This Federal Contractor Can Survive the Shutdown. Here's Why
Congress is at a stale mate. The federal government is shut down. Employees are being furloughed, citizens face shuttered offices, and contractors find the federal spigot suddenly shut off.
Unless, that is, those contractors followed a strategy that looks pretty darn smart right about now.
Meet Sharon Virts-Mozer, the founder and CEO of FCi Federal, which provides "back office" services to federal government agencies like the State Department and U.S. Coast Guard. Despite the fact that the vast majority of the company's $85 million in revenue depends on government funding, Virts-Mozer is confident that her firm will make it through the shutdown just fine.
The Reason? The Strategy Fit for a Budget Fight
FCi Federal goes after federal contracts that are funded not by the general discretionary budget--the one House Republicans and the Democratic Senate could not agree on--but from money the government collects for providing certain public services.
This includes the $135 in fees the government makes when someone gets a U.S. passport, say, or the $340 filing fee it earns from immigrants who apply for a green card to become a permanent U.S. resident, among other products and services users pay for.
Those programs generally keep moving forward even in a shutdown because they bring in revenue. "Nobody wants those fees not being deposited to the U.S. Treasury," says Virts-Mozer.
Lessons From the Last Government Shutdown
Virts-Mozer started her career as a government intern at the U.S. Department of Housing and Urban Development, and then became a contract worker at the Internal Revenue Service. Immersed in bureaucracy, she says she realized that there simply had to be a better way.
She launched FCi Federal in 1991--"at age 29, divorced, with two kids in diapers"--as a consulting firm showing other companies how to get federal contracts.
Four years later, she saw what her clients went through during the 28-day government shutdown in December 1995 and January 1996. So, when she shifted gears and decided to compete for contracts directly in 2005, she knew which budget to avoid.
"They were hurting," she recalls. "I didn't want to be subject to the whims of Congress and the White House and all that. I don't want to be held hostage."
Still, FCi Is Not Entirely Immune
While 92 percent of FCi Federal's contracts are the fee-for-service type in the immigration and law enforcement fields, it has another eight percent that are not, so some of the company's 1,450 employees will wind up furloughed.
In some of FCi's functions, its employees work day-to-day in government offices such that most customers--the applicants filling out forms with U.S. Citizenship and Immigration Services, for example--never have any idea they're dealing with a private company under contract with the government.
Virts-Mozer said she and the others in her C-suite met yesterday to try to figure out how much of the difference they'll be able to make up in pay for those workers.
Broader Economic Implications: The DC Area Hit Hard
According to The Washington Post, while all State Department employees will remain on duty, at least in the short-term, and uniformed members of the military will be paid, other agencies will lose almost everyone. As of Tuesday, there will be only 349 employees nationwide on duty at the Department of Housing and Urban Development, 242 at the Department of Education, and 549 at NASA.
Overall, the District of Columbia and surrounding area will be hit hard. The shutdown will cost the Washington region $200 million a day, and, paradoxically, will cost the government more than it would spend staying open.
"I worry for the country and what's happening to the economy and the poor federal workers," Virts-Mozer says.
BILL MURPHY JR. | Columnist
Bill Murphy Jr. is a journalist, ghostwriter, and entrepreneur. He is the author of Breakthrough Entrepreneurship (with Jon Burgstone) and is a former reporter for The Washington Post.