Federal contractors grilled on pre-sequester layoff notices
By Kedar Pavgi
October 12, 2012 - Government Executive
In letters
to CEOs of 10 major government contractors, a key Republican lawmaker asked if
the companies had consulted their own lawyers about whether layoff notices are
required ahead of threatened across-the-board budget cuts slated to begin in
January.
The letters from House Oversight Committee Chairman Darrell Issa, R-Calif.,
also asked the contractors to detail their communication with Obama
administration officials about the 1988 Worker Adjustment Retraining
Notification Act, which requires companies with more than 100 employees to issue
notices to them 60 days before mass layoffs or plant closures.
The Labor Department said
in July that it would be ginconsistenth with the WARN Act for contractors to
send notices informing their employees that mass layoffs could result from the
loss of business after across-the-board cuts leave government -- and especially
the Defense Department -- unable to continue paying for contracts. The Office of
Management and Budget said
in September that the government would pay for related legal costs incurred by
companies that follow Laborfs advice. And Defense has assured contractors that
any devastating cuts to programs and contracts would not occur immediately in
early 2013.
That guidance seemed to satisfy heads of many of the largest federal
contractors, who have
said they will not send WARN Act notices unless they get more details about
how sequestration -- the dramatic cuts that will take effect in January if
lawmakers donft agree on an alternative long-term budget plan -- would affect
them.
House Republicans were still skeptical. gThe guidance seems intended to
invite federal contractors to flout the law, and in doing so places a large
contingent financial liability on the shoulders of American taxpayers in order
to indemnify those contractors who follow the administrationfs direction,h Issa
told the companies.
The letter was addressed to the CEOs of Boeing Co., Lockheed Martin Corp.,
Northrop Grumman Corp., Science Applications International Corp., Raytheon,
General Dynamics, Hewlett-Packard, Booz Allen Hamilton, Computer Sciences Corp.
and DynCorp International.
In a separate
letter to Obama administration officials, Issa sought more details on the
legal reasoning behind the guidance from Labor and OMB. Ali Ahmad, a spokesman
for the House Oversight and Government Reform Committee, said the commitment to
pay legal costs related to sequestration may have changed the business decisions
of some companies.
gDespite the Obama administrationfs failure to be transparent about
sequestration-related cuts and the Department of Laborfs instruction that
contractors ignore their obligations under the WARN Act, many firms publicly
indicated they thought it would be necessary to issue notifications to employees
in early November,h Ahmad said. Early November is 60 days before the cuts are
scheduled to take effect on Jan. 2.
gThe White Housefs commitment to foot the bill for WARN Act violation claims
with taxpayer money evidently affected the decision-making of at least some of
these firms, and the committee is seeking information about the White Housefs
motivations,h Ahmad said.
Spokeswoman Jennifer Allen said Lockheed Martinfs decision
to delay sequestration-related layoff notices was based on the Obama
administrationfs clarification of the timetable for the budget cuts.
gIf 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,h Allen said.
By Kedar Pavgi
October 12, 2012
http://www.govexec.com/contracting/2012/10/house-republican-grills-federal-contractors-pre-sequester-layoff-notices/58751/