Debt Limit Breach to Squeeze US Government Contractors First

Federal contractors would be among the first to experience serious financial consequences in the event Congress fails to raise the debt limit and government agencies can’t pay their bills as the fiscal year ends.

The government’s fourth fiscal quarter is typically the busiest part of a contractor’s year and can be a make-or-break period for the annual bottom line. Agencies spend about one-third of their annual procurement dollars in July, August, and September, and fourth quarter contract disruptions could have devastating financial consequences for the federal vendor base. That could lead to bankruptcies and layoffs among contractors.

The Congressional Budget ...