Pentagon sees mass layoffs if budget cuts prevail

The Pentagon said on Thursday it would expect hundreds of thousands of layoffs across the defense industry if lawmakers did not take action to avert an additional $500 billion in defense budget cuts that could take effect in January 2013.
Frank Kendall, the Defense Department's acting under-secretary for acquisition, technology and logistics, said the cuts would force the Pentagon to break many hard-won contracts with industry, including a multibillion dollar deal with Boeing Co for development of a new refuelling plane. The Navy's contracts with Lockheed Martin Corp and Australia's Austal Ltd for littoral combat ships would also be vulnerable if the mandatory cuts, known as sequestration, took effect as planned, Kendall told the Senate Armed Services Committee at a confirmation hearing to stay in the job.
Kendall said the defense industry would face fairly deep cuts applied indiscriminately, rather than on a targeted basis, given the way the Budget Control Act was worded. The Pentagon last month unveiled a budget proposal for fiscal 2013 that would begin to implement $487 billion in spending cuts that the White House and Congress agreed to make, spanning the next decade. If lawmakers did not come up with $1.2 trillion in other deficit-reducing measures, the Pentagon would have to cut its proposed funding by another $500 billion.