Contractors Assess Default

U.S. defense firms and government contractors are starting to prepare for the unthinkable: The possibility that the U.S. government, the ultimate reliable customer, may not be able to pay its bills on time.

As the clock ticks down in debt ceiling talks, defense industry officials say they are contemplating a range of options for surviving a potential government default. Some companies are reviewing their balance sheets to calculate how long that can get through any delay in payments. Others are scrutinizing contracts to determine what work they must perform if the government runs out of cash.

But when it comes to a government failure to pay IOUs, the U.S. is entering uncharted territory.

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