The Defense Drumbeat Blog

Jul 18 2012

“Absence of guidance"

Defense CEOs Point to Administration’s Failure to Provide Clarity on Sequestration as Key Hurdle

Washington - In a House Armed Services Committee hearing today on sequestration implementation, CEOs and Presidents from a cross-section of the nation’s defense companies highlighted that the “absence of guidance” from the executive branch on sequestration is causing them to prepare for the possibility of mass layoffs. In addition to layoffs, the leaders testified that a key concern is a lack of preparedness, impacting our national security and troops on the front lines. Key excerpts from their testimony are below:

Get Microsoft Silverlight

“The near-term horizon is completely obscured by a fog of uncertainty.”
“From an industry perspective, because of the specter of sequestration, the near-term horizon is completely obscured by a fog of uncertainty. With just 167 days remaining until it is triggered, we have little insight as to how sequestration will be implemented … no insight into which programs will be curtailed, which sites will be closed, which technologies will be discontinued, or which contracts will be reformed.”

“The impact on industry would be devastating, with a significant disruption to ongoing programs and initiatives, leading to facility closures and personnel reductions that would significantly disrupt advanced manufacturing operations, erode engineering expertise, and accelerate the loss of skills and knowledge.”
--Robert Stevens, CEO of Lockheed Martin

“Most immediately, the administration must communicate today its sequestration implementation plan to the public, our armed forces and to industry.”
“The current uncertainty has effectively put sequestration and its consequences in motion. In the absence of any guidance, industry is already holding back investments, questioning the fairness of ongoing competitions, doubting the viability of existing contracts and starting to trim capacity.”

“In the absence of definitive guidance from DoD, OMB and the Defense Contract Management Agency, we feel compelled to act in the spirit of this law and in all likelihood will issue WARN notices to those employees engaged in ongoing federal contract activities.”
--Sean O’Keefe, Chairman and CEO of EADS North America

“Some clarity from the Office of Management and Budget...would be helpful”
“As an industry, we are already seeing the impacts of potential sequestration budget cuts today…In the near term, some clarity from the Office of Management and Budget about how sequestration cuts would be implemented would be helpful in avoiding some of these impacts.”

“If sequestration were to go into effect, no amount of juggling is going to preserve my workforce or help me maintain my supply base.”
--David P. Hess, President of Pratt and Whitney 

“The impending threat of these wholesale budget cuts is of deep concern to me.”

“So these cuts will not just impact a few large companies. These cuts will flow down the supply chain and through the broader economy. They will impact companies, like mine and threaten the jobs of thousands of skilled workers.”

“I believe that this dedication to providing innovative products for the defense industry helps to illustrate the potential impact sequestration will have on my business and many others. The same people who have put their hearts, souls and backs into developing the next generation of test equipment … are left wondering if there will be a next generation.”
--Della Williams, President of Williams-Pyro  

Full text of the prepared testimony can be found on the Armed Services website hearing page