Senators ask industry for help explaining danger of defense cuts

A group of Senate defense hawks are asking 15 of the biggest defense contractors to explain how $500 billion in defense cuts could impact them, the latest effort in a campaign to pry information from the White House and Pentagon about the automatic cuts.

Of course, the defense industry has already joined its allies in Congress expressing extreme opposition to sequestration cuts taking effect in January and urging Congress to undo them.

Industry leaders, such as Lockheed Martin CEO Bob Stevens, have warned of layoffs, and Stevens said last month that all 100,000-plus employees in his companies could receive layoff notices right before the election due to federal reporting requirements.

The senators, led by Sen. John McCain (R-Ariz.), say in a letter sent to the contractors last week that the administration’s “apparent unwillingness to conduct any meaningful analysis or planning for sequestration is alarming.”

“Recognizing that you, like the Congress, have received no guidance from the administration on implementation of sequestration,” the senators write, “we would appreciate your answers” on the cuts, roughly $500 billion across the board to both defense and non-defense discretionary spending over the next decade.  

Among the questions in the letter:

• What’s the number and dollar value of contracts that could be terminated or restructured?
• When do contractors expect to have to issue layoff notices under the Worker Adjustment and Retraining Notification (WARN) Act?
• Has there been a slowdown in new contracts “attributable to the uncertainty of funding available” because of the threat of sequestration?
• What’s the impact of sequestration on capital and research investments and recruiting?

Most Democrats and Republicans, as well as the Obama administration, want to stop the automatic cuts, which were included in last year’s Budget Control Act. However, the two parties have deep disagreements about how to find the alternative revenue to do so.

Many don’t expect movement until after the November election, and the latest tactic from defense hawks has been to try to gather evidence about how bad sequestration would be.

In the letter, signed by McCain and Sens. Joe Lieberman (I-Ct.), Jim Inhofe (R-Okla.), Kelly Ayotte (R-N.H.), Lindsey Graham (R-S.C.) and John Cornyn (R-Texas), the senators tout the amendment that passed the Senate requiring the administration to explain the impact of sequestration in three reports.

That amendment, which passed on the Senate's farm bill, still must pass the House to become law.

Stevens, who is leaving his Lockheed post at the end of the year, has also called on the administration to explain sequestration more clearly. At a media day Q&A last month where Stevens made the layoffs threat, he said the industry was in a “fog of uncertainty” because of sequestration.

Defense Secretary Leon Panetta, who has been one of the loudest voices about the “devastating” impact sequestration would have, provided McCain and Graham a similar assessment on the impact of sequestration to the Pentagon back in November. 

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