Contracting with the Federal Government frequently includes many unique risks and uncertainties. In the wake of the Ebola epidemic occurring overseas the United States has stepped in to provide assistance, much of which comes in the form of the use of contractors. Being exposed to Ebola is not a small risk and comes with many uncertainties including becoming subject to large third-party claims for injury death or damages. In order to continue supporting these efforts in the Ebola outbreak, there has been a drive to mitigate this risk factor for contractors. On November 13th, President Obama released a Presidential Memorandum granting the Administrator of the United States Agency for International Development (USAID) the authority to indemnify companies from lawsuits related to “contracts performed in Africa in support of USAID’s response to the Ebola outbreak in Africa where the contractor, its employees, or subcontractors will have significant exposure to Ebola.”
The ability to grant this authority comes from Public Law 85-804. Generally, the Government is prohibited from entering into open-ended indemnification agreements due to the Anti-Deficiency Act. However, Public Law 85-804 permits the President to authorize any federal agency or department connected to national security the ability to enter into, amend or modify contracts with private companies in order to “facilitate the national defense.” This includes indemnifying government contractors against unusually hazardous or nuclear risks without regard to the availability of appropriated funds. The process under which indemnification is requested and negotiated is set forth in Part 50 of the Federal Acquisition Regulations (FAR).
In his memorandum, President Obama called the Ebola outbreak “a relevant state of national emergency,” adding that “this memorandum and actions taken pursuant to that authorization would facilitate the national defense.” The memorandum makes clear that the authority granted is “solely for the purpose of holding harmless and indemnifying contractors with respect to claims, losses, or damage arising out of or resulting from exposure, in the course of performance of the contracts, to Ebola.”