How a New Federal Holiday Can Impact Your Business as a Government Contractor

Last Thursday Juneteenth was signed into law as the first new Federal holiday since 1983. Although the debate about adding the holiday has been going on for decades, the speed with which this holiday was formally established was unexpected. While most organizations spent several frantic hours working out the logistics of a new holiday with less than 24 hours of notice, there is a larger impact that Government contractors need to address.

The fringe rate for most contractors is based on 10 Federal holidays. With the addition of another day, fringe rates are going to go up and billable hours are going to fall. If you have T&M or FP contracts (or CP with ceilings), your profitability just took a hit for the life of the contract, which could mean the next 5 to 10 years. You also need to factor this holiday in for proposals to both the fringe rate and direct productive hours.

There are some potential options for you. We recommend, at a minimum, that you talk about the impact to your fringe rate with your contracting officers to see if there is any flexibility for a rate adjustment on the program. Alternatively, if a higher fringe rate is going to mean a competitive disadvantage in your niche, now is the time to take another look at all fringe costs to identify any potential offsets.

The bottom line of this post? Talk with your accounting and finance folks about the impacts of this new holiday on YOUR bottom line.

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