Senators quiz defense companies on sequestration

Friday - 7/6/2012, 11:55am EDT

Seven senators — six Republicans and one independent — are inviting specific assessments of the impact of sequestration from the government's largest contractors as they press their case to undo the automatic budget cuts set to kick in on Jan. 2, 2013.

A letter sent to 15 major vendors June 29 and released by Sen. John McCain's (R-Ariz.) office Thursday builds on language lawmakers attached to a recent agriculture funding bill that would require the Defense Department and the Office of Management and Budget to detail precisely how the sequestration cuts would be implemented.

"While this report will be essential in Congress' analysis of the effects on defense operations, activities, programs and facilities, we also need your input to help Congress understand the impact on the industrial base, including the impact on the contracts you service and your workforce," the senators wrote

Among the information sought in the letter, co-signed by Sens. Joe Lieberman (I-Conn.), James Inhofe (R-Okla.), Saxby Chambliss (R-Ga.), Kelly Ayotte (R-N.H), Lindsey Graham (R-S.C.) and John Cornyn (R-Texas):

  • An estimate of the total dollar value of companies' contracts that would be cancelled or restructured under sequestration;

  • The impact of contract cancellations on employees and suppliers;

  • The date on which companies would issue required layoff notices to their workforce under the WARN Act in anticipation of sequestration;

  • Whether companies have already noticed a slowdown in the government awarding new contracts because of uncertainty over whether sequestration will occur;

  • Whether the threat of sequestration is impacting companies' strategic planning, investment and research.

Some companies and defense industry associations have already volunteered dire warnings about the impacts of the $1 trillion governmentwide budget cut. Lockheed Martin, the government's biggest contractor, said last month that it would have to send layoff notices to most of its employees under the WARN Act at the beginning of November, shortly before the presidential election. The firm also cautioned the cuts would ultimately increase the price of products and services to the government.

And the Aerospace Industry Association has been circulating an economic analysis that suggests the cuts would cause the loss of 1 million jobs in and around the defense industry.

The companies that were asked to provide information to the Senate are Lockheed Martin Corporation, Raytheon Company, L-3 Communications Holdings Inc., Northrup Grumman Corporation, Huntington Ingalls Industries, the Boeing Company, General Dynamics Corporation, Honeywell International Inc., CSC, SAIC, BAE Systems Inc., ATK, ITT Exelis, EADS North America Inc. and United Technologies Corporation.

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