Buy Lines: DHS contractors still waiting for liability protection

Stan Soloway

In technology, there is no such thing as perfection. Failures occur, even in the course of diligent, high-quality performance. For those companies providing products or services that are highly developmental or likely to be deployed for front-line anti-terrorism activities, the liabilities associated with problems or failures can be enormous.

That's why Congress authorized the Homeland Security Department to offer liability protection to providers of selected anti-terrorism products and services.

Known as the Safety Act, this protection is built around a tort reform model. The third-party liability of companies that make "qualified anti-terrorism technology" products or services is limited to the commercially available insurance coverage for that product or service.

For a narrow range of circumstances, particularly where the Safety Act is inadequate or inappropriate, Public Law 85-804 (Extraordinary Relief) coverage may be used instead. DHS issued interim rules implementing the Safety Act in October; the comment period on the rules ended in December. A final rule has not been published.

Unfortunately, while the statutory parameters of the Safety Act and its implementing regulations limit the ability of DHS to qualify and certify technologies and services, the pace of certification where it is possible has been very slow.

Through the end of March, DHS had received 75 pre-applications and 19 full applications requesting coverage. More than half of the full applications were deemed incomplete and returned. At press time, no company had yet received Safety Act approval.

This is a problem of growing concern. Even today, DHS is rolling out new technologies designed to improve our ability to prevent future terrorist acts in the United States.

None of the companies providing those technologies has received the liability protection they legitimately need and that Congress intended. Some of that may be the fault of the companies and the quality of their applications, but at least some of the fault lies elsewhere and must be addressed.

First, the law and the implementing regulations create an elaborate approval regime that presents substantial barriers, particularly for services providers.

For example, although the statute and the rules require that the product or service be "demonstrated," many technology services solutions are evolutionary or new and cannot be demonstrated as simply as can a discrete product.

The interim rules are unclear as to how such situations, which include many of the critical technologies DHS seeks, should be handled.

Second, while DHS has a Safety Act program office, there is no sense of urgency to address these complexities or, for that matter, a broad recognition in DHS of the fundamental importance of reasonable liability protection to its mission.

Moreover, there appear to be disconnects between some DHS activities and its acquisition community.

These disconnects are, in part, an unavoidable result of DHS' organizational structure, in which the Science and Technology directorate has responsibility for Safety Act implementation while the management directorate is responsible for acquisition and contracting.

Several companies have reported that their customers are desperate to move forward with their solutions, even if the company has not received approval of its Safety Act application. This puts companies in a most untenable position.

Despite its flaws, the Safety Act is an important part of ensuring that the companies developing and providing critical technology solutions to help fight terrorism get appropriate liability protection. It's time to put the Safety Act into action.

Stan Soloway is president of the Professional Services Council; he previously served as deputy undersecretary of defense. His e-mail is soloway@pscouncil.org.

About the Author

Stan Soloway is president and chief executive officer of the Professional Services Council.

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