McCain Threatens to Block Contractor Payments From Pentagon

October 3, 2012

The top Republican on the Senate Armed Services Committee said today he would move to block Pentagon payments to defense contractors facing layoff-related expenses from automatic budget cuts set to begin in January.

Senator John McCain of Arizona faulted guidance from the Office of Management and Budget last week saying the government would cover legal and compensation costs of contractors facing spending cuts and held liable for not giving enough notice of layoffs. He accused President Barack Obama of “telling contractors to ignore the law” so that layoff notices wouldn’t be delivered before the Nov. 6 election.

“Companies have a choice whether to rely on OMB’s politically-motivated guidance or to comply with the law,” McCain said in an e-mailed statement. “But I can assure them that I will do everything in my power to ensure that taxpayer dollars are not used to compensate contractors who do not comply with the law.”

The automatic spending cuts, known as sequestration, would take effect Jan. 2 if U.S. lawmakers and Obama fail to agree on a long-term plan to reduce federal deficits. Military spending would be reduced by as much as $500 billion over the next decade, including as much as $54.7 billion in fiscal 2013.

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