Too little info for pre-sequestration layoff warnings, contractors say

Boeing Co., General Dynamics and other contractors will not send their employees layoff warnings in November in anticipation of lost government contracts resulting from sequestration, representatives from those companies said.

Rob Doolittle, a spokesman for General Dynamics, said without details about the across-the-board budget cuts slated to take effect in January, his company cannot assess the workforce implications.

“We will not issue notices to our employees unless we have specific information about what the impact of sequestration will be on our programs, and we determine that we need to lay off employees as a result of the changes to our programs,” Doolittle said. “The Defense Department has not provided information to General Dynamics about how it intends to implement sequestration with regard to our programs.”

Amid fears federal contract money will dry up if sequestration is not averted, contractors have threatened to send employees warning notices according to the 1988 Worker Adjustment Retraining Notification Act. The WARN Act requires companies with more than 100 employees to send out notices 60 days ahead of mass layoffs or plant closures.

The Labor Department has said it is unnecessary and even “inconsistent” with the law for contractors to send out such notices ahead of the threatened sequestration because it’s not clear the sequestration actually will happen or what impact the automatic cuts it triggers would have on individual agency contracts and companies. Lawmakers hope to come to agreement on an alternative to sequestration to avoid the potentially haphazard cuts.

The Office of Management and Budget issued guidance on Sept. 28 saying agencies would cover contractors’ “liability and litigation costs” related to WARN Act notices if the companies follow Labor’s guidance. Separately the Defense Department told contractors that it would take some period of time after a sequester went into effect on Jan. 2, 2013, before funding for individual programs would be cut.

Like General Dynamic, Boeing said it would need more information before making workforce determinations. “It has always been our position that Boeing would not issue WARN  notices to our employees until we receive detailed guidance from our customers about cuts to specific programs and workforce actions required to address those cuts,” spokesman Dan Beck said in an email to Government Executive.

Lockheed Martin Corp., the government’s largest contractor, announced Oct. 1 that it would not be issuing WARN Act notices this year. The company’s top officials told its employees the government’s guidance convinced them the notices were unnecessary.

When contacted by Government Executive, other corporations, including Booz Allen Hamilton, did not want to speculate on sequestration-related cuts. During an earning’s conference call in early August, Booz Allen Hamilton Executive Vice President Samuel Strickland said the firm was “being cautious” for fiscal 2013. 

ITT Exelis also was not intending to issue sequestration-related layoff notices, citing the government’s advice.

“Based on past and more recent government guidance from the Department of Labor and DoD, ITT Exelis does not currently have (nor have we had in the past) any intention of issuing pre-emptive sequestration-related WARN notices at this time,” spokesperson B.J Talley said.