Serco issues WARN notices, rejecting most contractors’ wait-and-see approach

April 7, 2013

After months of handwringing over whether they would have to issue sequestration-related layoff notices, defense contractors from BAE Systems to Lockheed Martin ultimately decided against it.

But one contractor has been quietly issuing the notices to hundreds of employees in Maryland and Virginia.

Reston-based Serco, a professional services company, has notified about 770 employees in Maryland and Virginia that their jobs may be in doubt.

Layoff notices are required under the Worker Adjustment and Retraining Notification Act, or WARN Act, when there might be mass layoffs or a plant might have to close.

As sequestration loomed last summer, contracting executives appeared on Capitol Hill, telling Congress that they might have no choice but to warn all of their employees that their positions were in danger, given the uncertainty sequestration posed.

But, in October, many backed off those plans, following a White House memo that assured contractors that if sequestration occurred and an agency terminated or changed a contract that resulted in a plant closing or mass layoff, the contractors’ liability and litigation costs under the WARN Act would be “allowable costs” covered by the contracting agency.

And since sequestration went into effect earlier this year, contractors have not renewed talk of WARN notices.

Lockheed, McLean-based Science Applications International Corp. and the Arlington-based U.S. unit of BAE Systems, for instance, confirmed last week that they have not issued WARN notices related to sequestration (BAE issued some WARN notices to ship repair employees in Virginia, but said those were related to federal budget issues stemming from the continuing resolution).

Sean O’Keefe, chief executive of Herndon-based EADS North America, told Congress last year that the company would likely issue the notices in advance of sequestration.

“It’s not something we want to do,” he said in prepared testimony. “But it appears the law requires us to do it.”

An EADS North America spokesman said last week that the company has not issued notices.

Serco, however, has issued WARN notices to 308 employees in Columbia, 216 in Chesapeake, 82 in Suitland, 75 in Harrisonburg, 38 in Rockville, 27 at Aberdeen Proving Ground and 23 in Bethesda.

“We were advised by an attorney ... that it would be our best course of action to issue the notices,” said Candy Curtin, the company’s senior vice president of human resources, in an interview.

The company sent out conditional notices to employees, based “on what may happen, not necessarily what will happen,” Curtin said. She said only a handful of employees’ jobs have actually been cut by sequestration at this point.

Like others, Serco is waiting for news on particular contracts before making more definite decisions. BAE said it is holding off on notices as it waits for more information.

“We expect in time that our customers will provide that guidance on a program-by-program and contract-by-contract basis,” the company said in a statement. “[W]hen we receive such guidance, we will fulfill all of our legal obligations to notify potentially impacted employees.”

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