Shutdown Not Yet Over for Companies Dealing With Backlogs

Photographer: Justin Sullivan/Getty Images

Some small businesses ranging from Pete’s Diner & Carryout, a 50-year-old Capitol Hill eatery in Washington, to the iconic Cliff House restaurant in San Francisco can’t make back the money they lost during the shutdown, when there were no federal workers to buy meals or national parks were closed. Close

Some small businesses ranging from Pete’s Diner & Carryout, a 50-year-old Capitol Hill... Read More

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Photographer: Justin Sullivan/Getty Images

Some small businesses ranging from Pete’s Diner & Carryout, a 50-year-old Capitol Hill eatery in Washington, to the iconic Cliff House restaurant in San Francisco can’t make back the money they lost during the shutdown, when there were no federal workers to buy meals or national parks were closed.

Just because the government is back in business doesn’t mean business is back to work.

NCI Inc. (NCIT), a computer-network designer that gets all its sales from federal dollars, is recalling about 200 furloughed workers only dozens at a time now that the shutdown has ended. US Airways Group Inc. (LCC) and American Airlines need regulatory clearance to add a half-dozen new planes to their fleets. Even imported ingredients for pesticides await inspectors’ approval, creating potential delays for farmers next spring.

“It’s red tape -- the rat has to get through the snake before I can get people back,” said Brian Clark, president of Reston, Virginia-based NCI, who brought 80 people including himself back to action yesterday, with another 50 set for today.

Government workers returned to their jobs yesterday after Congress agreed to fund spending temporarily, ending a 16-day shutdown that Standard & Poor’s Ratings Services estimates cost the U.S. economy $24 billion this quarter. Now that the money is flowing again, the corporations and small-business owners who count on federal contracts and approvals are still suffering from the lost business and delayed decision making.

In Annandale, Virginia, Micheal Davis said he’s worried about how quickly his Davis-Paige Management Systems LLC will receive payments tied to about $3 million in outstanding invoices. He had furloughed 60 of his 190 employees after federal agencies told him to stop work on a handful of contracts for program management and other services.

“There are lots of invoices that haven’t been acted on,” Davis said. He started getting requests from agencies to put his team back on the job as early as 6 a.m. yesterday, and by 2 p.m. he had recalled all but four workers.

Money Lost

Some small businesses ranging from Pete’s Diner & Carryout, a 50-year-old Capitol Hill eatery in Washington, to the iconic Cliff House restaurant in San Francisco can’t make back the money they lost during the shutdown, when there were no federal workers to buy meals or national parks were closed.

“I’m looking at a loss of sales of over $300,000,” said Ralph Burgin, general manager at the Cliff House, which is located on federal land as part of Golden Gate National Recreation Area. The restaurant was closed most of the first half of October and “we also lost weddings, pre-booked events, because no one knew when we were going to open.”

Delaware North Cos. yesterday reopened the lodging, dining and other services it operates at eight national parks, including Yosemite and Yellowstone.

“We are encouraged by the volume of calls and reservations we have seen today,” said Glen White, a spokesman for Buffalo, New York-based Delaware North, which lost about $600,000 a day during the shutdown. “We hope it’s a sign that there is some pent-up demand.”

Industry Regulators

Airlines, telecommunications companies and medical centers are working through delays caused by the loss of agencies overseeing their industries.

The shutdown of the FAA’s aircraft registry in Oklahoma City delayed delivery of more than 150 new aircraft with a value of at least $1.9 billion, according to the General Aviation Manufacturers Association trade group.

Workers at the registry will be returning to a backlog at an office that handles more than 10,000 transactions a month and had already fallen behind as a result of across-the-board budget cuts imposed earlier this year.

“I don’t know when deliveries will resume, but it’s obviously a positive development,” Philippe Poutissou, vice president of marketing at Bombardier Inc. (BBD/B)’s commercial aircraft unit, who has planes destined for Delta Air Lines Inc. (DAL) “Let’s see how quickly operations at FAA can resume.”

Aircraft Deliveries

US Airways now is making plans to take delivery of an Airbus A330 from Toulouse, France, on Oct. 22, spokesman Todd Lehmacher said. AMR Corp. (AAMRQ)’s America Airlines has three Airbus A319s on the tarmac in Dallas, another Airbus in Hamburg and a Boeing Co. (BA) 737-800 in Seattle.

The Federal Communications Commission posted a notice on its website yesterday asking companies for patience as it resumes normal operations, and it has asked companies to refrain from filing some documents. The FCC had suspended consideration of more than $6 billion in deals involving purchases of airwaves licenses and television stations -- transactions involving AT&T Inc. (T), Gannett Co., Tribune Co. (TRBAA) and Sinclair Broadcast Group Inc. (SBGI)

The part of the FCC website that lets companies register new electronic devices came back to life.

“We’re pleased to see it’s up,” Danielle Coffey, vice president of government affairs for the Telecommunications Industry Association, said of the FCC site. “The longer this had gone on, the worse it would have been.”

Medical Grants

The U.S. government shutdown interfered with operations at major medical centers across the country, particularly those whose work is funded by the federal government. At research centers, new initiatives were delayed as the National Institutes of Health suspended grant applications. The NIH reviews grants three times a year, with one cycle occurring right now.

“The shutdown will affect the timing of those awards and may impact their ability to move forward,” said Sundeep Khosla, director of the Mayo Clinic Center for Clinical and Translational Sciences.

Pesticide registrations also have been set back more than two weeks. CropLife America, a trade group representing pesticide makers including Dow Chemical Co. (DOW) and DuPont Co. (DD), said it will try to work with the Environmental Protection Agency to head off such a situation in any future shutdowns.

“The potential exists that farmers may not have access to new tools in time for the 2014 planting season,” Barbara Glenn, the group’s senior vice president for science and regulatory affairs, said yesterday in a statement.

Future Conflicts

The potential for more conflict still exists. There are budget talks with a Dec. 13 target. This week’s agreement funds the government at Republican-backed spending levels through Jan. 15 and suspends the debt limit through Feb. 7.

Americans were the most pessimistic about the nation’s economic prospects in almost two years in October, as concern mounted that continued political gridlock will hurt the expansion. The monthly Bloomberg Consumer Confidence Index (COMFBTWR) expectations gauge plunged to minus 31, the lowest level since November 2011, from minus 9 in September, a report showed today.

“With the tea leaves I read, I’m not going to be one bit surprised if we’re going through the same drill 90 days from now,” said Clark, the executive at NCI. “The government’s opened, but nothing changed.”

To contact the reporter on this story: Thomas Black in Dallas at tblack@bloomberg.net

To contact the editor responsible for this story: Kevin Miller at kmiller@bloomberg.net

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