How will Government Shutdown Affect Defense Contractors Overseas?

A large number of civilian employees would be temporarily furloughed, according to the Pentagon. A shutdown lasting less than two weeks would not hurt big defense contractors, which can survive temporarily without federal contract payments, said ratings agency Standard & Poor's. But a longer shutdown could weaken the financial profiles and liquidity positions of smaller defense contractors.

Under Secretary of Defense for Acquisition, Technology and Logistics Frank Kendall directly addressed the issue:

“In the event of a lapse, vendors working on contracts with funds already appropriated … should continue to work unless directed otherwise by their contracting officer. In situations where Government personnel are necessary to oversee or inspect work, the local Government managers will make the decision on whether or not that work will be accomplished and direction will be provided by the contracting officer.”