White House Offers to Pay Defense Contractors’ Legal Expenses for Breaking the Law to Cover for White House
The audacity of bribery – White House Moves To Head Off Sequester Layoffs:
Some defense companies—including Lockheed Martin, BAE Systems and EADS North America—have said they expect to send notices to their employees 60 days before sequestration takes effect to comply with the Worker Adjustment and Retraining Notification Act, which requires companies to give advance warning to workers deemed reasonably likely to lose their jobs…
So the Office of Management and Budget went a step further in guidance issued late Friday afternoon. If an agency terminates or modifies a contract, and the contractor must close a plant or lay off workers en masse, the company could treat employee compensation costs for WARN Act liability, attorneys’ fees and other litigation costs as allowable costs to be covered by the contracting agency—so long as the contractor has followed a course of action consistent with the Labor Department’s guidance. The legal fees would be covered regardless of the outcome of the litigation, according to the OMB guidance issued by Daniel Werfel, controller of the Office of Federal Financial Management, and Joseph Jordan, the Administrator for Federal Procurement Policy.
This is obviously and quite brazenly about election optics. I suspect that Congressional Democrats and the White House, when agreeing to the sequestration arrangement, simply assumed it would have no effect until after the first of the year — they didn’t do their homework and so had no idea that shutting down defense contracts would require WARN notices to be sent out right before the election. The delicious twist to this is that in states like Colorado with both a large defense industry presence and mail-in early voting, the WARN notices could very well arrive in the same delivery as the recipients’ general election ballot.*
Breaking it down, when the effects of a particular law will look bad for the President’s reelection, he offers to pay back those subject to the law if they break the law on his behalf. How can this possibly be legal? And what sort of precedent could this set? Could he next pressure large corporations to withhold until after the election critical negative information that might put the lie to his campaign’s claims of economic recovery, with the promise that the fedgov will pay their legal fees when the SEC or other regulatory agencies come after them for violating accounting and reporting laws? (I know, what a ridiculous suggestion…)
It took a much less personal last minute controversy to turn voters against Colorado’s GOP Senate candidate in 2010 — imagine the impact on the vote in Colorado of tens of thousands of residents getting their layoff notices in mid-October due to Obama’s inability or unwillingness to do his job as President.
* – depending on how early they are sent out…60 days before January 2, 2013 is November 3, but if it is the case that WARN notices are required to be received no less than 60 days in advance, they would need to be mailed out roughly two weeks before that date.
UPDATE (10/1/2012): Lockheed Martin blinks…sorta: At White House Request, Lockheed Martin Drops Plan to Issue Layoff Notices
In the corporate email announcing this to us this morning (from which I think ABC is quoting), it was explained – persuasively – that even if sequestration happens as of January 2, it will be some time after that date before contract suspensions or cancellations are issued. So, putting out WARN notices on November 3 would be a bit premature.
Hm. I still believe from the earlier reporting that the admin was putting undue pressure on private companies to keep them from harming Obama’s campaign — I don’t think there’s any question about it. But here, either the matter has just been rendered moot as far as the election connection goes by the belated 0realization that the cancellations would take time to work through the system, or the administration has found a legal way to avoid the prompt issuance of WARN notices by promising to delay the triggering actions. Either way, however, their actions reveal their willingness to use that undue pressure, which is…illuminating.