Defense Department Issues Guidance on Sequestration - "Continue Normal Spending"

Last week the Office of Budget and Management (OMB) circulate a memo to the heads of executive departments and agencies to clarify issues raised by the potential impact of sequestration as set forth by last year's Budget Control Act. In the memo, OMB stated it would be holding discussion on issues with agency staff over the coming months to develop plans for operations for FY13.

In response, Defense Department Deputy Secretary Ashton Carter issued a memo providing guidance to DOD personnel, calling on them to not make any decisions or changes in preparation for sequestration.

In order to remain consistent with guidance from OMB, DOD is instructed to "continue normal spending and operations. We do not want our programs, personnel, and activities to begin to suffer the harmful effects of sequestration while there is still a chance it can be avoided."

Deputy Secretary Carter directs commanders and managers in the DOD to continue their defense missions under current laws and polices - this includes avoiding any attempt to curtail planned training, maintenance, healthcare or family programs.

Below is the text of the memo:

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This memo comes after much heated discussion and debate between the Pentagon and the Defense Industrial Base over uncertainty in their workforces' future. Lockheed Martin CEO Robert Stevens warned earlier this year that he would issue lay off warnings in late October, with elections right around the corner, because of the Jan. 2 offset of $55 billion in automatic cuts for FY13 - i.e. sequestration.

However, after the issuance of the OMB and DOD memos, many in the defense industry have backed off lay off threats, as contracts would likely need to be renegotiated under a sequester, but not all at once. Yet taxpayers could end up paying the costs of sequestration, as industry could bill the government for losses of contracts, factories and workers.

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