While the funding lapse for most Homeland Security Department agencies ended on Thursday, a trade association for government contractors warned that it will take time for federal operations to return to normal and for some contracting companies to experience financial relief from missed reimbursements due to the shutdown.
“We’re very thankful that the shutdown is now over, but there’s still a lot of work to be done to get the government back on track,” said Jim Carroll, the CEO of the Professional Services Council.
The association reported on Tuesday that as a result of the DHS shutdown, which began in mid-February, contracts that support government cybersecurity operations as well as disaster response and preparedness were forced to operate at a reduced capacity.
Even though DHS appropriations have now resumed, Carroll cautioned that it may take until the end of the year for agencies and contractors to return to normal capabilities.
“For every day of a government shutdown, it takes three to five business days for the federal government to get back on track,” the PSC CEO said. “So with this extraordinary shutdown, the longest in history for any agency, what this means is that it will be many months before the government can get up and running on a normal basis. The aftershocks from a shutdown will last probably through the end of this year.”
He also said that many companies were still recovering — both financially and with respect to fulfilling contract requirements — from the 43-day fall 2025 shutdown.
President Donald Trump in April signed a memorandum to use untapped funds to pay DHS employees who hadn’t been receiving paychecks because of the appropriations lapse. But Carroll noted that the administration’s directive didn’t apply to contractors.
He said that several companies, including Transportation Security Administration contractors that help secure airports, faced enormous financial pressures, as they had to pay their employees but were not receiving payments from DHS for their work.
“These companies were paying their employees to come to work, even though they were not getting reimbursed by the government to do this,” Carroll said. “So what that meant was that companies were depleting cash on hand or they had to rely on lines of credit. That’s really an untenable situation, especially for some of the smaller and mid-sized companies.”
He recommended that DHS create a surge team to distribute shutdown-related reimbursements and accrued interest.
“In some situations, we think that the interest alone that the government will owe to the companies will exceed the penalties,” Carroll said. “This shutdown means that the government will not only need to reimburse the companies, the government will also owe interest payments and penalty payments because of a shutdown.”
He also warned that the funding lapse will impact DHS and contractors for the remainder of the fiscal year, as the department has less time to obligate its funding and enter into contracts.
DHS did not respond to a request for comment.
