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October 03, 2012

GOP senators to Obama: No dollars to pay for defense firms sequestration WARN Act costs

As we reported yesterday, Lockheed Martin and other defense contractors have said they will not issue notices to employees warning of possible layoffs due to the possibility of across the board budget cuts in January.

The about face came after the Obama administration, which really doesn't want layoff notices going out days before the election, assured the companies that if budget cuts do hit programs and they do have to lay off workers they could bill the government for costs they incurred due to WARN Act violations.

Now Politico.com (paid site) reports the Republican pols prompt response.

MCCAIN AND GRAHAM: NOT ONE PENNY FOR CONTRACTOR LAYOFFS: Sen. Lindsey Graham (R-S.C.) tells POLITICO he'd oppose paying even a cent of defense vendors' legal or employee costs if they were forced to lay off workers next year under a potential sequester. Contractors "fail to issue [layoff] notices at their own peril," the influential SASC member said. Meanwhile Sen. John McCain (R-Ariz.) is expected to announce this morning that he's told DoD he would block the transfer of funds to reimburse vendors' costs in a layoff or legal situation, and wants 30 days' notice from DoD before it actually got to the point of attempting payment.

Graham was peeved: "I hope they get sued and there will be absolutely no way Congress will reimburse any contractor one penny if they find themselves in litigation. By not issuing the notices, they're on their own," he added. The OMB has said that the administration would cover the costs involved if sequester forces them to close plants and lay off employees and they are exposed to WARN Act liability.

Meanwhile, EADS, parent company of American Eurocopter in Grand Prairie, follows the lead of Lockheed and others and says it won't issues WARN Act notices:

EADS BACKS OFF LAYOFF WARNINGS: EADS North America joined Lockheed Martin and BAE Systems on Tuesday, telling POLITICO it too no longer plans to issue the WARN Act notices it once mused about sending employees in anticipation of sequestration. "We have no intention at this point of issuing notices this year," EADS spokesman Guy Hicks said. "If sequestration occurs and it becomes clear that our operations would be impacted as a result, then we would go ahead and issue WARN Act notices."

- Bob Cox




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