Subcontractors start to feel the pinch

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By Arin McKenna

Some subcontractors are already feeling the pinch as the federal shutdown enters its second week. 

“About 30 percent of our chamber membership is lab subcontractors,” said Katy Korkos, Los Alamos Chamber of Commerce Member Services Coordinator. “Lab subcontractors will never be able to recover the income that they’re losing currently. Some are being sent home from jobsites within the lab.

“The subcontractors are always the first ones to be hit in every emergency. The Cerro Grande fire, the Las Conchas fire–every time the lab experiences a shutdown, the impact is almost doubled with subcontractors.”

Korkos explained that such interruptions hit subcontractors harder because of the nature of their contracts, which have a firm end date that cannot be extended. Subcontractors are only able to bill for work performed, so any interruption in that work costs them revenues. 

Not all subcontractors have been affected. Holiday Inn Express Assistant General Manager Manny Martinez has not noticed a decrease in his subcontractor business, which comprises a large part of the hotel’s bookings.

“As of right now, from what I’m hearing from my guests, this won’t affect them for the foreseeable future, since the lab has some carryover money,” Martinez said. “So as of right now we haven’t experienced much disruption in our guest totals.”

The new air service at the Los Alamos County airport is also doing well this month. Airport Manager Peter Soderquist is not sure a LANL shutdown would have a major impact on business. 

“The Los Alamos residents of the community are using the airline more than the lab guys do,” Soderquist said. “The local businesses, retired folks, people like me and you, we use the airlines. The lab people are not using it as much as we thought they would.”

The county could be affected by reduced Gross Receipts Tax from the subcontractors who have been laid off, and will definitely feel the pain if the lab closes completely, It will be December before the county receives the state’s October GRT report so staff can calculate the impact. 

County Administrator Harry Burgess noted that cooperative agreements with LANL for such things as fire protection services and utilities do not currently appear to be at risk. 

“We’ve received no notification of any changes that would be affected, particularly with the fire and some of the safety and security type things are continuing, as I understand,” Burgess said. 

“The bigger issue for us is more for the long-term: where is the federal budget going? Because clearly our revenues are tied to that,” Burgess said. “Even under the continuing resolution, if they were to pass that, those continuing resolutions typically don’t address the other budget requests that are in there. They usually continue funding at a prior year’s level. 

“With both the president’s request and what we’ve seen as far as numbers out of Congress, we would be in a better position should they adopt the budget in one of the forms that have been proposed, as opposed to any continuing resolution, because each of the proposed budgets are higher numbers than what I anticipate the continuing resolution would ever be. 

“So we prefer not only that they come to some resolution but that it be a budget as opposed to any continuing resolution.”