New documents made public by Rep. Earl Blumenauer (D-OR) show that many of the largest defense contractors, including Raytheon, Boeing, General Dynamics, L-3 Communications, Lockheed Martin and BAE Systems, all have or had contracts with the Pentagon containing indemnity provisions, potentially immunizing the contractors from legal accountability for harm they cause.
The documents provide information on contracts issued by the Army, Navy, Air Force, and other defense agencies that include indemnification provisions, whether lawsuits related to those contracts have been filed, and the amount of money the government has paid to indemnify contractors.
The documents identify approximately 100 such contracts over the last ten years, only one of which has resulted in indemnification. That occurred when the Army paid Emergent BioDefense Operations Lansing, Inc., $646,000 for litigation expenses related to a contract to manufacture anthrax vaccine. The company sought over $1.5 million, but the Army determined the rest of their claims were not “just and reasonable.”
About two months ago, POGO blogged about the Department of Defense (DoD) secretly immunizing one of its contractors from legal accountability for the harm they cause. National Guard veterans who filed lawsuits accusing KBR of exposing them to a cancer-causing substance called hexavalent chromium in Iraq found out during discovery that KBR’s contract with the U.S. Army contains a classified provision indemnifying KBR for any property damage, injury or death occurring at all KBR worksites. If the plaintiffs win in court or reach a settlement, taxpayers will be on the hook for potentially millions of dollars in damages, costs and fees. The Oregonian obtained a letter from KBR to the U.S. Army Corps of Engineers claiming that the total cost of soldiers’ claims against the company could exceed $150 million.
Rep. Blumenauer represents one of the states where a KBR hexavalent chromium lawsuit is pending, and has taken the lead on this issue. In addition to sponsoring legislation placing restrictions on the use of classified indemnity provisions, Blumenauer is demanding answers from DoD. The documents he posted this week were turned over by DoD in response to his inquiries.
The Pentagon is still refusing to declassify the KBR indemnification provision. POGO wonders if they are hiding the fact that KBR was given a special, all-inclusive immunity that sticks taxpayers with the bill under all circumstances, even when KBR is grossly or criminally negligent. Rep. Blumenauer’s aforementioned bill, the Accountability for Defense Contractors Act, would expressly prohibit indemnification in cases where the contractor acted with gross negligence, willful misconduct, or lack of good faith. Contractors should not have an incentive to behave recklessly.
It remains to be seen how widespread this practice is among the other federal agencies. If the government has become so dependent on contractors to perform high-risk tasks that it must agree to absolve them of liability when things go wrong, maybe it’s time for those tasks to be moved in-house.
-- Neil Gordon
See also: Secret Deals May Lead to Bailouts for Defense Contractor Misconduct
Wow, this is a real news flash! You couldn't just read any government contract and find this out. Oh, wait, yes, you could.
Is this a nation of morons? What do you want these defense contractors to provide, weapons that provide the contractors with the least amount of exposure to lawsuits, or weapons that work effectively? If you want the former, then kiss innovation goodbye. Not that there's much innovation left after you dimwits decided it was a good idea to pay for development anyway, but, rest assured, whatever was left will be killed off if you eliminate the indemification clauses from weapons contracts.
Funny, isn't it, that you never hear anyone "leak to the press" any information about the effect paying profit on development has had on government contracting, but when it comes to yet crap like this that will make our armed forces less capable is "leaked" and shows up all over the news. Wow, it's almost like someone doesn't like us.
Posted by: Dfens | Dec 05, 2010 at 12:38 PM
There are various bins of "standard" indemnity clauses. The government tries to avoid using them, believe it or not, but in war zones it believes it needs to as an incentive to get contractors to go there in the first place. That may be true for some services in some situations, especially when the firms are doing what uniformed service members used to do. For example, in Vietnam, Army Supply Corps troops drove fuel-truck convoys--and took a lot of casualties. In Iraq and Afgh, KBR and local contractors do this, at high risk, but at high reward. Indemnity comes in, for example, if, say, a fuel tanker veers out of control after its contractor driver is shot or hits an IED and the truck goes into a school. Indemnification of the company by the govt, arguably, makes sense and is fair in this case. In others, it would be nuts, e.g., indemnifying a firm for electrical work that turns out to be faulty/lethal. So, the govt should have a bias not to indemnify except in specific contractor roles, or perhaps a combo of role plus geo location. This subject is not worth airing without such specifics.
Posted by: Observer V | Dec 03, 2010 at 08:48 PM