Top Pentagon, defense industry leaders to hold talks on sequestration

The Pentagon’s No. 2 official will sit down with several top industry leaders to discuss how the U.S. defense sector will cope with the near-term fallout from severe budget cuts slated for next year.

Deputy Defense Secretary Ash Carter will meet with the Aerospace Industry Association’s (AIA) executive committee on Sept. 18 to go over details on how council members are preparing for the automatic defense cuts under sequestration, according to a DOD source.

{mosads}The committee’s membership includes the heads of Pratt & Whitney, Northrop Grumman, BAE Systems, General Dynamics, Raytheon and Lockheed Martin.

While Pentagon officials have been mum on the specifics, AIA President and Chief Executive Officer Marion Blakey told Reuters on Wednesday the meeting would be focused on how near-term deals between DOD and U.S. defense firms will be affected by sequestration.

The high-level meeting will be “undoubtedly mostly about sequestration and how contracts will be handled,” Blakey told Reuters. 

The upcoming meeting with Carter comes months after Defense Secretary Leon Panetta met with members of the Defense Industrial Base Task Force in June to talk sequestration.

The DOD-initiated task force, which is made up of senior defense industry executives from AIA, National Defense Industry Association and the Professional Services Council, conveyed their growing concern over sequestration and its potential impact to the defense sector.

The Pentagon is staring down a $500-billion across-the-board budget cut due to Congress’s failure to trim $1.2 billion from the national deficit last year. The cuts, included in the White House’s so-called sequestration plan, are set to go into effect in January. 

While lawmakers on both sides of the aisle continue to wrangle over how to come up with additional revenue to offset the cuts, defense firms are already contemplating severe reductions to their workforces over the coming months. 

Lockheed Martin alone has estimated they could lose upward of 10,000 workers as a result of sequestration. 

Should defense firms proceed with the workforce reductions, the layoff notices could come as early as November, days before Americans head to the voting booths for the upcoming presidential election.