Lockheed Martin is backing down from threats to issue employee layoff notices days before the November election based on new guidance from the Obama administration and the Pentagon.
The defense giant’s decision ends a stand-off with the administration over the impact of deep automatic cuts set to begin hitting defense spending Jan. 2, if Congress can’t find a solution to the impasse.
The layoff notices, required by law, would have gone out to dozens of employees in Northern Virginia, a hotbed for defense contracting in a state Mr. Obama took in 2008 and wants to keep in his win column on Election Day. Democrats were worried that sending out a slew of layoff notices in the state just days before voters went to the polls would have suppressed the vote for Obama.
Lockheed Martin’s decision not to send them out comes after reassurances from the Office of Management and Budget that the Pentagon didn’t plan on killing any contracts on Jan. 2, and also said the government would pay for severance costs mandated under a federal layoff notices law, the Worker Adjustment and Retraining Notification (WARN) Act.
Sen. Lindsey Graham, a South Carolina Republican who has repeatedly warned about the economic and national security fallout of the pending defense cuts, labeled the Obama administration’s latest attempts to stop the layoff notices a purely political attempt to win the election at the expense of job security for employees in the defense industry.
“This is typical Barack Obama politics — being supportive of the WARN Act when convenient and against it when it creates a political downside,” Mr. Graham said Monday in a release. “This is the most outcome-based White House in memory.”
In 2007, Mr. Obama, then Senator of Illinois, wanted to extend the WARN Act notices to 90 days, up from 60, to ensure workers were treated fairly, Mr. Graham noted.
“Now, President Obama is trying to suppress the issuance of WARN notices, which will hit mailboxes right before the election,” he said. “The Obama administration’s legal advice is dubious at best.”
In June, Bob Stevens, Lockheed’s CEO, said he was following his lawyers’ advice and planning to send out notices of potential layoffs to all 123,000 of his employees on Nov. 2, just four days before the election. But, over the summer, the Obama administration repeatedly told contractors the layoff notices were “inappropriate” because the effects of budget sequestration were only hypothetical. Lockheed and several other contractors said the legal issue was so clear they believed they were forced to send them out or face legal retribution from employees for not doing so.
But the new guidance sent Friday provided assurances to defense companies that the federal government wold cover the costs of employee terminations if the contracts ended up being canceled — but only if the companies did not issue the notices.