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Defense cuts: Should defense firms notify workers of looming layoffs?

The Obama administration advises Pentagon contractors that federal labor law requiring a 60-day notice of layoffs does not apply to Jan. 1 sequester. GOP senators dub the move 'political expediency.'

By Staff writer / August 1, 2012

Acting Budget Director Jeffrey Zients on Wednesday testifies before the House Armed Services Committee on the automatic cuts slated to hit domestic and defense programs beginning Jan. 2, unless Congress can figure out a way to avert the reductions. The failure of the bipartisan congressional supercommittee to come up with $1.2 trillion in savings set the cuts in motion.

J. Scott Applewhite/AP

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Norfolk, Va.

A battle over mandated reductions to defense spending is heating up, as two moves by the Obama administration on just how the government will respond drew sharp rebukes from Republicans, who say the administration is trying to obscure the potential pain of the cuts.

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At issue is a $1.2 trillion sequester, negotiated as part of the 2011 deal to raise the national debt limit by ensuring equivalent spending cuts. The Pentagon is to take $600 billion of that hit, the first $55 billion of which comes due on after Jan. 1.

Because many defense firms would see their revenue slashed, several Pentagon contractors have said they would have to provide their employees with layoff notices to comply with a federal labor law, known as WARN, that requires federal contractors to give notice 60 days before impending layoffs. The CEO of Lockheed Martin recently threatened to send layoff warnings to all of his 120,000 employees just days before the November election.

To Republicans, the prospect of mass defense industry layoffs right before Election Day could be a significant political driver for a deal on replacing at least the first year of cuts.

That was, at least, until the Department of Labor cautioned defense firms not to issue such notices in an advisory published Monday. "In fact, to provide such notice would be inconsistent with the purpose of the WARN Act," the advisory said.

“Given that Federal Agencies, including [the Department of Defense], have not announced which contracts will be affected by sequestration were it to occur, and that many contracts may be completely unaffected, the actual contract terminations or cutbacks that will occur in the event of sequestration are unknown,” it added. “Thus, in the absence of any additional information, potential plant closings or layoffs resulting from such contract terminations or cutbacks are speculative and unforeseeable.”

Meanwhile, the White House Office of Management and Budget said, ahead of testimony before the House Armed Services Committee on Wednesday, that it would exempt military personnel from any cuts, should the sequester go into place.

These developments angered GOP lawmakers, who charged that the Obama administration is more interested in obscuring the impact of the pending cuts than it is in negotiating an alternative.

"Rather than coming to the table with Republicans and Democrats in Congress to finally address the issue of budget sequestration, the Obama Administration is flailing around attempting to make sequester look less devastating than it actually is,” said GOP Sens. John McCain of Arizona, Lindsey Graham of South Carolina, and Kelly Ayotte of New Hampshire, in a joint statement Tuesday. The GOP trio of defense hawks stumped at town meetings in  Florida, North Carolina, Virginia, and New Hampshire earlier this week to make their case that the nation needs to avoid $55 billion in mandated spending reductions on defense.

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