Government Shutdown Would Affect Thousands of Marketing Firms. What you need to know and what can you do?
Yesterday, I published an op-ed in Advertising Week about how the pending government shutdown would affect thousands of marketing communications firms inside and outside the beltway. Here's an excerpt -- read the full article HERE.
"...In an era where communication reigns supreme, marketing and advertising have become integral components of government operations. The federal government allocates a staggering $2.2 billion annually to fund its marketing communications efforts.
However, what often goes unnoticed are the more than 1,000 advertising agencies and communications firms that rely heavily on these funds to keep their operations afloat. And, that’s just lead agencies or “prime contractors”…not including the exponentially greater number of supporting agencies (“subcontractors”) on these programs. A federal government shutdown, a scenario that has become all too familiar, serves as a stark reminder of the critical questions surrounding the short-term health of these agencies and the broader impact on the economy. Federal government shutdowns cast a long shadow of uncertainty over the advertising industry. These shutdowns are not merely inconveniences; they have severe financial repercussions. Advertising agencies, both large and small, holding companies and independents, across the nation, are deeply entrenched in government contracts. These contracts encompass a wide range of services, from the public awareness, safety or health campaigns to the large military recruitment marketing campaigns. When the government’s purse strings snap shut, these agencies are left in the lurch..."
At this point, it's extremely likely that the government will shut down soon and that the majority of government buildings will close, new contracts and changes to existing ones will likely pause, and bills you send to the government might not get paid on time. Here's what you should do to prepare:
Communicate with your contracting officers: Stay in touch with your contracting officers. If the government shuts down, they might not be around. The Federal Acquisition Regulation (FAR) doesn't give clear directions for shutdown situations. This means contracting officers can decide how to manage contracts on a case-by-case basis. If your contract includes FAR § 52.242-15, "Stop-Work Order", the officer can ask you to stop work. If this happens, you might be able to adjust your payment due to increased costs from the work pause. If they tell you to stop or if things aren’t clear, you should not work on the contract as you may not get paid for that work.
Talk to your subcontractors and keep them in the loop: Give periodic updates to your team members and maintain communication. If you're told to stop a project, each of your contractors should as well (or you'll end up paying them for work you can't bill the government for).
Control your costs: Plan alternative tasks for your team, e.g. shifting them to other jobs, training, or taking PTO. And, keep track of all shutdown-related costs and activities. Both the Stop- Work Order and the Changes FAR clauses can give guidance, so watch those closely. This will help if you seek compensation later. But remember, you might not get paid for everything.
Handle pending matters: If you can, sort out any ongoing issues now, like approval of deliverables, payment of invoices, and any modifications to your contracts. After the shutdown, there might be delays in these.
A government shutdown isn't certain and the length of any shutdown is unknown (the 2018 shutdown lasted 30+ days). Hope these points help in this very unusual time.