Government Shutdown Ends, But VARs Wary Of The Future


The federal government shutdown is over -- for now -- but solution providers told CRN they are bracing themselves for a continued negative impact on the economy.

The 16-day government shutdown that threw the country into a state of economic uncertainty came to a close early Thursday morning as President Barack Obama signed a bill that pushed off a decision on the budget and debt ceiling until the beginning of February. However, the delayed decision isn't enough to stave off the economic damage to come, according to solution providers at the 2013 Best of Breed Conference, hosted by CRN publisher The Channel Company.

"I am pleased this particular crisis is over," said the CEO for a top federal systems integrator, who did not want to be identified for fear of alienating government customers. "We were getting ready to put people on forced furlough and we have pulled back on it. But this agreement is only for 90 days. We're looking at Ground Hog Day. The fact that it is likely to happen again is not a cause for optimism. You can't plan under this scenario."

George Usi, president of Sacramento Technology Group, said that because of the way government contracts are designed, his company is still working on projects assigned months ago. However, the current comfort means he is expecting a major hit to revenues three to six months from now in the first quarter.

Usi said that his company does 40 percent of its business with state and local governments, but has learned from its experience in the sector to maintain a diversified portfolio to dilute the effects of governmental problems, such as the shutdown.

However, it's not just the companies with government contracts that are going to feel a hit -- it's everybody, Usi said.

"It's going to hurt," Usi said. "And how it hurts is going to impact most of the solution providers in the market today, managed service providers in the market today, in ebbs and flows. Essentially, there's the incident of the government having issues, and then it takes a while to trickle down to certain markets."

Allen Falcon, CEO of Cumulus Global, said that even though his company does not have any contracts with the government, it doesn't mean he is exempt from the economic hit. The uncertainty with the economy will mean companies will hold off on major spending.

"I think they're screwing everyone," Falcon said. "The political brinkmanship is inadvertently creating economic uncertainty, which stymies growth."

The CEO who preferred to remain unnamed said that history has shown that this sort of "shenanigans" will repeat itself, and said he is making assumptions that politics will again get in the way of a solution in January as Congress strives to come to a solution.

The CEO, who has been providing IT services in the government market for 22 years, said the government shutdown is a "sad commentary on our government. It was predictable. I knew it would go to the brink, but I didn't think it would be this bad. It just kind of goes to show you what kind of length the political folks will go through to make a point. They need more businesspeople in there and less lawyers. We have two political parties who want different things going to extremes to get there. What I would tell them to do is: Get to the middle and solve this in a meaningful way and act like adults, instead of everybody saying, 'I am going to take my ball and go home.' It starts with communication. It is kind of that simple."

PUBLISHED OCT. 17, 2013