Up until 2012 when the media broke the Muffingate story and the scandal of the GSA Western Regional Conference changed everything, government meetings were considered a relatively recession proof base of business. Federal meetings almost singlehandedly bailed out the hospitality industry following the tragedy of 9/11.
Since late 2012, I have been teaching The Future of Government Meetings, which was very uncertain. Government agencies are frozen, afraid to make decisions that will land their events on the front page of the Washington Post. Congress finally provided guidance to agencies, limiting:
- How much money can be spent on meetings and events
- How many people can travel
- Where can these meetings be held or more specifically not held
Federal agencies have specific rules and regulations which can be found in the Federal Acquisition Regulation (FAR) when procuring goods and services. The FAR allows for “cancellation for the convenience of the government,” so even before the government shutdown and sequestration, there was always that risk that the government could cancel.
Because the government represented solid business, and the likelihood of cancellation minimal, many venues and event contractors have taken this risk. But consistent with a risk management plan, it is critical that the government contracting document protect the agency with an inclusive force majeure (“Act of God”) clause. This clause protects both parties from paying damages resulting from circumstances that are beyond the control of either or both parties, resulting in breach of contract. The force majeure clause will alert the other party that under certain circumstances, the government may not be able to fulfill the contract. In addition to weather and other Acts of God, these situational items should include cancellation of the event for any of the following reasons:
Availability of funds
A Federal government office must demonstrate to the contracting officer that there is money in the budget to fund an event. This is an internal official document of proof to allow the procurement to proceed. Although the money may be in the budget, based on unforeseen circumstances, an agency might decide not to spend money allocated and cancel the event.
If Congress has not passed a budget and there is a continuing resolution, agencies are only funded for a set period of time and only to the level of the previous budget. New initiatives must wait. It is always wise to include a clause stating, “subject to availability of funds in fiscal year x.”
No one expected the government to shut down; everyone was waiting for the 11th hour bail out to keep the lights on in government offices. On October 1, 2013, no budget or continuing resolution was passed, and the government actually shut down all non-essential activities for 10 days. So now contracting documents must add a clause indicating what will happen to programs in the event of a government shut down.
Automatic spending cuts through government sequestration is a new name for an old issue. In recent times, government agencies have been forced to cut budgets by up to 20%. If there is money budgeted to fund meetings, the perception of a government agency hosting off-site meetings while employees are being furloughed does not play well. That possibility needs to be acknowledged in contracts.
Threat of Terrorism and Terrorist attack
While things may grind to a halt during the aftermath of an attack while the government recovers, vendors still want to be paid. Include the possibility of terrorism in your force majeure clause.
Including these provisions in contracts with government agencies can help manage a risk that everyone now knows is there, while opening up possibilities for a big chunk of business.
Garland Preddy worked for the Federal government handling special events and meetings for more than 30 years and taught Doing Business with the Federal Government for 16 years.