Defense & National Security

Obama would spend tax dollars to keep sequester from hurting re-election

Obama would spend tax dollars to keep sequester from hurting re-election

House Republicans are outraged after the White House Office of Management and Budget issued new guidance implying that the U.S. government will pay to keep defense contracting companies from issuing a slew of politically damaging layoff notices before the November election.

Just before the weekend, OMB issued the memo, which reiterated a Department of Labor recommendation from earlier this year that the companies were not bound by the WARN act to issue layoff notices to their workers with 60 or 90 days’ notice, because the coming cuts to defense funding that would necessitate the notices may still be averted. The memo also spelled out, in clearer detail, the lengths the White House is willing to go to keep those notices from hitting mailboxes before Nov. 6: OMB will guarantee tax dollars to cover any costs that arise from employees suing the companies for non-compliance with the law.

That reimbursement money, according to the memo, would be available to the contracting companies who complied with earlier federal guidance and waited until Jan. 2, 2013–the day sequestration cuts take effect–to inform thousands of employees of their immediate firing.

In September, defense contracting giants BAE, EADS, and Lockheed Martin wrote Senate Armed Services Committee ranking member Sen. John McCain (R-Ariz.) to say they still planned to issue the notices, while other companies described the devastation in lost contracts that sequestration would bring to their business.

Lockheed officials previously said they may put most of their 123,000 employees on notice in advance of the sequester, while others have said they are not yet sure of the extent of the damage that sequestration would cause their companies. This week, Lockheed made the decision not to issue layoff warnings in New York state.

This afternoon, House Armed Services Committee chairman Buck McKeon (R-Calif.) issued a statement fuming that the White House was interfering with federal law.

“President Obama has placed hundreds of thousands of defense workers and the companies who employ them in a no-win situation. I am sure that Lockheed Martin’s decision today was motivated by the same concern for their workers’ security as was their initial contemplation of WARN notices,” he said. “It appears companies will bow to the threat implicit in last week’s OMB guidance; withhold notices today or the government might not cover your court costs down the road. Let me be clear, neither the OMB guidance nor the Lockheed decision will protect a single defense industry job if sequestration occurs in January.”

House Majority Leader Eric Cantor (R-Va.) also deplored OMB’s new advisory.

“For an administration that talks a lot about transparency, it is disappointing that they apparently think it is more important to protect their political interests than give hard-working families any indication that they might in fact lose their job in 60 to 90 days due to inaction by the president and Senate Democrats,” he said in a statement.

At the Aerospace Industries Association, a contracting advocacy organization that has published extensive research about the negative effects of sequestration, Vice President Cord Sterling said in a statement that AIA was still advising contractors to make their own decisions based on what was right for their individual company.

“As you know, the current budget debate as well as the recent Department of Labor memo regarding sequestration and the WARN Act create an uncertain environment for managers to effectively and efficiently operate as government contractors,” he said.

“Understanding what costs associated with sequestration will be allowable will help ensure that companies take appropriate steps to serve their government customers and care for their employees.”

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