Lockheed Still Awaiting Sequestration Guidance

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WASHINGTON — More than a month after Congress and the president agreed to a budget for the remaining half of the current fiscal year, Lockheed Martin, the largest U.S. space and defense contractor, is still awaiting guidance from its government customers on how to implement the indiscriminate across-the-board spending cuts known as sequestration, the company’s top official said.

“We’re waiting for them to come out with the details of how they’re dealing with sequestration,” Marillyn Hewson, Lockheed Martin’s chief executive, told a gathering of reporters May 14.

The Department of Defense, which is facing a sequestration cut of some 8 percent to all of its programs, is asking Congress for the flexibility to shuffle funding among different accounts to preserve its top priorities. Cuts of that size could disrupt major development and production programs, forcing delays and driving up costs.

Lockheed Martin expects sequestration to lead to about $825 million in lost revenue this year, Hewson said. The company has run its own internal modeling to get an idea of how the numbers could play out, she said.

Hewson said the company has seen some delays on contract awards but those have been very minor. Lockheed Martin received guidance late in 2012 from the Office of Management and Budget and the Pentagon on what to expect, but that correspondence mostly explained that any sequestration plan would take many months to roll out. 

“We’ve been vocal,” Hewson said. “We’ve been vocal for more than a year. We wanted to raise the flag that it’s not good public policy.”

 

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