Defense Base Act Workmans Compensation
Legal Resources
Despite being inadequate, the Defense Base Act was intended to benefit
the overseas US Government funded contract worker.
In addition to taking away some of your most basic rights the DBA is now
being "interpreted" by insurance companies, their defense lawyers and
some judges to delay and deny benefits.
Is your lawyer working in your best interest or just going along with this?
Legal Resources
Despite being inadequate, the Defense Base Act was intended to benefit
the overseas US Government funded contract worker.
In addition to taking away some of your most basic rights the DBA is now
being "interpreted" by insurance companies, their defense lawyers and
some judges to delay and deny benefits.
Is your lawyer working in your best interest or just going along with this?
| A person including, but not limited to, an employer, his duly authorized agent, or an employee of an insurance carrier who knowingly and willfully makes a false statement or representation for the purpose of reducing, denying, or terminating benefits to an injured employee, or his dependents pursuant to section 9 [33 USC § 909] if the injury results in death, shall be punished by a fine not to exceed $ 10,000, by imprisonment not to exceed five years, or by both. |
Disclosure
Exclusive remedy
Repatriation
First Choice of Doctor (for each injury)
Third Party Medical
MMPI 2 and the Fake Bad Scale
Independent Medical Evaluations
Exclusive remedy
Repatriation
First Choice of Doctor (for each injury)
Third Party Medical
MMPI 2 and the Fake Bad Scale
Independent Medical Evaluations
Contractors on the Battlefield: Special Legal
Challenges
By Rand L. Allen and William A. Roberts, III
April 2, 2003
The role of federal contractors has been expanding in the areas of front-
line and near front-line support for the United States military and other
government agencies. Both the war with Iraq and the ongoing war on
terrorism have increased the demand for the services of contractors in so-
called "hot zones," areas in which military activities are either impending
or ongoing. In addition, certain contracts that support defense activities
may be impacted by increased demand and priority considerations, as
well as heightened security restrictions that may cause interference with
contract performance. The Government Contracts Practice of Wiley Rein
& Fielding LLP represents a large number of federal contractors who
have faced many of the unique challenges posed by their expanding roles
when providing support to their U.S. customers. Our practice draws on its
broad expertise in advising and representing clients in a wide variety of
contracting experiences, as well as our significant contacts and
relationships with government agencies and officials. This summary
discusses some of the special contracting issues and challenges for
government contractors whose employees work in these areas.
I. Compensation for Employee Injury, Detention or Death
The Defense Base Act ("DBA") and War Hazards Compensation Act
("WHCA") extend workers’ compensation for employees who are injured,
captured or killed while working overseas on certain federal contracts.
Contractors may recover the costs of insurance premiums as an expense
under contracts, and contractors or their insurers may receive direct
reimbursement for certain other payments to employees. Contractors
should consult with their insurance carriers to determine the coverage
needed, and whether any anticipated activities void coverage under
existing policies.
As a preliminary matter, insurance carriers are prohibited by law from
providing coverage for business operations in any country against which
the United States has sanctions. Therefore, although the DBA and WHCA
would normally cover contractor activities in war situations, the current
sanctions against Iraq require contractors to take additional actions to
ensure coverage of employees. Certain exemptions under applicable laws
may apply to authorize waiver of the prohibition against coverage. In
addition, the Department of Treasury’s Office of Foreign Asset Control
may grant a license for transactions and assets for activities in countries
and areas under sanctions. If either a proper exemption is determined or
a license is granted, insurance companies may provide coverage. The
Office of Foreign Asset Control recommends contacting contracting
officers for assistance in determining exemptions or coordinating
applications for licenses.
A. The Defense Base Act
The DBA requires contractors to provide workers’ compensation
coverage to employees working on certain overseas contracts. The DBA
effectively extends coverage of the Longshoreman’s and Harbor Workers
Compensation Act and thereby provides coverage under the substantive
rules of workers’ compensation.
Compensation is available to the families of covered employees who are
injured or killed during the course of the employee’s work under a DBA-
covered contract. The DBA also provides coverage when an employee is
injured or killed during travel to or from the place of employment when the
contractor or government provides for the cost of transportation. A
contract subject to the DBA must include the clause at Federal Acquisition
Regulation ("FAR") § 52.228-3.
B. The War Hazards Compensation Act
The WHCA expands coverage of the DBA to provide coverage for war-
related hazards, such as injury, death or capture resulting from combat.
Whereas the DBA covers injuries sustained only during the course of an
employee’s performance of duties, the WHCA covers injuries sustained
while present in a combat zone, whether or not the employee was
engaged in the performance of the contract. In essence, the WHCA
extends 24-hour, 7 days a week coverage to employees who are subject
to war-hazards risks. The WHCA broadly defines "war risk hazards" and is
not limited to actual declarations of war.
Employees and/or their families may receive compensation for injuries,
capture and detention, or death, including funeral and burial expenses,
medical/hospital care, or other necessary care when the employee is
working under a federal contract. The WHCA also provides for
compensation if an employee is captured or reasonably believed
captured by hostile forces, or not returned to home or place of
employment due to failure of the contractor or the government.
II. Status of Forces on the Battlefield
Because the Department of Defense ("DoD") has not provided
contractors with uniform guidance regarding contractors in combat, the
status of contractor employees is not entirely clear. The role and status of
contractors under international law, particularly the Geneva Convention,
is also not clear. The DoD’s Doctrine for Logistic Support of Joint
Operations (2000) provides some guidance regarding contractor roles.
Status of Forces ("SOF") Agreements define the legal status of members
of U.S. forces stationed or deployed within another nation and are
typically entered into prior to military action. Generally, SOF Agreements
do not address contractor personnel. If a SOF Agreement does not
address the status of contractors, employees are subject to the laws of
the nation in which they are working.
Contractors accompanying military forces during wartime are defined
under the Geneva Convention as non-combatants. They are therefore
accorded prisoner of war status and protections if captured. The DoD
recommends that contractors be issued identity cards stating their status
under the Geneva Convention (the Geneva Conventions Identity Card).
Also, in the event of a formal declaration of war by Congress, an
employee accompanying U.S. forces would become subject to the Uniform
Military Justice Act.
Some contractors have recently indicated that their employees are either
being permitted or required to carry arms when working in potential
combat areas. Such actions may present a special problem for
contractors because they may conflict with the employees’ ordinary non-
combatant status, even in the event that the weapon is carried for self-
defense. An employee who carries arms might lose his or her non-
combatant status and protections because he or she could be considered
neither a noncombatant nor a sanctioned combatant under the U.S.
armed forces - thereby no longer meriting prisoner of war status.
Furthermore, some commentators have suggested that a contractor’s
support for or even presence near a weapon or weapons system may
make the contractor and its employees subject to direct attack under the
provisions of international law. These issues should be raised with
contracting officers for clarification with regard to the Identity Card and
the particular SOF agreement under which the U.S. military forces
operate and in the theater where the employees will provide support.
III. Safety and Force Protection Provisions for Contractor Personnel
Because the DoD has not issued uniform guidance regarding safety and
protection provisions for contractor employees, contractors should also
actively engage their contracting officers regarding issues such as: (1)
availability of facilities and transport for medical needs and emergencies,
(2) evacuation and extraction plans and provisions for dangerous
situations, (3) and extra equipment and training for special needs such as
chemical or biological warfare protection.
The Antiterrorism/Force Protection Policy for Defense Contractors
Outside the U.S. clause at DoD Federal Acquisition Regulation
Supplement ("DFARS") 252.225-7043 requires contractors to obtain
information necessary to ensure the safety of contractor personnel. The
clause itself does not specify particular protections or guarantees
available to contractors, but directs contractors to seek out information.
Contractors are required to contact the Department of State’s Overseas
Security Advisory Council and inform the United States embassy of the
presence of employees. Contractors must also obtain and provide
employees with force protection awareness information "commensurate"
with that provided to DoD civilian and military personnel and to ensure
compliance with existing polices regarding force protection for contractors.
IV. Pay Incentives for Contractor Employees in Dangerous Areas
Contractors working in certain designated areas of danger may be
entitled to additional "danger pay" premiums that recognize the significant
hardship and risks of physical injury imposed by employment in those
areas. Certain premiums may also be paid for contract work in areas that
are determined to warrant a "post hardship differential allowance" based
on differences in conditions in those areas as compared to the United
States. The Department of State issues and updates guidance for
government personnel regarding the classification of danger pay and
hardship post allowances, as well as the levels of pay premiums
authorized above basic compensation levels, which range from 5-25% for
each category, with the total not to exceed 50%. Generally, these
additional contract costs are allowable and may be passed on to the
government. The FAR, however, counsels that advanced agreement and
coordination with the contracting officer are strongly encouraged, to verify
the allowability of these costs. See, e.g., FAR §§ 31.109, 31.205-6.
V. Potential Defenses to Contractor Liability
Increased risk may be involved with battlefield support activities, in the
form of harm to employees, other contractor employees, U.S. or allied
military forces, and other non-combatant parties. For example, a
contractor might be sued when an employee who is issued a side arm
accidentally shoots an employee of another contractor. If a claim is
brought against a contractor arising from the activities of the contractor
and its employees on the battlefield, the following defenses may be
available.
A. Government Contractor Defense
The Government Contractor Defense may be available as a defense
against liability for a contractor’s or its employee’s actions to the extent
that the employee was acting within the scope of a government contract.
Although the defense was first raised in the context of a contractor’s
liability for a manufacturing defect, courts have held that the defense
applies to service contracting as well. The three-part test for this defense,
as applied to service contractors, generally requires the following: (1) the
contractor must have acted at the direction of government officials acting
in their official discretionary capacity; (2) the government must have
approved reasonably precise performance specifications or duties in the
contract, and the contractor must have performed according to those
specifications or duties; and (3) the contractor must have warned the
government of all dangers in the performance of those specifications or
duties known to the contractor and not known to the government.
B. Extraordinary Contractual Relief
Public Law 85-804 provides for possible relief to contractors under
circumstances where they are not otherwise entitled to it. As the name
implies, relief is rarely granted, and only in extraordinary conditions. The
contract clause at FAR § 52.250 provides indemnification for "unusually
hazardous activities." Unlike the typical 84-805 request, which seeks after-
the-fact compensation or reimbursement for costs or liabilities, this clause
provides for prospective indemnification of a contractor whose employees
are in engaged in activities that pose unusual risks to themselves or
others. The clause does not define "unusually hazardous activities," which
means that contractors should take care to define the anticipated scope
of hazards for which indemnification is provided. This clause, however, is
an extraordinary grant of immunity, and will not likely be agreed to by the
government, absent very compelling circumstances.
VI. Extended Military Leave Benefits
In October of 2001, the DoD issued a memorandum concerning the
allowability of costs for additional fringe benefits paid by contractors to
employees who are called up for reserve military duty in the National
Guard and Armed Forces Reserve. The memorandum noted that, in the
past, many employers continued to provide fringe benefits such as health
care and/or pay the differential between employees’ salaries and their
military duty salaries. The DoD stated that it encouraged and applauded
the provision of such benefits, and clarified that such costs were allowable
as contract costs under FAR Part 31 cost provisions.
VII. Government Restriction of Access to Contract Sites
The heightened level of security at government facilities during the war
and/or elevated terror risk levels has created the potential for government
interference with contract performance. An emerging issue for some
contractors has been the restriction of access by the government to
facilities or property where the work is performed. In effect, contractors
have discovered that their employees are barred by the government from
the worksite. Some contractors have been informed that all access to
government facilities or property is restricted for security reasons. Other
contractors have been told that particular employees are henceforth
considered "non-essential," and therefore restricted from access, while
other employees will be allowed access and may continue their work.
Depending on the type of contract, the government’s action could be
deemed a constructive partial suspension or stop work or a constructive
partial termination, for which the contractor may be entitled to an
equitable adjustment on the contract price or other contract terms.
Contractors may be able to recover for stand-by labor and related
overhead, retention of key personnel, severance payments, recruiting
costs to replace staff after work is allowed to resume, idle or underutilized
equipment, demobilization and remobilization of work teams, material and
labor escalation costs, losses of efficiency, unabsorbed overhead,
increased subcontractor costs, profits on costs incurred, and equitable
adjustment preparation costs.
At a minimum, contractors should establish communications with their
contracting officer as early as possible to ensure that the government is
apprised of any restrictions on the contractor’s ability to perform the
contract. Dialogue with the government will help ensure the
reasonableness of contractors’ actions and required efforts to mitigate
losses during the restrictions. Contractors should also keep detailed
records of their communications with the government, and their activities
concerning idled employees and resources, including efforts to mitigate
the costs of having them on stand-by. Because a request for an equitable
adjustment requires a written claim, adequate documentation is essential
to a contractor’s recovery.
VIII. Defense Priorities and Allocations System
The Defense Priorities and Allocations System ("DPAS") allows the
president to declare that certain contracts be given priority when
necessary to promote the national defense. The DPAS, which is
administered by the Department of Commerce, allows the government to
issue "rated orders" that identify critical items and establish a hierarchy of
priority for their production. A contractor who receives a rated order must
give that order priority over lower-rated orders, and all non-rated orders.
A contractor who is able to fill a rated order must do so, regardless of the
impact it may have on the non-rated or lower-rated orders of government
or commercial sector clients. Contractors must be aware of the potential
for receiving rated orders, and must understand their obligations to
accept them. Contractors should also become familiar with the limited
circumstances under which they may, and sometimes must, reject rated
orders. Special provisions of the DPAS also grant immunity from civil
actions to contractors who accept rated orders.
IX. Conclusion
Although contractor employees face heightened risks when working
overseas, a number of protections are available to them. Increased
contractor costs may be reimbursed by the government, and certain
liabilities may be avoided as a result of the government-contractor
relationship. Because many of these issues are not well defined, care
should be taken to address potential problems in advance through
increased and well-informed dialogue with contracting officials and
insurance carriers, and by securing inclusion of appropriate FAR and
DFARS contract clauses.
For more information, please contact Rand L. Allen at 202.719.7329 or
rallen@wileyrein.com and William A. Roberts, III at 202.719.4955 or
wroberts@wileyrein.com.
Challenges
By Rand L. Allen and William A. Roberts, III
April 2, 2003
The role of federal contractors has been expanding in the areas of front-
line and near front-line support for the United States military and other
government agencies. Both the war with Iraq and the ongoing war on
terrorism have increased the demand for the services of contractors in so-
called "hot zones," areas in which military activities are either impending
or ongoing. In addition, certain contracts that support defense activities
may be impacted by increased demand and priority considerations, as
well as heightened security restrictions that may cause interference with
contract performance. The Government Contracts Practice of Wiley Rein
& Fielding LLP represents a large number of federal contractors who
have faced many of the unique challenges posed by their expanding roles
when providing support to their U.S. customers. Our practice draws on its
broad expertise in advising and representing clients in a wide variety of
contracting experiences, as well as our significant contacts and
relationships with government agencies and officials. This summary
discusses some of the special contracting issues and challenges for
government contractors whose employees work in these areas.
I. Compensation for Employee Injury, Detention or Death
The Defense Base Act ("DBA") and War Hazards Compensation Act
("WHCA") extend workers’ compensation for employees who are injured,
captured or killed while working overseas on certain federal contracts.
Contractors may recover the costs of insurance premiums as an expense
under contracts, and contractors or their insurers may receive direct
reimbursement for certain other payments to employees. Contractors
should consult with their insurance carriers to determine the coverage
needed, and whether any anticipated activities void coverage under
existing policies.
As a preliminary matter, insurance carriers are prohibited by law from
providing coverage for business operations in any country against which
the United States has sanctions. Therefore, although the DBA and WHCA
would normally cover contractor activities in war situations, the current
sanctions against Iraq require contractors to take additional actions to
ensure coverage of employees. Certain exemptions under applicable laws
may apply to authorize waiver of the prohibition against coverage. In
addition, the Department of Treasury’s Office of Foreign Asset Control
may grant a license for transactions and assets for activities in countries
and areas under sanctions. If either a proper exemption is determined or
a license is granted, insurance companies may provide coverage. The
Office of Foreign Asset Control recommends contacting contracting
officers for assistance in determining exemptions or coordinating
applications for licenses.
A. The Defense Base Act
The DBA requires contractors to provide workers’ compensation
coverage to employees working on certain overseas contracts. The DBA
effectively extends coverage of the Longshoreman’s and Harbor Workers
Compensation Act and thereby provides coverage under the substantive
rules of workers’ compensation.
Compensation is available to the families of covered employees who are
injured or killed during the course of the employee’s work under a DBA-
covered contract. The DBA also provides coverage when an employee is
injured or killed during travel to or from the place of employment when the
contractor or government provides for the cost of transportation. A
contract subject to the DBA must include the clause at Federal Acquisition
Regulation ("FAR") § 52.228-3.
B. The War Hazards Compensation Act
The WHCA expands coverage of the DBA to provide coverage for war-
related hazards, such as injury, death or capture resulting from combat.
Whereas the DBA covers injuries sustained only during the course of an
employee’s performance of duties, the WHCA covers injuries sustained
while present in a combat zone, whether or not the employee was
engaged in the performance of the contract. In essence, the WHCA
extends 24-hour, 7 days a week coverage to employees who are subject
to war-hazards risks. The WHCA broadly defines "war risk hazards" and is
not limited to actual declarations of war.
Employees and/or their families may receive compensation for injuries,
capture and detention, or death, including funeral and burial expenses,
medical/hospital care, or other necessary care when the employee is
working under a federal contract. The WHCA also provides for
compensation if an employee is captured or reasonably believed
captured by hostile forces, or not returned to home or place of
employment due to failure of the contractor or the government.
II. Status of Forces on the Battlefield
Because the Department of Defense ("DoD") has not provided
contractors with uniform guidance regarding contractors in combat, the
status of contractor employees is not entirely clear. The role and status of
contractors under international law, particularly the Geneva Convention,
is also not clear. The DoD’s Doctrine for Logistic Support of Joint
Operations (2000) provides some guidance regarding contractor roles.
Status of Forces ("SOF") Agreements define the legal status of members
of U.S. forces stationed or deployed within another nation and are
typically entered into prior to military action. Generally, SOF Agreements
do not address contractor personnel. If a SOF Agreement does not
address the status of contractors, employees are subject to the laws of
the nation in which they are working.
Contractors accompanying military forces during wartime are defined
under the Geneva Convention as non-combatants. They are therefore
accorded prisoner of war status and protections if captured. The DoD
recommends that contractors be issued identity cards stating their status
under the Geneva Convention (the Geneva Conventions Identity Card).
Also, in the event of a formal declaration of war by Congress, an
employee accompanying U.S. forces would become subject to the Uniform
Military Justice Act.
Some contractors have recently indicated that their employees are either
being permitted or required to carry arms when working in potential
combat areas. Such actions may present a special problem for
contractors because they may conflict with the employees’ ordinary non-
combatant status, even in the event that the weapon is carried for self-
defense. An employee who carries arms might lose his or her non-
combatant status and protections because he or she could be considered
neither a noncombatant nor a sanctioned combatant under the U.S.
armed forces - thereby no longer meriting prisoner of war status.
Furthermore, some commentators have suggested that a contractor’s
support for or even presence near a weapon or weapons system may
make the contractor and its employees subject to direct attack under the
provisions of international law. These issues should be raised with
contracting officers for clarification with regard to the Identity Card and
the particular SOF agreement under which the U.S. military forces
operate and in the theater where the employees will provide support.
III. Safety and Force Protection Provisions for Contractor Personnel
Because the DoD has not issued uniform guidance regarding safety and
protection provisions for contractor employees, contractors should also
actively engage their contracting officers regarding issues such as: (1)
availability of facilities and transport for medical needs and emergencies,
(2) evacuation and extraction plans and provisions for dangerous
situations, (3) and extra equipment and training for special needs such as
chemical or biological warfare protection.
The Antiterrorism/Force Protection Policy for Defense Contractors
Outside the U.S. clause at DoD Federal Acquisition Regulation
Supplement ("DFARS") 252.225-7043 requires contractors to obtain
information necessary to ensure the safety of contractor personnel. The
clause itself does not specify particular protections or guarantees
available to contractors, but directs contractors to seek out information.
Contractors are required to contact the Department of State’s Overseas
Security Advisory Council and inform the United States embassy of the
presence of employees. Contractors must also obtain and provide
employees with force protection awareness information "commensurate"
with that provided to DoD civilian and military personnel and to ensure
compliance with existing polices regarding force protection for contractors.
IV. Pay Incentives for Contractor Employees in Dangerous Areas
Contractors working in certain designated areas of danger may be
entitled to additional "danger pay" premiums that recognize the significant
hardship and risks of physical injury imposed by employment in those
areas. Certain premiums may also be paid for contract work in areas that
are determined to warrant a "post hardship differential allowance" based
on differences in conditions in those areas as compared to the United
States. The Department of State issues and updates guidance for
government personnel regarding the classification of danger pay and
hardship post allowances, as well as the levels of pay premiums
authorized above basic compensation levels, which range from 5-25% for
each category, with the total not to exceed 50%. Generally, these
additional contract costs are allowable and may be passed on to the
government. The FAR, however, counsels that advanced agreement and
coordination with the contracting officer are strongly encouraged, to verify
the allowability of these costs. See, e.g., FAR §§ 31.109, 31.205-6.
V. Potential Defenses to Contractor Liability
Increased risk may be involved with battlefield support activities, in the
form of harm to employees, other contractor employees, U.S. or allied
military forces, and other non-combatant parties. For example, a
contractor might be sued when an employee who is issued a side arm
accidentally shoots an employee of another contractor. If a claim is
brought against a contractor arising from the activities of the contractor
and its employees on the battlefield, the following defenses may be
available.
A. Government Contractor Defense
The Government Contractor Defense may be available as a defense
against liability for a contractor’s or its employee’s actions to the extent
that the employee was acting within the scope of a government contract.
Although the defense was first raised in the context of a contractor’s
liability for a manufacturing defect, courts have held that the defense
applies to service contracting as well. The three-part test for this defense,
as applied to service contractors, generally requires the following: (1) the
contractor must have acted at the direction of government officials acting
in their official discretionary capacity; (2) the government must have
approved reasonably precise performance specifications or duties in the
contract, and the contractor must have performed according to those
specifications or duties; and (3) the contractor must have warned the
government of all dangers in the performance of those specifications or
duties known to the contractor and not known to the government.
B. Extraordinary Contractual Relief
Public Law 85-804 provides for possible relief to contractors under
circumstances where they are not otherwise entitled to it. As the name
implies, relief is rarely granted, and only in extraordinary conditions. The
contract clause at FAR § 52.250 provides indemnification for "unusually
hazardous activities." Unlike the typical 84-805 request, which seeks after-
the-fact compensation or reimbursement for costs or liabilities, this clause
provides for prospective indemnification of a contractor whose employees
are in engaged in activities that pose unusual risks to themselves or
others. The clause does not define "unusually hazardous activities," which
means that contractors should take care to define the anticipated scope
of hazards for which indemnification is provided. This clause, however, is
an extraordinary grant of immunity, and will not likely be agreed to by the
government, absent very compelling circumstances.
VI. Extended Military Leave Benefits
In October of 2001, the DoD issued a memorandum concerning the
allowability of costs for additional fringe benefits paid by contractors to
employees who are called up for reserve military duty in the National
Guard and Armed Forces Reserve. The memorandum noted that, in the
past, many employers continued to provide fringe benefits such as health
care and/or pay the differential between employees’ salaries and their
military duty salaries. The DoD stated that it encouraged and applauded
the provision of such benefits, and clarified that such costs were allowable
as contract costs under FAR Part 31 cost provisions.
VII. Government Restriction of Access to Contract Sites
The heightened level of security at government facilities during the war
and/or elevated terror risk levels has created the potential for government
interference with contract performance. An emerging issue for some
contractors has been the restriction of access by the government to
facilities or property where the work is performed. In effect, contractors
have discovered that their employees are barred by the government from
the worksite. Some contractors have been informed that all access to
government facilities or property is restricted for security reasons. Other
contractors have been told that particular employees are henceforth
considered "non-essential," and therefore restricted from access, while
other employees will be allowed access and may continue their work.
Depending on the type of contract, the government’s action could be
deemed a constructive partial suspension or stop work or a constructive
partial termination, for which the contractor may be entitled to an
equitable adjustment on the contract price or other contract terms.
Contractors may be able to recover for stand-by labor and related
overhead, retention of key personnel, severance payments, recruiting
costs to replace staff after work is allowed to resume, idle or underutilized
equipment, demobilization and remobilization of work teams, material and
labor escalation costs, losses of efficiency, unabsorbed overhead,
increased subcontractor costs, profits on costs incurred, and equitable
adjustment preparation costs.
At a minimum, contractors should establish communications with their
contracting officer as early as possible to ensure that the government is
apprised of any restrictions on the contractor’s ability to perform the
contract. Dialogue with the government will help ensure the
reasonableness of contractors’ actions and required efforts to mitigate
losses during the restrictions. Contractors should also keep detailed
records of their communications with the government, and their activities
concerning idled employees and resources, including efforts to mitigate
the costs of having them on stand-by. Because a request for an equitable
adjustment requires a written claim, adequate documentation is essential
to a contractor’s recovery.
VIII. Defense Priorities and Allocations System
The Defense Priorities and Allocations System ("DPAS") allows the
president to declare that certain contracts be given priority when
necessary to promote the national defense. The DPAS, which is
administered by the Department of Commerce, allows the government to
issue "rated orders" that identify critical items and establish a hierarchy of
priority for their production. A contractor who receives a rated order must
give that order priority over lower-rated orders, and all non-rated orders.
A contractor who is able to fill a rated order must do so, regardless of the
impact it may have on the non-rated or lower-rated orders of government
or commercial sector clients. Contractors must be aware of the potential
for receiving rated orders, and must understand their obligations to
accept them. Contractors should also become familiar with the limited
circumstances under which they may, and sometimes must, reject rated
orders. Special provisions of the DPAS also grant immunity from civil
actions to contractors who accept rated orders.
IX. Conclusion
Although contractor employees face heightened risks when working
overseas, a number of protections are available to them. Increased
contractor costs may be reimbursed by the government, and certain
liabilities may be avoided as a result of the government-contractor
relationship. Because many of these issues are not well defined, care
should be taken to address potential problems in advance through
increased and well-informed dialogue with contracting officials and
insurance carriers, and by securing inclusion of appropriate FAR and
DFARS contract clauses.
For more information, please contact Rand L. Allen at 202.719.7329 or
rallen@wileyrein.com and William A. Roberts, III at 202.719.4955 or
wroberts@wileyrein.com.
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Under Construction
Defense Base Act Attorneys
Scott Bloch
William Skepnek
Brennan Fagan
(202) 347-9526
sbloch@bcounsel.com
Scott Bloch
William Skepnek
Brennan Fagan
(202) 347-9526
sbloch@bcounsel.com
United States Federal and International
Law Practice
Law Practice
Law offices of
Burce H Nicholson
bigadvocate@gmail.com
www.bigadvocate.com
Burce H Nicholson
bigadvocate@gmail.com
www.bigadvocate.com