief policy officer at the Chamber of Commerce, said in a letter attached to the report.

Bradley noted that although federal employees are entitled to back pay under the law when they return to work after a shutdown, contractors have no such legal protections.

“When the government reopens, rarely are contractors made whole,” he added. “The purchase of many goods may only be delayed by a government shutdown, though some are permanently forgone.”

Bradley called on Congress to pass a short-term spending bill to reopen the government.

“We also urge Congress to consider ways to help make federal contractors, especially small business contractors, whole,” he wrote.

A Republican-sponsored House stopgap funding bill has been voted on 13 times in the Senate. But each time, the bill has fallen short of the 60 votes needed to pass, as Democrats hold out for an agreement to extend enhanced Affordable Care Act premium tax credits that are set to end this year.

Some of the lost funding to contractors is expected to be made up once the government reopens, according to a Congressional Budget Office report.

But the same report calculated that the shutdown so far will result in the loss of at least $7 billion in gross domestic product due to furloughed federal employees working fewer weeks.

CBO Director Phillip Swagel told House Budget Committee Chairman Jodey Arrington, R-Texas, in a letter that a six-week-long shutdown would cost the economy $11 billion, and an eight-week-long shutdown would cost $14 billion.