Chief executive officers of defense contractors led by Lockheed Martin Corp. (LMT:US) and EADS North America went to the Pentagon to urge U.S. Defense Secretary Leon Panetta’s help in averting automatic budget cuts.
Lockheed Chairman and CEO Robert Stevens and his EADS counterpart Sean O’Keefe met with Panetta and his top aides yesterday. Executives from other contractors including General Dynamics Corp. (GD:US) also met with the Pentagon chief, according to a defense official and an industry executive who asked not to be identified discussing the private sessions.
Defense companies are lobbying Congress and President Barack Obama’s administration to avoid automatic cuts to federal spending, known as sequestration. Pentagon spending will be reduced by more than $500 billion over a decade beginning in January unless an accord is reached on an alternative.
Leaders in both chambers of Congress are discussing whether to propose a catch-all bill that would delay the automatic cuts and fund the government through March or later, according to a House aide and industry officials, who asked not to be identified discussing the deliberations.
Panetta has called sequestration a “doomsday formula” that would cut across all Pentagon programs and would be “truly devastating to our national security.” The Obama administration has proposed $487 billion in cuts from previously planned spending over 10 years. Panetta has said Congress has the responsibility to find a solution.
Panetta discussed the consequences of sequestration when he met yesterday “with executives from a number of defense companies,” Department of Defense spokesman George Little told reporters today.
“We are not planning for sequestration,” Little said. “The companies themselves, not at DOD’s behest, may decide to take action in the coming months.”
Stevens and O’Keefe said their companies were concerned about planning for sequestration’s effects, according to the defense and industry officials. They discussed the prospect of sending hundreds of thousands of defense workers letters that they may lose their jobs under requirements of state and federal WARN acts requiring advance notice before jobs are cut.
They also asked about how to charge for overhead costs on Pentagon contracts already in effect when sequestration starts.
The defense contractors declined to comment on what they described as meetings with customers, according to Jennifer Whitlow, a spokeswoman for Bethesda, Maryland-based Lockheed, Guy Hicks, a spokesman for EADS North America based in Herndon, Virginia, and Rob Doolittle, a spokesman for Falls Church, Virginia-based General Dynamics
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