NDIA Letter

The National Defense Industrial Association last week sent a letter to Deputy Defense Secretary Ashton Carter asking new questions about the effects of sequestration on the defense industry:

We have welcomed the open and productive dialogue we have had with you and Secretary Panetta on these issues and in that spirit would appreciate your guidance and clarification on a further matter. An important question, that directly impacts individual company decisions on how and when to move forward with possible sequestration-related layoffs or site closures, involves whether the costs incurred as result of WARN Act compliance will be determined allowable by the Department of Defense. For instance, if a particular company decides to wait for the January 2 sequestration implementation date specified in law to begin the required WARN Act notice process, will the Department determine that the costs resulting from retaining the affected work force through the applicable WARN Act period to be allowable and be willing to use advance agreements or a similar device to effect this policy position? This matter has been consistently raised by a number of our member companies and identified as s critical to their planning efforts.

We understand the question of sequestration WARN Act applicability is complex and reaches beyond the purview of the Department of Defense. However, further clarity and assurances on how the Department will handle associated cost allowability issues would be of significant help as our industry further reviews and begins to establish options for managing the significant impacts of budget sequestration.

And to view a slew of defense contractors' letters sent to Congress in the past month regarding sequestration, click here.