Report of the Commission on Government ... - Bayhdolecentral
Report of the Commission on Government ... - Bayhdolecentral
Report of the Commission on Government ... - Bayhdolecentral
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100<br />
will be compensated, and <str<strong>on</strong>g>the</str<strong>on</strong>g> greater <str<strong>on</strong>g>the</str<strong>on</strong>g> damage,<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g> less <str<strong>on</strong>g>the</str<strong>on</strong>g> chances for compensati<strong>on</strong><br />
through insurance or o<str<strong>on</strong>g>the</str<strong>on</strong>g>rwise. In a catastrophe,<br />
<strong>on</strong>e or more c<strong>on</strong>tractors might face<br />
liability far in excess <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g>ir total financial<br />
capability.<br />
Before evaluating statutes, policies, and procedures<br />
governing indemnificati<strong>on</strong> for catastrophic<br />
accidents, which are manmade ra<str<strong>on</strong>g>the</str<strong>on</strong>g>r<br />
than natural disasters, two terms must be defined:<br />
A catastrophe is a disaster <str<strong>on</strong>g>of</str<strong>on</strong>g> such magnitude<br />
that <str<strong>on</strong>g>the</str<strong>on</strong>g> resulting claims for pers<strong>on</strong>al injury<br />
and property damage would exceed <str<strong>on</strong>g>the</str<strong>on</strong>g> m<strong>on</strong>etary<br />
level for which <str<strong>on</strong>g>the</str<strong>on</strong>g>re is reas<strong>on</strong>ably<br />
available insurance coverage. Since "reas<strong>on</strong>ably<br />
available insurance coverage" is subject to varying<br />
definiti<strong>on</strong>s, depending <strong>on</strong> circumstances, any<br />
legislative efforts in this area should provide<br />
for reducing <str<strong>on</strong>g>the</str<strong>on</strong>g> term to a numerical value or<br />
designate an <str<strong>on</strong>g>of</str<strong>on</strong>g>ficial to determine <str<strong>on</strong>g>the</str<strong>on</strong>g> value<br />
after a catastrophe has occurred.<br />
Indemmificati<strong>on</strong> is an assurance wherein <strong>on</strong>e<br />
party frees ano<str<strong>on</strong>g>the</str<strong>on</strong>g>r from an anticipated loss,<br />
or risk <str<strong>on</strong>g>of</str<strong>on</strong>g> loss, or prevents him from suffering<br />
loss or damage due to <str<strong>on</strong>g>the</str<strong>on</strong>g> legal c<strong>on</strong>sequences <str<strong>on</strong>g>of</str<strong>on</strong>g><br />
an act or forebearance <strong>on</strong> <str<strong>on</strong>g>the</str<strong>on</strong>g> part <str<strong>on</strong>g>of</str<strong>on</strong>g> <strong>on</strong>e <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
parties to a c<strong>on</strong>tract or some third pers<strong>on</strong>. A<br />
legislative act is called "indemnificati<strong>on</strong>" when<br />
it provides a procedure for <str<strong>on</strong>g>the</str<strong>on</strong>g> <strong>Government</strong><br />
ei<str<strong>on</strong>g>the</str<strong>on</strong>g>r to reimburse c<strong>on</strong>tractors for payments<br />
made in satisfacti<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g> judgments rendered<br />
against <str<strong>on</strong>g>the</str<strong>on</strong>g>m or to anticipate adverse judgments<br />
and assume <str<strong>on</strong>g>the</str<strong>on</strong>g> obligati<strong>on</strong> to pay such<br />
judgments when rendered.<br />
PRIVATE MEANS TO DEAL WITH<br />
CATASTROPHIC ACCIDENTS<br />
There are now two primary means <str<strong>on</strong>g>of</str<strong>on</strong>g> providing<br />
relief through <str<strong>on</strong>g>the</str<strong>on</strong>g> private sector in<br />
c<strong>on</strong>necti<strong>on</strong> with catastrophic accidents arising<br />
from <strong>Government</strong> programs: private insurance<br />
and, for <str<strong>on</strong>g>the</str<strong>on</strong>g> victims <str<strong>on</strong>g>of</str<strong>on</strong>g> an accident, civil suit<br />
against a negligent <strong>Government</strong> c<strong>on</strong>tractor.<br />
When c<strong>on</strong>tractors are exposed to risks so<br />
large that <str<strong>on</strong>g>the</str<strong>on</strong>g>y cannot safely assume <str<strong>on</strong>g>the</str<strong>on</strong>g>m<br />
<str<strong>on</strong>g>the</str<strong>on</strong>g>mselves, <str<strong>on</strong>g>the</str<strong>on</strong>g>y usually spread such risks by<br />
purchasing insurance. C<strong>on</strong>tractors engaged in<br />
hazardous <strong>Government</strong> programs ordinarily<br />
carry policies insuring <str<strong>on</strong>g>the</str<strong>on</strong>g>m against liability to<br />
Part H<br />
third parties, including product liability,<br />
arising out <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g>ir activities. The <strong>Government</strong><br />
permits liability insurance costs to be included<br />
directly or indirectly in c<strong>on</strong>tract costs passed<br />
<strong>on</strong> to <str<strong>on</strong>g>the</str<strong>on</strong>g> <strong>Government</strong>.'<br />
Private insurance performs important functi<strong>on</strong>s<br />
in covering c<strong>on</strong>tractors against thirdparty<br />
liability up to a given dollar level.<br />
Insurance companies have dem<strong>on</strong>strated <str<strong>on</strong>g>the</str<strong>on</strong>g>ir<br />
ability to send large numbers <str<strong>on</strong>g>of</str<strong>on</strong>g> claims investigators<br />
and adjusters quickly to <str<strong>on</strong>g>the</str<strong>on</strong>g> scene<br />
<str<strong>on</strong>g>of</str<strong>on</strong>g> a major accident. With such expertise, <str<strong>on</strong>g>the</str<strong>on</strong>g>y<br />
can process claims quite rapidly and are frequently<br />
able to settle many <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g> resulting<br />
claims quickly and out <str<strong>on</strong>g>of</str<strong>on</strong>g> court. Finally, to an<br />
increasing degree, casualty and liability insurance<br />
companies have been helping <str<strong>on</strong>g>the</str<strong>on</strong>g>ir<br />
assured to improve <str<strong>on</strong>g>the</str<strong>on</strong>g>ir safety procedures.<br />
If liability insurance is adequate to satisfy<br />
judgments against c<strong>on</strong>tractors, industry is not<br />
<strong>on</strong>ly protected, but injured members <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
public are assured that <str<strong>on</strong>g>the</str<strong>on</strong>g>ir judgments will<br />
be paid, provided <str<strong>on</strong>g>the</str<strong>on</strong>g>y establish <str<strong>on</strong>g>the</str<strong>on</strong>g> liability<br />
<str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g> c<strong>on</strong>tractor who carries such insurance.<br />
Similarly, individuals may carry insurance to<br />
protect <str<strong>on</strong>g>the</str<strong>on</strong>g>m individually against loss. To <str<strong>on</strong>g>the</str<strong>on</strong>g><br />
extent <str<strong>on</strong>g>of</str<strong>on</strong>g> such coverage, individual victims can<br />
obtain relief for injuries and damage caused<br />
by catastrophic accidents.<br />
GOVERNMENT PROGRAMS TO DEAL<br />
WITH CATASTROPHIC ACCIDENTS<br />
Apart from civil suits and private insurance,<br />
a number <str<strong>on</strong>g>of</str<strong>on</strong>g> statutes authorize <strong>Government</strong><br />
indemnificati<strong>on</strong> <str<strong>on</strong>g>of</str<strong>on</strong>g> c<strong>on</strong>tractors engaged in ultrahazardous<br />
or nuclear activities.<br />
Public Law 85-804' and Defense Procurement<br />
Circular No. 103 <str<strong>on</strong>g>of</str<strong>on</strong>g> August 24, 1972,<br />
apply to c<strong>on</strong>tracts <str<strong>on</strong>g>of</str<strong>on</strong>g> <str<strong>on</strong>g>the</str<strong>on</strong>g> Department <str<strong>on</strong>g>of</str<strong>on</strong>g> Defense<br />
and several o<str<strong>on</strong>g>the</str<strong>on</strong>g>r agencies. Under this<br />
law, any agency whose activities are c<strong>on</strong>nected<br />
with nati<strong>on</strong>al defense can enter into indemnificati<strong>on</strong><br />
c<strong>on</strong>tracts without regard to existing<br />
law. This law is effective during a nati<strong>on</strong>al<br />
emergency declared by C<strong>on</strong>gress or <str<strong>on</strong>g>the</str<strong>on</strong>g> President<br />
and for six m<strong>on</strong>ths after <str<strong>on</strong>g>the</str<strong>on</strong>g> terminati<strong>on</strong><br />
<str<strong>on</strong>g>the</str<strong>on</strong>g>re<str<strong>on</strong>g>of</str<strong>on</strong>g> or until such earlier time as C<strong>on</strong>gress<br />
by c<strong>on</strong>current resoluti<strong>on</strong> may designate.<br />
7 ASPR 15-205.16.<br />
e 50 U.S.C. §§ 1431-85 (1970). For fur<str<strong>on</strong>g>the</str<strong>on</strong>g>r discussi<strong>on</strong> and recommendati<strong>on</strong>s<br />
c<strong>on</strong>cerning this law, see Part G, Chapter 4.