Alex Constantine - December 5, 2010
" ... 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. ... "
Project on Govenment Oversight | Dec 3, 2010
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.