Two key Republican senators ratcheted up the pressure on defense industry companies to ignore advice from the Obama administration and the Pentagon encouraging them not to issue layoff notices associated with pending defense cuts before the election.
In a letter sent to 15 defense contractors Friday, Arizona Sen. John McCain and South Carolina Sen. Lindsey Graham said failing to comply with federal law requiring notices to go out to employees 60 days before possible layoffs could leave the companies open to “serious legal and financial repercussions.”
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The senators, both prominent members of the Senate Armed Services Committee, also put the companies on notice that they plan to block any effort by the Obama administration to reimburse companies for any legal costs incurred because of failing to send out the notices.
“We will oppose any requested funding increase in the budget process, any programming action…or the use of any program funds to reimburse contractors for any expenses resulting from failure to comply with the law,” they wrote.
The White House told the companies late last week that they did not have to follow a federal law requiring companies to notify their employees 60 days before possible layoffs because the defense cuts slated to take effect Jan. 2 are only speculative and administration officials believe Congress will find a way to avoid them. The Pentagon sent a letter to the companies the same day, saying it had no plans to start canceling contracts Jan. 2, even if the budget impasse persists.
Earlier this week, Mr. McCain and Mr. Graham were among those accusing President Obama and the White House of acting out of fear of the political fallout from the layoff notices going out to workers so close to the Nov. 6 election.
Those receiving the letter included: Lockheed Martin Corporation, Raytheon Company, L-3 Communications Holdings Inc., Northrop Grumman Corporation, Huntington Ingalls Industries, the Boeing Company, General Dynamics Corporation, Honeywell International Inc., CSC, SAIC, BAE Systems Inc., ATK, ITT Excelis, EADS North America Inc. and United Technologies Corporation.
The senators’ letter did not immediately appear to change defense companies’ decision to hold off on warning workers of potential pink slips for now.
A spokeswoman for Lockheed Martin said the company’s decision not to send out the layoff notices before the election was based on assurances from the Pentagon late last week that there are no plans to start canceling contracts immediately.
If the automatic budget cuts — known as “sequestration” in legislative jargon — occur and the Defense Department says it plans to cancel or scale back contracts at a later time, then Lockheed will comply with the law and send out the required notices.
“Our decision to delay sending [layoff] notices to our employees was based on new information that clarified the timeline for implementing sequestration budget cuts,” Lockheed said in a statement. “If sequestration occurs, we will adhere to the law and provide affected employees the full notice period required by the WARN Act at the appropriate time.”
