On January 15, 2009, the Civilian Agency Acquisition Council and the Defense Acquisition Regulations Council (the Councils) adopted a final rule that amends the Federal Acquisition Regulations (FAR) to implement the Department of Homeland Security (DHS) regulations relating to the Supporting Anti-Terrorism by Fostering Technologies Act of 2002 (SAFETY Act), 6 U.S.C. §§ 441-444. This final rule substantially incorporates the text of an interim rule previously published in the Federal Register on November 7, 2007. The final rule is effective February 17, 2009.

SAFETY Act Overview

In 2002, Congress enacted the SAFETY Act. DHS published the regulations implementing the Safety Act on June 8, 2006. The Act aims to ensure that the threat of liability does not deter companies from developing, deploying and commercializing life-saving anti-terrorism technologies by applying certain protections for claims that arise out of or relate to an act of terrorism. The SAFETY Act created “risk management” and “litigation management” systems as incentives for the development and deployment of anti-terrorism technologies. The benefits of SAFETY Act designation and certification (a higher level of protection than designation) include: limits on the extent of insurance required by DHS; exclusive cause of action in federal court; eliminates joint and several liability for non-economic damages; no punitive damages or pre-judgment interest and provides for a rebuttable presumption of the government contractor defense for products that receive certification.

To benefit from SAFETY Act protections, companies must apply with the SAFETY Act Office for DHS designation and certification that their technology is a Qualified Anti-Terrorism Technology (QATT). Examples of types of technology approved by the DHS Safety Act office include: detection systems, security services, threat and vulnerability assessment services, blast mitigation materials, screening services, crisis management systems and decision support software. For more information on the DHS Safety Act program see http://www.safetyact.gov.

FAR Implementation of SAFETY Act Provisions

The final rule implements a procurement policy that encourages agencies to determine whether technology being procured is appropriate for SAFETY Act protection and encourages offerors to seek SAFETY Act protections for their technologies. The rule does not mandate SAFETY Act protections for acquisitions (as this is an offeror’s choice). The final rule largely reflects the interim rule that added a new FAR Subpart 50.2 and became effective November 7, 2007. There were seven respondents who submitted comments on the interim rule. All respondents generally supported the rule, but offered suggestions for clarification of the rule.

The interim, now final rule implementing the SAFETY Act encourages early consideration of SAFETY Act application to technologies in the acquisition planning process by the agency. The Councils agreed with a suggestion to cross reference Part 7.105(b)(19) (contents of written acquisition plans) in Subpart 50.205(b) to make clear the policy of incorporating SAFETY Act considerations into acquisition planning activities. But the Council declined a suggestion to provide a list of types of requirements that should be reviewed for SAFETY Act consideration.

FAR 50.205-1 requires consideration of, as well as incorporation into, solicitations and advance public notices to potential offerors of DHS block designations or block certifications. The Council did accept a suggestion to make clear that when an agency determines a technology is appropriate for SAFETY Act protection, agencies should formally relay such a determination to DHS in support of SAFETY Act applications.

If no block designation or certification exists, FAR 20.205-2 requires the agency to request a pre-qualification designation notice (PQDN) from DHS. The final rule makes clear that the agency’s request for a PQDN should be made once the agency has determined that the specifications or statement of work are established and unlikely to undergo substantive modification. If DHS does issue a PQDN, the contracting officer will incorporate the notice into the solicitation or advance public notice to potential offerors. A PQDN is not available after contract award – contractors should apply for SAFETY Act protections in a traditional application. For those cases where DHS denies a request for a PQDN, or where the agency – after consultation with DHS – otherwise determines that SAFETY Act protection is not applicable to the procurement, contracting officers must insert the clause at FAR 52.250-2, SAFETY Act Coverage Not Applicable. The final rule makes clear that this clause does not otherwise preclude contractors – like any other technology seller – from submitting an application for SAFETY Act protection.

When DHS issues a block designation/certification or PQDN, contracting officers are required to appropriately use FAR Clause 52.250-3, SAFETY Act Block Designation/Certification, or Clause 52.250-4, SAFETY Act Pre-qualification Designation Notice. Two alternate clauses allow offerors to submit offers contingent on DHS issuing a SAFETY Act designation or certification under certain limited circumstances. In the final rule’s discussion of comments, the Councils rejected requests to expand the circumstances where offers contingent upon a SAFETY Act designation or certification can be accepted, stating that the risk of contingent offers without conditions was too great to the Government. The Councils also made clear that an agency cannot authorize offers contingent upon obtaining a SAFETY ACT certification, unless a block certification applies to the solicitation. Offers contingent upon obtaining a Safety Act designation (as opposed to certification) can be made when DHS has issued a PQDN or where the Government has not provided advance notice so that potential offerors could have obtained SAFETY Act designations before the release of a solicitation.

FAR 50.250-5, Equitable Adjustment, sets forth circumstances under which a contractor may be entitled to an equitable adjustment when pricing for items covered by a PQDN, block designation or block certification was established presuming that DHS would issue a SAFETY Act designation and DHS, in fact, ultimately denies the designation application. Under the specified circumstances, the contracting officer shall either approve an equitable adjustment or terminate the contract for convenience in lieu of providing an equitable adjustment. The Council rejected suggested changes to this clause.

The Councils also rejected a request for streamlined treatment for technology already being sold to the Government. Instead, the Councils emphasized that contractors may, like any sellers of technologies, submit a traditional application for SAFETY Act protections and that the application’s processing would not be expected to exceed two months.

At this time, it is unclear how much guidance there is or how widely known this FAR provision is within the acquisition professionals community. The degree of incorporation of SAFETY Act considerations into the acquisition planning process remains to be seen.