[Disclaimer: This article does not constitute legal advice and readers should seek legal counsel tailored to their specific jurisdiction and contractual agreements.]
On Tuesday, I received an email from a USAID-funded client (a consulting firm).
"We have received a stop-work order, instructing us to suspend all activities for a period of 90 days, effective immediately. In response to this directive, I am cancelling our Friday meeting. We need to pause the work envisioned in your contract for the directed period."
Slight panic and uncertainty ensued. I'll explain later how I personally dealt with this. Many independent professionals, contractors and consultants find themselves in a similarly sticky position following the US President's Executive Order issued on 20 January, which temporarily halts US foreign aid funding. Indeed, one IC-Hubber told me that she had lost 90% of her pipeline for the year.
This article will outline what independent consultants working with US government agencies or through intermediaries (international organisations, NGOs, consulting firms, etc.) funded by US assistance need to know right now. I'll cover the implications of the Executive Order, which types of independent professionals it impacts, and how such individuals can respond. It will also reflect on what all this means for our strategies as social solopreneurs.
While this article specifically addresses the implications of the order for independent professionals, it is clear that the decision has sent shockwaves throughout the entire international development and humanitarian world - impacting both the ecosystem as a whole, as well as countless beneficiaries. For a detailed overview of the wider context, I recommend checking out this five-part blog series by Tom's Aid&Dev Dispatches.
Who is affected?
How have you been affected?
Lost potential new business
Lost existing consulting project (with direct revenue hit)
Unaffected
Independent consultants in the middle of a US-funded contract
Independent consultants currently working on US-funded projects may face immediate work disruptions. If the projects to which you are contracted, like mine, are subject to a stop-work order, as many USAID-funded projects now are, you may have been requested to cease work immediately pending review.
Independent consultants engaged in a US-funded tendering process
If you were in the middle of bidding for a US-funded contract, your proposal might now be stalled. Many procurement processes will be frozen during the review period, meaning consultants and firms who rely on new tenders may experience a pipeline gap.
What can you do?
If you are engaged in a tendering process, there does not appear to be much you can do (other than seek work funded by other donors), as you most likely do not have a contract in place. You may be able to reach out to the organisation you were aiming to work with to both express sympathy and maintain the connection that could make it more likely they will want to work with you if and when funding resumes.
For those already working on a US-funded contract, you should first take note of the fact that you have a contract (at least, we hope you do!). If you're working for a US government agency like USAID directly, then your available recourse might be less clear. However, for the many others, including myself, working with the numerous intermediaries of US foreign assistance, I'd recommend proactively making contact with your client (compassionately and with empathy - especially for smaller organisations - as they and their staff may be equally if not more impacted than you). Here are some steps you can consider:
Communicate with the contracting firm or agency: Confirm with your client whether or not they are able to deliver on the contract that you have signed. It is important to make clear in writing that it is your client and not you who is not able to deliver on the contract.
Clarify contract terms: Determine whether payment to you is contingent on the intermediary receiving funds from their US donor. Some contracts explicitly state this. Others are less clear (i.e. they may say something to the effect of limiting their liability), while many others may not contain such a clause. (As a side note, you should ensure that any future contract you sign makes the client (and not the client's "client" or donor) responsible for all contractual obligations.) In the latter case, and especially if your client is a larger organisation with diverse funding streams, it is more than reasonable to expect them to adhere to the contractual commitments. Also look out for any clauses related to force majeure or contract suspension.
Negotiate partial payments: If work has already been completed, and assuming your contract does not explicitly state that your payments are contingent on your client receiving funds from the donor, you may have a case for requesting partial or full payment for your work.
Clarify and agree suspension, reactivation or termination terms: If your client confirms that they are unable to adhere to your contract, and unless your contract already defines suspension or termination terms in detail, request or propose clarifications of these terms.
In my case, I was fortunate that we had already completed around 90% of the work before Christmas and been paid for this work. The only part that has been suspended was the few days set aside to finalise the deliverable. As a further side note, this points to the importance of ensuring that all your contracts are not excessively "backloaded". Client organisations tend to prefer contracts in which a larger proportion of the payments come towards the end of the contract. It is better for you - and perfectly reasonable - that you structure the contract so that you are paid regularly for work completed.
In response, I wrote to my client to confirm that they would be temporarily unable to fulfil their contractual obligations. I further requested that they agree to suspension terms, including the requirement to give me 30 days' notice of their intention to reactivate the contract, the right for me to say no if I am unavailable, and the default termination of the contract if not reactivated within 4 months. In particular, I wanted to safeguard against a situation in which I line up other work and then the client considers that I renegaded on the contract if - despite my best efforts to accommodate - I end up not being available to resume the work.
Finally, if you're a US resident, please do engage with your political representatives, such as by writing to your members of Congress, especially if they sit on the Foreign Affairs Committees of the House of Representatives (see members list) or Senate (see members list). Explain how you are impacted and encourage them to put pressure on the executive to row back and restrain this mounting humanitarian catastrophe.
Lessons for the future: Why "levelling-up" is critical
It appears to us at the IC-Hub that this pause will be a net loss to independent consultants and contractors. There may certainly be opportunities - and, as solopreneurs, we should be firmly focused on these opportunities - to support US-funded intermediaries to redesign their programmes and deal with the inevitable fallout from pausing and then resuming funding. But it does seem likely that some programmes (and thus US-funded consulting projects) will not come back online.
At the IC-Hub, we talk a lot about how to "level-up" your consulting business. Central to the strategies that we try to impart is diversifying your clientele to avoid being overly reliant on one donor (especially US-funded ones, who are showing themselves to be unreliable development actors). If most of your consulting practice is US-funded, then this figurative kick in the teeth will serve as a cruel and undeserved lesson of the importance of this. If you work solely with another donor or intermediary client, then perhaps heed this warning of what can happen if you fall into the common trap of becoming a contractor for a single client - and challenge yourself to level-up your consulting business.
This debacle further reminds us why we have to charge daily consulting fees that may be much higher than an equivalent employee's annual salary divided by 365: there is a risk premium attached to being a service-providing business (though my heart also goes out to the recently employed USAID staffers who have been told not to come to work).
Beyond this, and while the sheer financial clout of the US aid apparatus may limit such blowback, it is worth questioning whether US-funded clients can be sustainable partners moving forward and to privilege clients who may have more diversified and stable sources of funding.