On October 5, Senators Lindsey Graham (R-SC) and John McCain (R-AZ) sent a letter to defense CEOs letting them know how they plan to respond to the aftermath of sequestration. Despite recent guidance from the Office of Management and Budget (OMB) against sending out Worker Adjustment and Retraining Notification (WARN) notices, Senators Graham and McCain remind contractors that compliance with the WARN Act is not optional.
By law, workers must be notified at least 60 days in advance of potential mass layoff. Since recent OMB guidance discouraged the sending of WARN notices and promised government coverage of sequestration related costs regardless, contractors would not be liable for billions of dollars of termination related costs. Instead, the burden of sequestration related costs would fall on the government. According to the Senators’ letter, failure to comply with the law by sending out WARN notices may mean, “the cost to the taxpayer could increase to billions of dollars.”
The Senators clearly state they will oppose any request for funding increases if contractors fail to send out WARN notices and that, “draining additional resources from programs to pay wholly avoidable costs due to failure to issue WARN notices is unconscionable.” McCain and Graham’s letter to defense CEOs warns that we are a mere three months away from the date when sequestration is to take effect and that, “neither the Senate nor the Administration have put forward a plan to address the issue.” Since Congress doesn’t go back into session until November 13, defense CEOs are urged to treat sequestration as imminent and not to ignore the WARN Act and its requirements. Graham and McCain end the letter on an ominous note by saying, “The Congress should not put the taxpayer on the hook if a private company fails to follow the law.”
This daunting letter to CEOs may very well make the recent OMB guidelines for sequestration allowability obsolete. Even though the OMB promised coverage to contractors who choose not to send out WARN notices, Senators McCain and Graham promise to make sure no funds go to contractors who fail to comply with the law. This move by Republican Senators may ensure the release of WARN notices and therefore a sequestration road block in the President’s re-election campaign.
Kimberly Suttle, Research Analyst
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