Monday, October 1, 2012

Govt Offers Bribe; Lockheed Accepts

With sequestration of government spending on defense looming, the impending large layoffs in the defense industry would trigger the WARN act which would require the defense contractors to issue warnings of large impending layoffs. Unfortunately, due to the timing involved, these notices would be issued just before the upcoming elections.

Failing to issue the advance notice can result in legal penalties, but the administration has offered to pickup the tab. Lockheed Martin,has apparently agreed to the offer:
The Obama administration issued guidance Friday that said defense firms’ costs would be covered if they have to layoff workers due to canceled contracts under the across-the-board cuts set to take effect Jan. 2.
Keeping in mind the administrations record on political promises, I wouldn't take this offer on a bet. I would, however have my legal department work out the costs associated with failing to pre-notify my employees including the government penalties and probable private lawsuit awards, and demand cash up front. People in a position to know have suggested that the offer itself is illegal.

The administration would have everyone believe that the sequestration can easily be avoided:
A partisan fight has developed over the defense reductions. Republicans say the cuts should be reversed, while Democrats say added tax revenue should be part of any compromise. The cuts stem from last year’s clash over raising the debt limit. The automatic cuts were set in motion after Congress and Obama failed to agree on a broad debt-reduction package.
If the Republicans simply sell out their constituents and agree to huge tax increases.

Disclosure: I used to work for Lockheed Martin, and still have a high regard for the company and its management.

Lockheed accepts and Obama wins: Lockheed's contracts are renewed in the lame-duck congress.
Lockheed accepts and Obama loses: Most of Lockheed's contracts are renewed.
Lockheed declines and Obama loses: Lockheeds contracts are tied up in the lame-duck Senate and filibustered by bitter Dems in the next Senate.
Lockheed declines and Obama wins: Lockheed's contracts are all transferred to Airbus.

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