WASHINGTON: After 28 years in business, financial woes have forced Equals Three Communications to shut its doors and become a virtual firm.
The decision follows the loss of its biggest client, the Navy SEALs, the firm's CEO Eugene Faison said. In 2010 and 2011, the military organization collectively paid his firm $1.4 million to develop and execute targeted marketing efforts aimed at increasing SEAL applications among minority groups, particularly African-Americans, according to award notices.
The firm's work targeted the Washington, DC metropolitan area, Maryland suburbs of Washington, DC, the suburban corridor between Washington, DC and Baltimore, and the Baltimore metropolitan area and its suburbs.
Faison did not say why Navy SEALs decided to stop working with Equals Three, but in March it announced it was seeking a firm to target minorities in various markets around the country.
After Equals Three lost the contract, the firm laid off a large number of its people, though Faison declined to state exactly how many.
Management had been talking for sometime about becoming a virtual organization, but didn't do so since some of the work for Navy SEALs required a physical office. The agency will now no longer operate from an office; staff will work from home.
In the months leading up to the closure of the firm's facilities it struggled to meet payroll responsibilities for some of its employees, which Faison attributed to clients being slow to pay.
Faison said he is positive his firm will be able to serve his remaining clients well and compete for new business as a virtual entity.
Most of the firm's clients consisted of federal agencies such as the US Food and Drug Administration, National Institutes of Health, and Department of Defense, but Faison said it has become increasingly difficult to work with the government.
“There are RFPs you think will be awarded in two months and they don't get awarded or it's much later than anticipated,” Faison said. “We kill ourselves to submit a proposal and if it's held up we're never told why.”
Over the last 12 years, federal records show the firm won more than $22 million in federal contracts, however these earnings waned in recent times.
Others have also struggled with aspects of the federal government, but say overall work has remained steady.
“There was a time when government contracts, while not as large revenue generators as those coming from the private sector, provided stability for firms,” said Sandra Wills Hannon, founder and principal at Hannon Group.
During her time as a VP at Fleishman-Hillard's DC office a contract with the White House's Office of National Drug Control Policy helped keep it afloat during a rough period in 1999. “Now, the tables have turned,” Hannon said.
At ICF International, staff have seen federal agencies cancel financially promising RFPs and some clients decline to pick up option years on a contract or reduce funding for the project from one year to the next.
But this year is expected to produce more federal revenue for the agency than the previous 12 months, thanks in part to the firm's inclusion on indefinite delivery, indefinite quantity (IDIQ)s like the one maintained by the Centers for Disease Control and Prevention.
“It is hard for those agencies that don't get on an IDIQ because they wouldn't be eligible to do work for that [federal] agency for five years, and that's huge,” said Courtney Partlow, VP at ICF.
Others have achieved success with the federal government by being named subcontractor on contracts that are largely related to non-PR activities, such as engineering, but have a communications component.
“We sort of stumbled into it,” said Jeff Mascott, managing partner of Adfero Group, noting that public sector work is one of the fastest-growing areas at his firm. “There is a lot of overhead and a lot work in managing government contract vehicles, which is taken care of by the prime contractor. [Being a subcontractor] has been very successful for us.”