Sequestration memo sets stage of allowable costs

In its latest guidance, the White House has set the parameters under which it will let contractors bill the government for the cost of layoffs and contract changes caused by sequestration, if it occurs.

The Sept. 28 memo also reiterates the Labor Department’s position that potential for sequestration does not trigger the Worker Adjustment and Retraining Notification Act, known as the WARN Act, that requires companies to give 60 days of notice before a layoff.

The White House said that contractors can bill the government for costs under two circumstances.

1. If sequestration occurs, and it causes a company to lay off workers or close a plant.

2. The contractor has followed Labor Department guidance on sequestration, and has competition costs for WARN Act liability as “determined by a court as well as attorney fees and other litigation costs.”

A contractor can bill for the litigation costs whether or not they win the litigation, according to the memo from Daniel Werfel, controller of the Office of Federal Financial Management, and Joseph Jordan, administrator for Federal Procurement Policy.

In their memo to agency chief financial officers and senior procurement executives, they said other costs can be billed if they are allowed under the Federal Acquisition Regulation.

The memo also restates the Labor Department position: because of the uncertainty of whether sequestration would actually occur, complying with the WARN Act would cause states to waste resources on employment assistance activities and create “unnecessary anxiety and uncertainty.”


About the Author

Nick Wakeman is the editor-in-chief of Washington Technology. Follow him on Twitter: @nick_wakeman.

Reader Comments

Wed, Oct 3, 2012 Brian

This WH does not believe in the rule of law. They must go. Get out and vote against this by voting for Romney. Its our last chance

Tue, Oct 2, 2012

This is ridiculous - the government can't just change the rules to help with the election. WARN is a basic HR tenant instilled in HR professionals and companies have more ethics than to just buy into a cheap election ploy.

Tue, Oct 2, 2012 Huntsville AL

The Congress made the law, the President only signed it.

Tue, Oct 2, 2012 Marine FA18 Pilot Colorado

Industry better check the fine print to find the escape clause the administration will use AFTER the election to default on these promises! The past 4 years have shown they have NO regard for obligations or commitments so why would they start honoring them now? And need I point out that this very effort by them to renege on a written requirement (in this instance, the WARN Act is proof that they will do what THEY deem necessary and in their own best interests. And what is even MORE amazing is that the media is giving them an utter pass on this blatant willingness to bilk the taxpayers........ again..... and again......and again!

Tue, Oct 2, 2012

You’ve got to be kidding. Shifting the knowledge of the impact of sequestration until after the election. Seems like the administration is taking forced campaign contributions out of US taxpayers to make sure sequestration is not known about before the election and using tax dollars for litigation after it goes into effect. Shameful.

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