GOP Sens. McCain and Graham tell contractors to issue layoff notices

Sens. Lindsey Graham (R-S.C.) and John McCain (R-Ariz.) have a message for defense contractors: ignore the Obama administration and send out mass layoff notices.

Graham and McCain sent letters to 15 defense firms Friday warning that they would block any payments from the federal government to contractors covering the costs associated with not following the law requiring 60 days' notice for mass layoffs.

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The Office of Management and Budget issued guidance last week that said contractors should not send notices of potential layoffs over the threat of sequestration, and that the federal government would cover any legal costs if contracts were canceled and layoffs did in fact occur.

The guidance prompted Lockheed Martin and other defense firms to drop plans to send the notices to employees this year before the across-the-board sequestration cuts are scheduled to take effect.

But Graham and McCain told the contractors that compliance with the Worker Adjustment and Retraining Notification (WARN) Act was not optional.

“The law clearly states that workers must be notified at least 60 days in advance of a potential mass layoff or plant closure, and it is unclear to us, in light of the Administration’s refusal to plan for sequestration, how the Administration can guarantee that no sequester-related budget cuts or contract actions will occur on January 2 or shortly thereafter,” the senators wrote.

“Despite the Administration’s guidance not to issue WARN notices now, it is our fear that, should you rely on that guidance and fail to comply with the WARN Act requirements, you will be setting your company up for serious legal and financial repercussions,” they said. “The Congress should not put the taxpayers on the hook if a private company fails to follow the law.”

Lockheed Martin said in a statement responding to the letter that it will “adhere to the law” in the event that it has to lay off workers and provide the notice required by the WARN Act.

“Our decision to delay sending sequestration-related WARN notices to our employees was based on new information that clarified the timeline for implementing sequestration budget cuts,” Lockheed spokeswoman Jennifer Allen said in a statement to The Hill. “If 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.”

Republicans have accused the Obama administration of making the promise to cover defense firms' layoff costs for political gain and to hide job losses before the election. Some defense firms had threatened to send the notices just four days before the election, which is 60 days before sequestration potentially takes effect on Jan. 2. Congress is working on a deal to block the automatic cuts to spending.

Graham told The Hill the OMB guidance was “patently illegal,” and Sen. James Inhofe (R-Okla.) said the administration was “bribing” defense contractors not to send notices.

White House press secretary Jay Carney said this week that the administration was “absolutely” not putting pressure on contractors to hold off on issuing the layoff notices. 

The Obama administration has said that contracts will not be canceled on Jan. 2 if sequestration occurs, and so it is not necessary for contractors to send the layoff notices. 

Updated at 1:59 p.m.