IIa Chairman Meets with Defense Secretary on Sequestration

Information International Associates (IIa) Chairman of the Board Bonnie C. Carroll and twenty-six other top executives from companies representing the industrial base that supports the Department of Defense (DoD) recently met with the U.S. Defense Secretary Leon Panetta to discuss how sequestration would impact the defense industry and DoD. Sponsored by the Aerospace Industries Association, National Defense Industrial Association, and Professional Services Council, this meeting was one of the largest to date between DoD leadership and industry on the subject of sequestration.

If sequestration occurs, the Budget Control Act of 2011 to lower the U.S. deficit would impose $500 billion in mandatory cuts to military spending over the next decade.With potential mandatory cuts  and massive job impacts looming, the meeting attracted high-level executives representative of the entire industrial base that supports DoD, including prime contractors, subcontractors, hardware manufacturers and service contractors. Joining Panetta was Frank Kendall, the Pentagon’s acquisition chief; Bob Hale, comptroller; and Brett Lambert, the industrial policy chief.

The group discussed four scenarios which could become reality in the coming months, including potential actions Congress might take to prevent the automatic budget cuts, including:

  • Congress does not act and sequestration occurs.
  • Congress creates a plan during the lame duck session to avert sequestration.
  • The Congressional Supercommittee finds $1.2 trillion in cuts to avert sequestration.
  • Congress creates a continuing resolution to delay sequestration for a year or two when the political environment is less heated.

The group also discussed the FAIR Act and the implications of sending possible lay-off notices to thousands of contract employees before a U.S. election.

The group did not attempt to gather consensus for a common path forward, however all attendees were in strong agreement to apply pressure on Congress to modify the Budget Control Act of 2011 in case lawmakers are not able to agree on ways to reduce the country’s debt.  

Ms. Carroll observed that “the tenor of the concern and involvement of the Defense Contractor community in the sequestration discussions has been incredibly more intense than what we have seen with the DOE contractor community, but hits will be evenly applied.  I was happy to see a more recent local uptake on these issues within ETEC.  It was interesting also to see the recent DOE requirement to send out a FAIR Act memo telling contractors not to take action on layoff notices.  Sequestration could have very serious impact on the Oak Ridge-Knoxville contractor community.  We’re doing some serious contingency planning for the various scenarios.”