One of the many less-fun things about being an employee of a defense contractor is the constant reminder that you are expensable. You and your salary and benefits are an operating expense, one of the items on the accounts payable side of the company’s financial balance sheet that is hopefully balanced by an item on the accounts receivable side under a government contract. If it isn’t, you’re just a drain on the company’s bottom line. Unless the government signs a new or renewed contract, it’s only a matter of time before the company sends you a pink slip.
Enter the WARN Act of 1988, which requires companies to notify employees at least 60 days in advance if the contract they’re working on is expected to expire. A lame idea, actually, because it pushes the ugliness of layoff notices onto the companies, when it is the government’s indecisiveness on whether to renew defense contracts that is the source of the problem. But at least it gives the hapless defense consultant 60 days to figure out where the next mortgage payment will come from.
That’s why you have to love this latest twist: Unless Congress and the President acts, a $110 billion budget cut, half coming from defense, will automatically take place on January 2, 2013. This cannot help but cause contract terminations and resultant layoffs. Of course, none of the politicians want to do anything about the budget before the election, and the White House certainly doesn’t want all those pink slips going out in the mail on Election Day!
What to do? Have the Labor Department announce that the WARN Act magically doesn’t apply!
White House to defense contractors: Don’t warn employees before election they may get laid off
Obama’s Labor Department is trying to spare the president the embarrassment of having hundreds of thousands of layoff notices arrive in the mail just before Election Day, including in the crucial swing state of Virginia. It issued a guidance [link to pdf] yesterday to defense contractors that just happened to advise them not to send federally-required warnings to their employees that they could get pink slipped because Washington can’t get the budget under control.
— Sean Higgins, Washington Examiner, 07/31/2012 | http://tinyurl.com/cvvqruk
So, if you’re a defense consultant, put on a happy face, pay no attention to that man behind the curtain while casting your ballot, and good luck coming up with that mortgage payment next year!