Defense companies weigh in on sequestration

If a series of automatic federal budgets cuts were to go into effect through a process known as sequestration, it would drastically alter the business landscape for many of the region’s prominent defense contractors. Here’s a primer on what the companies have said and done so far when it comes to sequestration.

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Lockheed Martin

The Bethesda-based contractor had planned to send layoff notices to employees, which it claimed were required under a law known as the WARN Act. It backed off when the federal government gave new guidance. The Office of Management and Budget wrote in a memo that contractors' liability and litigation costs related to WARN would be "allowable costs" covered by the contracting agency.

Tami Chappell / Reuters

Northrop Grumman

Wes Bush, the company's chairman, chief executive and president, has spoken out against sequestration, including making an appearance at a Stop Sequestration Rally in Crystal City over the summer. At another event, he said Northrop has started making cuts in "a rational way." But sequestration would be far more painful. “If faced with a cliff where the next day you’ve got to take X percent out ... it will not be pretty,” he said.

Jeffrey MacMillan / For The Washington Post

BAE Systems

Linda Hudson, who heads BAE Systems' Arlington County-based U.S. business, has said sequestration is creating significant uncertainty. "The environment is wreaking havoc on all of us and our ability to do rational things," she said in an interview with Reuters last year. The company had considered sending layoff notices to all of its employees but backed off those plans. Here, two BAE Systems employees are pictured at a naval yard.

David Moir / Reuters

General Dynamics

The uncertainty created by sequestration stopped General Dynamics from repurchasing shares last quarter, Jay L. Johnson, the company's former chief executive said in October. "In terms of capital deployment, we remain cautious given the unprecedented uncertainty in the coming months caused by the threat of sequestration," he said during a call with investors. Here, employees work on an Abrams battle tank.

Matt Sullivan / Reuters

Science Applications International Corp.

John P. Jumper, who heads SAIC, has said he is becoming less optimistic that the government will act to avert sequestration. "I’m a glass half-full kind of guy ... and I’ve got to admit that my glass is draining as we get closer to the day,” he said in a September speech. “You can’t do anything really to prepare, except doing things like making sure you’ve got your costs under control and preparing for what could be the worst.”

Jeffrey MacMillan / For The Washington Post

Booz Allen Hamilton

Samuel R. Strickland, Booz Allen Hamilton's chief financial officer, said that the company hasn't taken an official stance on whether sequestration will happen, but he correctly predicted it would be deferred. "Even knowing that would give us a fair amount more insight into what our [fiscal 20]14 is going to look like than we have right now," he said during a call with investors in October. Pictured is the company’s cyber-facility in Maryland.

Jeffrey MacMillan / For The Washington Post

EADS North America

At a congressional hearing over the summer, Sean O'Keefe, who heads EADS North America, said the cuts would take a toll on his company. EADS fears "that the government's reluctance to make difficult choices and apply a well-aimed fiscal razor will mean that the federal budget, and particularly defense, will get the equivalent of a shave with a chain saw," he wrote in his submitted testimony. This photo shows one of the company's aerial refueling tanker aircraft.

/ European Aeronautic Defence and Space Co. via AP

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