Lockheed says it won’t issue sequester-related layoff notices this year

Lockheed Martin Chairman and CEO Bob Stevens. Lockheed Martin Chairman and CEO Bob Stevens. PRNewsFoto/AP

The government’s largest contractor, Lockheed Martin, announced Monday it would not issue official warnings of impending layoffs before a federal budget sequester potentially goes into effect in January.

Lockheed officials have been warning for months that they might issue layoff warnings under the 1988 Worker Adjustment Retraining Notification Act, which requires companies to provide 60-day notice to employees of impending mass layoffs. But the Labor Department has ruled such notices are unnecessary and in fact “inconsistent” with the law, because it’s not clear whether a sequester actually will happen or what impact the across-the-board cuts it triggers would have on individual agency contracts and companies.

On Friday, the Office of Management and Budget issued guidance saying agencies would cover contractors’ “liability and litigation costs” related to WARN Act notices if the companies follow Labor’s guidelines. 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.

In a memo to Lockheed Martin employees Monday, Bob Stevens, the company’s chairman and chief executive officer, and Chris Kubasik, its vice chairman, president and chief operating officer, said that the two pieces of guidance satisfied them that layoff notices were not required this year.

The two executives, however, did not mince words in criticizing the looming sequester.

“We remain firm in our conviction that the automatic and across-the-board budget reductions under sequestration are ineffective and inefficient public policy that will weaken our civil government operations, damage our national security and adversely impact our industry,” Stevens and Kubasik said in the memo. “We will continue to work with leaders in our government to stop sequestration and find more thoughtful, balanced, and effective solutions to our nation’s challenges.”

Republican lawmakers criticized the Obama administration's guidance on WARN Act notices. “In 2007, Senator Obama wanted to extend the WARN ACT notices to 90 days, up from 60, to ensure workers were treated fairly," said Sen. Lindsey Graham, R-S.C., ion a statement. "Now, President Obama is trying to suppress the issuance of WARN notices, which will hit mailboxes right before the election. The Obama administration’s legal advice is dubious at best."

“The WARN ACT is crystal clear when it comes to defense contractors having to issue notices of impending layoffs as a result of sequestration," Graham added. "I hope defense contractors will follow the law and warn their employees about the devastating impact of sequestration."

Graham, Sen. John McCain, R-Ariz., and Sen. Kelly Ayotte, R-N.H., said Friday that OMB's guidance could result in the Defense Department paying as much as $4 billion in repayments to contractors to cover the salaries of workers laid off without receiving WARN Act notices -- along with legal damages they called "inestimable." 

Sequestration, which goes into effect automatically in January under the 2011 Budget Control Act unless Congress acts to stop it, would impose cuts of 9.4 percent in nonexempt defense discretionary funding and 8.2 percent in nonexempt, nondefense discretionary funding. A 2 percent cut would hit Medicare providers, 7.6 percent would affect other nonexempt nondefense mandatory programs, and 10 percent would be applied to nonexempt defense mandatory programs, according to an Obama administration report.

The Lockheed officials said they would continue to press the government for more information about agencies’ sequester planning activities.

“While we work to stop sequestration we will also continue to petition the government to outline exactly how sequestration will be implemented so that we can responsibly prepare for the impact to our employees and our business,” they wrote in the memo.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from GovExec.com.
We think these reports might interest you:

  • Sponsored by G Suite

    Cross-Agency Teamwork, Anytime and Anywhere

    Dan McCrae, director of IT service delivery division, National Oceanic and Atmospheric Administration (NOAA)

  • Data-Centric Security vs. Database-Level Security

    Database-level encryption had its origins in the 1990s and early 2000s in response to very basic risks which largely revolved around the theft of servers, backup tapes and other physical-layer assets. As noted in Verizon’s 2014, Data Breach Investigations Report (DBIR)1, threats today are far more advanced and dangerous.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.


When you download a report, your information may be shared with the underwriters of that document.