Stanford, Tech Giants Quietly Eye Government Shutdown

Although a looming government shutdown is not likely to impact existing federally funded research programs or private contracts, it will nonetheless freeze any new commitments and could therefore impact numerous Silicon Valley institutions.

Ann Arvin, Stanford University’s vice provost and dean of research, and Randy Livingston, vice president for business affairs and CFO, sent a letter Thursday to faculty and research administrators that addressed the impacts of a possible government shutdown.

The letter, obtained by Palo Alto Patch, states that Stanford has “not received any specific guidance from federal agencies regarding continuation of sponsored projects during the shutdown,” but that the university does not anticipate any negative impact to previously approved federally funded programs.

“All Stanford research activities may continue until further notice,” the letter says.

The American Association of Medical Colleges offered Stanford further guidance regarding National Institutes of Health-funded trials, noting that as long as awarded funds are automatically processed, there should be no interruption in funding. If, however, a federal employee is required to intervene in drawing down funds, “then draw-downs will likely cease,” the letter says.

Beyond Stanford University, Silicon Valley tech firms are also keeping a watchful eye on the developments in Washington.

 “There are a lot businesses here that have large federal contracts,” said Palo Alto Mayor Sid Espinosa, who himself worked for the justice department during the previous shutdown.

“Loral, Palantir, HP… a shutdown will have an impact on them,” he said.

Jeremy Bulow, Richard A. Steppe professor of economics at Stanford, agreed that companies dealing with the government are likely weighing important questions regarding the impact of a shutdown.

“Questions people would want to know are things like, are the bills that you send out to the government every month going to be paid on time or going to be delayed,” said Bulow, “just like an individual would be interested to know if their income tax return will come in on time.”

Bulow also named HP as a firm with extensive government contracts.

“It may not be a majority of their business the way it is with a defense contractor, but they certainly compete and sometimes win contracts for the federal government,” he said. “Even if it’s a small part of their business, it could be a billion dollars a year."

Indeed, HP has many billions of dollars worth of government contracts, including a $3 billion deal signed last July to provide secure IT services to more than 700,000 military and civilian personnel in the United States, Hawaii and Japan.

HP also agreed in March to a $22.5 million deal that will help the Corporation for National and Community Services (CNCS), a federal agency that promotes volunteerism, consolidate the customer support infrastructure for its various services, include AmeriCorps, SeniorCorps and Learn & Serve.

An HP spokesperson declined to comment today on the impact a government shutdown would have on deals such as these.

Calls made to other local tech firms were not returned by time of publication.

In the meantime, companies and researchers that rely on the federal government will have to work with what they've got, and keep a close eye on budget talks at the Capitol.