Liability Coverage

In response to queries from an Oregon congressman, the Defense Department has released documents indicating that more than 120 of its contracts contain indemnification clauses under which the U.S. government would cover liability costs that contractors could incur related to a variety of work, including some environmental services in the United States and in overseas operations, Defense Environment Alert reports this morning.

Further:

The release of information from a DOD data call in response to the congressional inquiry reveals indemnification clauses for a range of work, including for firms operating hazardous material facilities in the United States and to recover potential radioactive materials during the Iraq invasion, in addition to coverage for the makers of anthrax and smallpox vaccines, according to a Dec. 2 press release from Rep. Earl Blumenauer (D-OR), the congressman who months ago launched an inquiry into DOD's indemnification contract clauses. In the United States, indemnification clauses have been included in contracts to cover chemical weapons storage and destruction activities, according to the documents.

The probe has been driven by Blumenauer's concern that a defense firm -- Kellogg, Brown and Root (KBR) -- could invoke an indemnification clause to require the federal government to absorb the cost of legal claims being made by former National Guard members for exposures to chemical hazards at an Iraq water treatment plant the company oversaw (Defense Environment Alert, Sept. 27). The lawmaker has pressed the Pentagon to declassify the indemnification clause in this contract, which is known as the Restore Iraqi Oil contract, but DOD continues to refuse to do that, he says in the press release. Blumenauer adds that he remains concerned that contracts associated with the Iraq war effort have looser standards of indemnity protection than other DOD contracts.

In response to Blumenauer's inquiry, DOD's acquisition office launched a data call to the military services and other defense agencies to identify indemnification clauses in contracts, any lawsuits that had been filed regarding the contractor's actions, and the amount of money the federal government has paid out in response to the indemnity provisions, according to a Nov. 24 letter from DOD Principal Deputy Under Secretary for Acquisition, Technology & Logistics Frank Kendall. . . .

While the DOD contract summaries "appear to show a diligent, responsible process for work carried out in the United States that protects taxpayers from liability in cases of contractor negligence," it indicates much looser standards for the work done in Iraq, Blumenauer's press release says.

While Blumenauer called the documents release a victory for transparency, he warned that the "documents suggest that contracts associated with our Iraq war efforts may not contain sufficient taxpayer protections in cases of contractor negligence."

"I remain concerned that KBR's contract may be much more loosely drawn, removing incentives for the contractor to behave responsibly and exposing taxpayers to enormous liability and our troops to harm. Why is the Pentagon shielding this contract and protecting KBR?"

Blumenauer vowed to continue to seek declassification.

KBR has previously defended its work done at the Qarmat Ali water treatment plant in Iraq, with a spokeswoman saying that "the record is clear that the Army was to provide a site free of all environmental and war hazards. Once the presence of sodium dichromate was found [at Qarmat Ali], the Army was notified and was fully informed."