Inside the Shutdown: Federal Workers, AI Gaps, and a Nation on Pause

Original broadcast: 10/12/25

In this episode of Fed Gov Today with Francis Rose, the conversation focuses on the human impact of the government shutdown, the evolving role of artificial intelligence in federal operations, and the economic ripple effects felt across the public and private sectors.

Francis begins with Jeff Neal, Principal at ChiefHRO and former Chief Human Capital Officer at DHS, who explains why furlough numbers rise and fall throughout a shutdown. He clarifies that some employees continue working because their roles protect life and property or are funded outside regular appropriations, while others lose funding as working capital accounts run dry. Jeff reassures federal employees that the law guarantees back pay after appropriations are restored, despite political statements suggesting otherwise. 

Next, Lauren Knausenberger, Executive Vice President and Chief Innovation Officer at SAIC and former Air Force CIO, discusses the “missing link” in AI integration. She describes how government agencies must balance modern and legacy systems, manage evolving AI models, and guard against risks like data poisoning. Lauren stresses that AI should solve real problems, not exist for its own sake, and highlights how tools like ChatGPT, Copilot, and Power BI can streamline knowledge management and empower employees.

Finally, James Carroll, CEO of the Professional Services Council, shares how the shutdown affects federal contractors. Without legal protections for back pay, many small and mid-sized vendors face financial strain and possible closure. He calls for greater recognition of the industry’s role in delivering critical government services and urges swift action to bring stability back to the federal workforce and its partners.

The People Behind the Shutdown: What Washington Forgets About Federal Workers

Jeff Neal, Principal at ChiefHRO and former Chief Human Capital Officer at the Department of Homeland Security, breaks down the human realities and logistical challenges of the ongoing government shutdown.

Jeff explains why the number of furloughed employees fluctuates as the shutdown continues. Some federal workers stay on the job because their roles protect life, safety, or property, while others are funded through non-appropriated accounts like working capital funds. However, when those accounts run dry—since their revenue often depends on appropriated dollars—those workers also end up furloughed. Conversely, some employees are recalled if their absence begins to threaten safety or critical operations.

He reassures federal workers that back pay is guaranteed by law, emphasizing that despite conflicting political messages, the law passed after the 2019 shutdown ensures employees will be paid once funding resumes. Politicians’ statements, he says, “don’t make it so.”

Drawing from his experience during the 2013 and 2019 shutdowns, Jeff underscores the importance of communication, transparency, and orderly management. Agencies must clearly tell employees whether they are “excepted” or “non-excepted,” and prepare for the complex process of restarting operations. When the government reopens, workloads will surge, priorities will clash, and interagency coordination will be tested. Leaders, Jeff advises, should set clear priorities, manage expectations, and prepare their teams to adapt quickly to new realities once the lights come back on in Washington.

Key Takeaways:

1. Furlough numbers fluctuate as funding sources shift, causing employees to move on and off furlough throughout the shutdown.
2. Federal employees are guaranteed back pay by law once appropriations are restored, despite any conflicting political statements.
3. Clear communication and careful planning are important in managing the shutdown and ensuring a smooth, coordinated reopening.

The Missing Link in Federal AI: Why People, Not Technology, Drive Integration

Lauren Knausenberger, Executive Vice President and Chief Innovation Officer at SAIC and former Chief Information Officer of the U.S. Air Force, explores the challenges and opportunities of integrating artificial intelligence across the federal government.

Lauren notes that while AI shares some similarities with traditional IT systems, its complexity lies in the constant evolution of models and data sources. Agencies must manage a mix of legacy and modern systems, ensuring they communicate effectively while protecting against threats like data poisoning and maintaining traceability in AI decision-making. Successful integration, she says, requires both technical rigor and human judgment.

Lauren cautions leaders against adopting AI “for the sake of AI.” Instead, she urges them to focus on real operational problems—bottlenecks, inefficiencies, and data gaps—and use AI only where it genuinely adds value. She highlights tools like ChatGPT, Copilot, and Power BI, which empower employees to work smarter, automate routine tasks, and improve knowledge management across agencies.

She emphasizes that AI’s greatest potential lies in augmenting human capability, not replacing it. From streamlining government headquarters workflows to improving border security through integrated data and sensor systems, Lauren envisions a future where AI serves as a trusted partner—freeing people from manual work and enhancing decision-making. Her message is clear: the key to effective AI integration isn’t just smarter algorithms—it’s smarter problem-solving led by people who understand the mission.

Key Takeaways:

1. Integrating AI into government systems is complex because agencies must connect modern tools with legacy infrastructure while managing evolving models and data sources.
2. AI should be used to solve real operational problems, not adopted for its own sake; leaders must focus on where it truly adds value and efficiency.
3. Tools like ChatGPT, Copilot, and Power BI can empower federal employees by automating routine work, improving knowledge management, and enhancing decision-making.

The Forgotten Workforce: How the Shutdown Is Crippling Federal Contractors

James Carroll, Chief Executive Officer of the Professional Services Council and former Deputy White House Counsel, spotlights the devastating impact of the government shutdown on federal contractors and the businesses that keep government operations running behind the scenes.

James explains that while federal employees are guaranteed back pay by law, contractors have no such protection. Thousands of small and mid-sized companies serving the government face mounting financial strain as stop-work orders pile up and payments halt. Without cash flow, many risk closing their doors permanently—a pattern seen during the 2019 shutdown, when several firms never recovered.

Representing more than 400 member companies and nearly a million workers nationwide, James says his organization is holding daily meetings to guide firms through the crisis. Contractors are advised to stay in contact with contracting officers—though many are furloughed themselves—and to keep detailed records so they can resume work immediately once funding returns.

James underscores that the shutdown’s harm extends far beyond the Beltway. It hurts innovation, disrupts services for citizens, and damages the national economy—just as the 2019 shutdown cost the U.S. an estimated $3 billion in permanent GDP loss. He calls for renewed congressional action to guarantee contractor back pay and recognition of their essential role in government missions, from AI and cybersecurity to health care and financial systems. His message is blunt: America’s contractors are vital partners, not collateral damage.

Key Takeaways:

1. Federal contractors face severe financial strain during the shutdown since, unlike federal employees, they are not guaranteed back pay by law.
2. Many small and mid-sized companies risk closure as stop-work orders increase and cash flow dries up, repeating challenges seen in the 2019 shutdown.
3. Carroll urges recognition of contractors’ essential role in government missions and calls for legislative action to ensure fair treatment and financial protection.