Ginman's letter was very clear: "The Department does not anticipate having to terminate or significantly modify any contracts on or about January 2, 2013." He noted that most contracts are fully funded by previously appropriated funds, which are not affected by sequestration. Moreover, any impact of sequestration on "incrementally funded" contracts would occur several months after sequestration took effect and contract officers at DOD would have latitude to work out how that took place, including reprogramming funds to fix problems. That letter went to straight to the source of the lobbying campaign.

The same day, OMB weighed in with significant reassurance. The heads of the Office of Federal Financial Management and the Office of Federal Procurement Policy said that any legal costs contractors may incur as a result of layoffs caused by a sequester would likely be "allowable costs" under their defense contracts.

Seems like that was enough reassurance to the industry, or perhaps defense contractor CEOs realized they were a bit "out over their skis" in threatening layoffs before the election. The retreat on jobs turned into an instant rout. As the spokesman for General Dynamics put it: "We will not issue notices to our employees unless we have specific information about what the impact of sequestration will be on our programs, and we determine that we need to lay off employees as a result of the changes to our programs." And the leader of the layoff charge, Robert Stevens, announced that Lockheed no longer had any plans to distribute such notices to their employees before the election.

Undercut in their "prevent a defense sequester" campaign, the politicians went ballistic. In an interview with Charles C.W. Cooke of National Review, Sen. Graham attacked the administration's interpretation of the law as "exhibit A in the march toward an imperial presidency," and attacked Lockheed for caving: "Lockheed Martin will give into the administration and ignore the law at their peril."

But the battle is over, even if the jobs war, writ large, continues. In reality, this is another indication that, while the sequester would be a miserable way to manage the budget, its impact may be a lot less significant than the rhetoric from all sides suggests.

As one defense program manager put it to me the other day: "You're telling me that if there is a sequester, I have to manage my program with 9.4 percent fewer resources than I thought I would have when I put in the budget request? I can do that; that's what they pay me to do, and I can do it without damage to the program."

Certainly, it can be done without a bundle of layoffs on January 2.

PREVIOUS 12