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A small group of top U.S. defense executives, while privy to information on the nation’s most secretive programs, were told by White House representatives at a June 13 meeting that they wouldn’t be getting any special details on the plans for the automatic budget cuts known as sequestration, sources familiar with the conversation said.
The unpublicized meeting, requested by Aerospace Industries Association President Marion Blakey, who was joined by Lockheed Martin CEO Bob Stevens, Northrop Grumman CEO Wes Bush and Pratt & Whitney CEO David Hess, was cordial in tone, but left the executives with no greater insight into how the budget cuts would be carried out. The executives met with representatives of the Office of Management and Budget (OMB) to voice concerns about the lack of information on how sequestration would work and to request that further details be made available soon.
“OMB said, ‘We don’t have any real specifics now and we don’t expect to have any real specifics until after the election,’” an industry source said.
Last week, Blakey and Stevens publicly vocalized the need for information on how the cuts would be implemented if they take effect as planned Jan. 2 so industry can adjust its workforce, which could include thousands if not hundreds of thousands of layoffs, Blakey has warned.
The meeting included the presentation of information about lagging hiring numbers that Blakey attributed to contractors uncertain of the future defense picture, sources said. Blakey also presented the OMB representatives with details on the need to notify employees of potential layoffs within 60 to 90 days, depending on the state, in advance of sequestration to comply with the Worker Adjustment and Retraining Notification (WARN) Act, as well as concerns about the need to modify contracts under equitable adjustment clauses.
“It was very cordial,” an industry source said. “It was very amenable. They appreciated the information. And they said they didn’t have any further information on how sequestration would be implemented.”
Boeing Defense’s Dennis Muilenburg was invited but canceled due to an “unavoidable scheduling conflict,” a Boeing spokesman said.
Executives have been emphasizing the legal requirement to inform employees of potential layoffs, part of the WARN Act, as possibly forcing layoff notifications to be delivered on Nov. 1, right before the presidential election. Experts said the companies would likely notify far more employees than they would actually fire to retain flexibility on layoffs.
“Industry is indicating that absent guidance, that they feel they need to warn their entire organizations because they don’t know yet how the cuts will come,” said Brett Lambert, the Department of Defense’s industrial base policy chief.
Lawmakers are also putting pressure on the Obama administration to start planning for sequestration. In its farm bill, the Senate included an amendment that would force the administration to tell Congress this summer how sequestration would be implemented.
It also calls on OMB to release a report within 30 days of the law’s passage, and the president to release a report within 60 days on the impact of sequestration across defense and nondefense spending.
Lawmakers are expected to attach similar amendments to legislation that may move through the congressional system faster than the farm bill, including a federal flood insurance bill, which the Senate is scheduled to begin debating June 25.
Gordon Adams, who oversaw national security budgets at OMB under President Bill Clinton, said this push for information is nothing more than politics.
“Every single thing that happens in this town this year is about the election,” Adams said.
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Kate Brannen and Marcus Weisgerber contributed to this report.
