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On March 1, the much feared fiscal cliff sequestration took place. A doomsday machine thought to be so terrible it could never become law is now in gear. What can we expect to happen? Will hundreds of thousands of federal employees be facing forced furloughs after the 30-day waiting period prescribed by law? Will thousands of federal contractor companies have to continue making layoffs, see reduced business opportunities, or maybe even go out of business?

The drama of the fiscal cliff continues to roil the market for proposal services like nothing else in living memory. Whereas spending for the first fiscal quarter (October through December), was up compared to 2011, spending in January of 2013 is down by 2/3 compared to 2011. This is mostly because of indecision in the political process – the agencies don't know what to do, because the direction for procurement in 2013 has not been set by the President and Congress.

Federal agencies in January 2013 will officially require contractors that win services contracts to first hire employees from the company that had previously performed the work, implementing a 2009 executive order.

This has long been in the works. The Labor Department published a final rule Aug. 29, 2011 to implement the 2009 executive order that supposedly "reduces disruption to the delivery of services during the period of transition between contractors."

Now that the election is over, congress is starting down the rocky road in search of a plan that will mitigate the devastating effects of Sequestration. With both the Senate and House majority leaders pledging to find a solution, the atmosphere seemed to be warming to a political deal that would avert the "fiscal cliff" on the day after the election. Since then, the news in the press seems to be good and bad on alternate days.

Unfortunately, the time is coming when some companies will have to lay off proposal personnel due to the sequestration. This is a difficult situation where economics just doesn't provide another option. So companies do what they have to do to get through problem.

In this short article, we try to provide some guidance that may be helpful to proposal departments faced with the need to downsize their operations. The solution generally has these components: