It’s not often that a Government contractor files for bankruptcy. It is probably a less frequent occurrence among Government contractors than in the general population. First of all, prospective Government contractors must endure pre-award surveys which include a financial responsibility determination. If a contractor cannot satisfy the Government that it has the financial resources to complete the contract (or can acquire the financial resources), it will be disqualified from the selection process. And then there is the matter of contract financing. With the ability to to earn progress payments and/or obtain monthly reimbursements of cost, contractors need only two to three months of working capital before the cash pipeline begins flowing.
SOURCE: Contractors Filing Bankruptcy
Last February at a hearing in front of the Oversight and Management Subcommittee of the House