An Update on Sequestration-Related WARN Notices
DATE: October 1, 2012
TO: All Lockheed Martin Employees
FROM: Bob Stevens, Chairman and Chief Executive Officer
Chris Kubasik, Vice Chairman, President and Chief Operating Officer
SUBJECT: An Update on Sequestration-Related WARN Notices
For the better part of this year, we and others in industry and government have worked to raise awareness in Congress as to the devastating effects of sequestration -- the federal law passed last year through the Budget Control Act that forces automatic across-the-board cuts in government spending. In July, we informed you that, without clear direction from the government about how these cuts would be implemented, the corporation could issue conditional Worker Adjustment and Retraining Notification (WARN) notices to a substantial number of employees.
We have been working closely with the government to understand our obligations under the WARN Act and to ensure our employees are provided fair treatment and appropriate notice, if their jobs are impacted by sequestration. On Friday afternoon the U.S. Office of Management and Budget (OMB) and the Department of Defense (DOD) released guidance clarifying responsibilities under the WARN Act and outlining their timeline for making sequestration-related program decisions.
After careful review of the additional guidance provided by the Office of Management and Budget and the Department of Defense, we will not issue sequestration-related WARN notices this year. The additional guidance offered important new information about the potential timing of DOD actions under sequestration, indicating that DOD anticipates no contract actions on or about 2 January, 2013, and that any action to adjust funding levels on contracts as a result of sequestration would likely not occur for several months after 2 Jan. The additional guidance further ensures that, if contract actions due to sequestration were to occur, our employees would be provided the protection of the WARN Act and that the costs of this protection would be allowable and recoverable.
We remain firm in our conviction that the automatic and across-the-board budget reductions under sequestration are ineffective and inefficient public policy that will weaken our civil government operations, damage our national security, and adversely impact our industry. We will continue to work with leaders in our government to stop sequestration and find more thoughtful, balanced, and effective solutions to our nation’s challenges.
If sequestration were to happen, we are compelled to comply with the law and will do so as respectfully and as ably as we can. While we work to stop sequestration we will also continue to petition the government to outline exactly how sequestration will be implemented so that we can responsibly prepare for the impact to our employees and our business. We will keep you informed through direct communication and our LM News series.
Your commitment to delivering to our customers has never wavered despite the uncertainty that sequestration has caused. We’re proud of your resilience and appreciate your continued focus on our global security mission. Our values and integrity distinguish us, and will continue to distinguish us into the future.