Preparing Your Design Firm for a Federal Government Shutdown

Unless a compromise is reached, annual funding for the federal government will expire tonight at midnight. Although a government shutdown ultimately could spur long-term agreement, ease partisan tension and take the prospect of debt default off the table, the process will surely test the resilience of an economy still in recovery.

While working to find a solution to prevent a lapse in appropriations, the Obama administration is simultaneously coordinating with Congress and federal agencies to develop contingencies in the event of a lapse in appropriated funding. Still, there are many questions about how such a shutdown would affect all Americans, including those in the interior design industry.

Shutdown at a Glance

Each year Congress must pass a series of appropriations bills that fund most government agencies and programs for the federal fiscal year (Oct. 1 to Sept. 30). If Congress and the president fail to enact into law funding for federal agencies, Congress can pass a continuing resolution that extends the prior year’s funding levels for a short time until an appropriations bill can be passed. If neither a continuing resolution bill nor a full-year appropriation is signed, affected agencies must cease operations. The last time the government shut down — in the mid-1990s — operations ceased for approximately three weeks.

If Congress and the president were to approve funding for specific agencies, those agencies would continue running. In addition, certain programs, such as Medicare and Social Security, are not contingent upon the annual appropriations process, and they will continue to be funded. The federal staff members who administer these programs, however, may not be able to work unless they are deemed “essential.” The definition of which employees are essential varies by agency, but safety and law enforcement personnel, such as air traffic controllers, Secret Service agents and military personnel, will most certainly continue working. In the event of a shutdown, “non-essential” personnel would be placed on unpaid furlough, meaning they have to stop all work activities, including answering emails and phone calls.

What to Do if You Work with (or for) the Federal Government

Agencies have not provided much guidance on what happens during a shutdown. Projects that receive federal grants or funding will undoubtedly be affected. In addition, state and local governments receive money from the federal government for various activities, including some potentially affected design- and construction-related projects. You should speak to your point of contact as soon as possible to determine the status of any projects in the event of a shutdown.

It is important to carefully maintain records of all contracts, outstanding invoices and costs incurred due to the shutdown, as well as other data about activities both before and during a shutdown. In general, expenses incurred prior to the shutdown will be paid, but the shutdown may delay the processing of these expenses. During the most recent shutdown, Congress approved back pay for federal employees but not for contractors. Should you be furloughed if funding for federal projects is stopped or delayed, you may be eligible for unemployment compensation. For information, contact your state’s unemployment office.

Interior Design and the Government

The federal government spends an average of $500 billion each year on contracted services. And while the exact amount spent specifically on interior design work fluctuates, government spending accounts for tens of millions of dollars’ worth of work for the industry. In fact, a recent survey by the American Society of Interior Designers of more than 18,000 practicing interior designers showed that 37 percent had worked on government projects.

ASID will continue to monitor the negotiations regarding a potential shutdown. Regardless of whether the government shuts down, it is clear all businesses will face more competition for fewer dollars in fiscal year 2014. However, the design community is poised to be at the center of the solution for government agencies as they look to contain costs. ASID encourages designers to continue to focus on solutions and to leverage the competitive advantages of our skills to improve health and education outcomes, increase workplace productivity and employee engagement and retention, and reduce energy consumption and absenteeism.

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