McCain joins GOP vow to block layoff payments to defense firms

Sen. John McCain (R-Ariz.) is joining the ranks of Republicans vowing to block payments to defense contractors from the Obama administration for the severance costs associated with any layoffs due to sequestration.

McCain said in a letter Wednesday to Defense Secretary Leon Panetta that he would try to deny payments from the administration to defense contractors for the costs of layoffs, and requested the Pentagon provide 30 days' notice to Congress if any payments are being made.

The senator jumped on board with his close ally Sen. Lindsey Graham (R-S.C.), who said Monday he also would block any payments.

Graham's vow, first reported by The Hill, was the beginning of a barrage of Republican attacks on the Obama administration's budget guidance for issuing mass layoff notices, which prompted Lockheed Martin and other defense contractors to say they would not send the notices this year.

ADVERTISEMENT
The Office of Management and Budget on Friday said it would cover the costs associated with any layoffs that take place due to sequestration under a law requiring 60 days' notice of mass layoffs, but only if companies did not send out the mass notices this year.

“Companies have a choice whether to rely on OMB’s politically-motivated guidance or to comply with the law,” McCain said in a statement. “But I can assure them that I will do everything in my power to ensure that taxpayer dollars are not used to compensate contractors who do not comply with the law.”

The issue of sending layoff notices under the Worker Adjustment and Retraining Notification (WARN) Act has taken a sharp political turn this year, after Lockheed’s CEO Bob Stevens threatened to send notices to all of his employees because of the uncertainty surrounding the looming across-the-board sequestration cuts, which would reduce Pentagon budgets $500 billion over the next decade.

Stevens noted that the company would have sent the notices four days before the election, because the WARN Act requires 60 days' notice and sequestration is set to take effect Jan. 2.

The Obama administration said in July that issuing the layoff notices due to sequestration was “inappropriate,” but Republicans encouraged the companies to do so, accusing the administration of trying to hide job losses ahead of the election.

Friday’s guidance from the Office of Management and Budget sparked a whole new round of attacks from Republicans, who have accused the OMB notice of seeking to help Obama politically.

Sen. James Inhofe (R-Okla.) said Tuesday that the Obama administration was “bribing” defense companies not to send the notices, while Sens. Chuck Grassley (R-Iowa) and Kelly Ayotte (R-N.H.) sent a letter to OMB demanding legal justification for the payouts.

Not all Republicans are on board with plans to block the WARN payments. House Armed Services Committee Chairman Buck McKeon (R-Calif.) told The Hill on Monday that he wasn’t planning to work on blocking payments just yet, as he wanted to focus first on stopping sequestration before it takes effect. Congress is reportedly working on a deficit-reduction deal that would avert the spending reductions.

The Obama administration has defended the OMB guidance, and White House press secretary Jay Carney said the White House “absolutely” did not pressure Lockheed to drop its threat of sending the notices.

Administration officials point to guidance issued by the Pentagon Friday that says DOD does not expect any contract cancellations on Jan. 2, the rationale for having to send the notices before sequestration takes effect.