Industry to Hill: Deal with sequestration aready

Industry to Hill: Deal with sequestration aready

Address the sequestration time bomb and do it soon! That was the message a group of Senators and defense industry leaders hammered home to an audience of Congressional staffers and reporters during a lunch on Capitol Hill today.

“Industry really can’t wait until the lame duck session [to make preparations for the $500 billion dollar defense spending cut], and that is certainly true, it’s true in my company and it’s true in all the companies [in the defense sector,” said Lockheed Martin CEO Robert Stevens, referring to the post-November election session of the current Congress.

At an Aerospace Industries Association-sponsored lunch on the Hill, Stevens warned: “The very prospect of sequestration is already having a chilling effect on the industry. We’re not gonna hire, we’re not gonna make speculative investments, we’re not gonna invest in incremental training because the uncertainty associated with $53 billion of reductions in the first fiscal quarter of next year is a huge disruption to our business.”


Stevens went on to warn that defense companies must legally provide employees with 60 to 90 days notice of any facilities closures and associated job cuts that would be triggered by sequestration, the more than $500 billion across the board cuts in defense spending over the next ten years that are slated to start in January, with a $53 billion dollar cut for FY-13 unless Congress finds a way to rescind them.

Furthermore, while everyone from the Pentagon to the defense contractors agree that sequestration will wreak havoc on the Defense Department’s modernization plans and industry’s profits, no one has accounted for the thousands of subcontractors who will see work disappear, said Stevens.

“To continue to wait, and then as industry to instantly respond to a massive reduction to the availability of funding when we’re already in our year of execution is a massively complicated and unpredictable approach for any business and we don’t have really rational and really good responses,” said the CEO. “All of our companies have thousands and thousands of contracts that have terms and conditions in them that are reinforced by the funding that’s available, and when the funding stops, we will be abrogating all those contracts and there will be thousands of claims for equitable adjustments from small businesses that I don’t believe anybody has included in any calculus about the magnitude of disruption that’s associated with sequestration.”

If sequestration is inevitable, Congress and the Pentagon need to begin work identifying which programs will take the heaviest hits as soon as possible so that the defense industry can try to prepare itself for the cuts, added Stevens

Stevens was joined by Georgia Republican Sen. Saxby Chambliss, whose state has a heavy Lockheed presence, who called for both the Pentagon and his fellow lawmakers to get ready to deal with Sequestration ASAP.

The Pentagon is “not planning on sequestration but they’re gonna have to be prepared for it, and we know that…they’re gonna have to start planning well in advance of any lame duck and anybody that thinks that we can wait till the lame duck to address this issue is kidding themselves,” said Chambliss.

Chief aerospace industry lobbiest Marion Blakey, head of AIA, also took an opportunity to urge action on sequestration, by either preparing for the cuts or heading them off.

“I know that there are many scenarios out there that say, ‘well, lets wait till the lame duck and somehow we’ll solve everything in the lame duck’,” said Blakey.

“I don’t know about you all, but I’ve counted the number of days in the lame duck and in order to accomplish everything that some folks are hoping for would be an absolute impossibility just in terms of time. So we o need to address it now, not only because of that issue, but also because before the election, both [office of management and budget] are going to have to act on the probability, the possibility that sequestration” will happen.

Both she and Stevens said that the defense industry will begin planning for the possible cuts well before next Janauary.

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The fact the same few senators keep telling the DoD and industry they’ll fix it make it clear when it hits the DoD will NOT be prepared and will be hit alot harder in a surprise budget cut. These senators are the problem they say they will stop it but there in the minority and already have stop the DoDs budget and ensure a long and bitter fight over that even before sequestration is even discussed. Its going to happen they might as well plane for it.

Sure the Republicans need the votes, but once the election is over they wont lift a finger to hurt their banker friends.

If a contractor cant survive what is by commercial standards not even a mild recession, they need to free up the oxygen for companies that can and go out of business.

They really had better sort it out sooner rather than later. There are literally a million people, probably a few million, working for defense contractors. Imagine the sheer chaos if a sizeable percentage of those jobs disappeared overnight. It would wreak havoc on the economy and the missions of the various defense agencies and other government agencies who are reliant on contracts for such a large portion of their work.

Are some waiting until the last second to make cuts. What is being done now. Don’t know much but do know that hiring more accountants, lawyers, and political door knockers, won’t lower expenses.

You have no clue what you are talking about.

Everybody ought to know that itfunk is clueless by now.

Sure, imagine the horror if thousands of our best engineers and scientists were to leave the defense industry and were forced to take jobs where they could actually contribute to our economy. Clearly our Chinese masters don’t want that to happen. No, keep borrowing money from China to keep our best and brightest firmly entrenched in thankless jobs where any innovations or progress they make will result in swift and harsh retribution from defense contractors who have manipulated the military procurement systems so it pays them a profit incentive to drag out development and jack up weapons costs as high as possible, thus rewarding sloth and stupidity over innovation and hard work.

And yet every time it is suggested that the US military go to a method of procurement that provides capitalist incentives to provide good weapons on-time and on-budget, all of the defense schills beat their chests and shout endlessly about how capitalism could never work, and Oh-my-god are you trying to destroy our wonderful military industrial complex… So since none of the other rules of common sense or logic apply to defense contractors, I guess we’re supposed to believe both that they can’t survive capitalism and that they not only could but would thrive? Hmm, sounds pretty fishy. Maybe you should break out your talking point charts and go over them one more time.

I agree with DFENS. The defense industry (both on the government and contractor sides) need to restore its integrity and accountability. Since the 1990’s and post 911 time frame we’ve witnessed numerous defense industry fiasco’s, ie: the FCS, LPD-17, LCS, EFV, JSF and the USCG’s deep water program, to name a few. I say bring on the sequestration budget cuts. BUT BEFORE we cut the enlisted ranks or the quantity of existing military hardware items, let’s FIRST cut the DOD civilian staff and bureaucracy. Then let’s reduce the number of flag grade offices. It’s this oversized and undisciplined DOD bureaucracy, and a bloated flag office corps who conceived and then failed to properly execute the aforementioned programs.

In addition, other culprits are those senators and congress people who receive campaign funds from the defense industry via their PACs and super PACS, it’s and it’s those defense executives whose priority is their yearly bonuses and financial standing on Wall Street who are who perpetuating this whole wasteful system. The ongoing recession has brought a “judgment day” upon the housing and to a certain extent the banking industry for their past greed and excesses. Judgment day for the military industrial complex is overdue and needed.

DoD already spelled out big cuts, narrowing it down from other potential cuts that would simply be added to the chopping block if needed. The companies just want to know if they need to hire lobbyists (engineers might be more useful) to defend their shareholders. Elections get awkward for politicians who want to reduce the deficit but keep spending on sacred cows.

You know they have to do Environment Ompact Studies before they do something. I think they should do an Enonomic Impact Study to determine the following: Amount of Federal Income Tax, Social Security and Medicare taxes will be lost just in the defense industry, how many people will be laid off and the amount of money it will cost in Unemployment, Food Stamps and what ever else you are given by the government when your unemployed. Then determine how many more people in supporting sectors will be affected by these cuts

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