|
FEDERAL ACQUISITION
REGULATIONS (FAR)
UNDERSTANDING GC'S
RISKS
PREVENTATIVE APPROACH
RISK MANAGEMENT TECHNIQUES
LAWSUIT PROTECTION
A THOROUGH BROKER
RESOLVING UNUSUAL
RISKS
USE OF MULTIPLE CONTRACTORS
KNOWING LEGAL ISSUES
OUR PROFESSIONALS
DOWNLOADS
FEDERAL
ACQUISITION REGULATIONS
The Federal
Acquisition Regulations (FAR) contain numerous clauses that
can make a contractor responsible for government furnished equipment,
property, or motor vehicles when the contractor is in possession
or using those items. Conversely, the FAR can also offer the government
contractor immunity from responsibility for damage to these items
if the right clauses are invoked.
UNDERSTANDING GC'S RISKS
The FAR can also offer some immunity from certain product and
professional liability suits. From an underwriter's perspective
many products and services developed by a government contractor
are high risk, especially if the contractor cannot share the government's
sovereign immunity. The art of products and professional liability
underwriting is understanding to what degree, if any, the GC can
face liability suits from the public.
PREVENTATIVE APPROACH
Many contract officers for federal agencies are experts in the
subject but do not necessarily understand or appreciate how a
particular contract's wording can affect the contractor's ability
to obtain insurance at a reasonable cost. Anticipating problems
and educating contract officers can solve many problems before
they mushroom into a costly area of risk.
RISK MANAGEMENT TECHNIQUES
Much of the products and professional liability underwriting
standards used in the insurance industry revolve around the contract
used by the insured with their customers. With GCs you usually
won't have the luxury of using your own contract and will have
to use the FAR and/or language proposed by the federal government.
Understanding contract risk management techniques, especially
if you are using your customer's proposed contract, is key to
limiting the likelihood and severity of a suit.
LAWSUIT PROTECTION
Although the federal government may not sue their contractors
often for products and professional liability, it has the recourse
to terminate for default, terminate for convenience, delay payments,
or suspend the award of any more contracts to the GC. In other
words, the government still carries a big stick with significant
financial implications for the GC. Therefore, understanding the
customer and how to keep them satisfied is just as valid for the
GC as it is for a company selling to commercial customers. Again,
contract risk management is important for managing the customer.
A THOROUGH BROKER
Federal jobs can be structured such that
you, the contractor, do not know if you will have certain exposures
until you receive a task order and, even then, you may not be
able to quantify the exposure. Telling an insurance underwriter
"I may need Defense Base Act coverage but I'm not sure if
we'll be sending anyone" or "I don't know yet if we'll
be responsible for storing hazardous chemicals" can lead
to higher premiums or lack of interest by underwriters without
the right broker explaining the ins and outs of government contracting.
AH&T is able to guide you and manage the communications with
the underwriter so they understand your current levels of exposure
to loss and potential near-term needs.
RESOLVING UNUSUAL RISKS
Contracting with the federal government can mean unusual exposures
to loss such as civilian employees on military equipment or vessels;
in high hazard environments such as Afghanistan or Iraq; or working
at government facilities with unusual risks. Workers Compensation
coverage in these situations must be done correctly to protect
the GC for its legal responsibility.
USE OF MULTIPLE CONTRACTORS
Even though your end customer is a federal government agency,
your may have commercial subcontractors or be a sub yourself.
Although the contract may be governed by the FAR to a great degree,
the relationship between two contractors also has commercial and
common law elements. Failure to deliver a working product, on
time, that results in another contactor losing payments from the
federal agency customer can still result in a products or professional
liability claim.
KNOWING LEGAL ISSUES
Understanding the legal theory and background of the government
contractor defense and the similar provisions for product liability
immunity in the Homeland Security Safety Act are critical to placing
products liability for many of the government contractors who
work with AH&T. Aviation exposures are also common to many
government contractors but throw up a red flag for insurance underwriters.
Again, AH&T has expertise at understanding, assessing and
underwriting these risks.
OUR PROFESSIONALS
|
