New push for Safety Act fixes

Contractors supplying new technologies to the Homeland Security Department are renewing their push to ease what they feel is an arduous application process for the department's Safety Act liability protections, and to strengthen the protections for trade secrets they disclose in their applications.

Driving this effort is an optimism that new DHS Secretary Michael Chertoff will address these shortcomings in a top-to-bottom review he promised when he took over the department in February.

Contractors also have been encouraged by the recent faster pace of technologies that have been certified under the Support Anti-terrorism by Fostering Effective Technologies, or Safety, Act.

When Congress created DHS in 2002, lawmakers added the Safety Act provisions to protect manufacturers from the huge financial liability that could result from an act of terrorism. The idea was to stimulate contractors to provide new equipment, services and software and devices by mitigating the threat of liability if their technologies or products failed because of a terrorist attack.

From more than 70 applications submitted, the first four Safety Act certifications were granted in June 2004, and four more technologies were granted certification in February and March 2005.

"In the last one and a half months, we've seen a flurry of approvals," said Brian Finch, associate attorney at McKenna, Long & Aldridge, a Washington law firm.

Moreover, Chertoff's promised departmentwide review offers a great opportunity "to take a long, hard look at the Safety Act process and how it's working or not working," said Andrew Howell, vice president for homeland security for the U.S. Chamber of Commerce.

"The Safety Act is the number one priority on our list," Howell said.

For months, contractors have been complaining that the Safety Act application process is lengthy, difficult and out of sync with the department's procurement processes.

Department officials, responding to those concerns, in December 2004 released a revised application kit and submitted a revised rule to the Office of Management and Budget, said Donald Tighe, a spokesman for the department.

As for synchronizing the Safety Act with procurement rules," that is one of our priorities," Tighe said. "We're aggressively moving forward on that," he said, although he declined to say when action might be taken on it.

Ray Biagini of McKenna Long said the new application procedure creates a "pre-application consultation" to provide early feedback to the applicants.

The new procedure also initially requests less extensive financial and insurance data and drops a requirement to provide data on certain risk scenarios, he said.

The new application kit, however, has garnered only lukewarm reviews. "It's not much of an improvement," said Ted Hoffman, partner with Blank, Rome law firm in Philadelphia.

"Even with the new kit improvements, concerns remain," Biagini said at a March 16 security conference sponsored by King Publishing.

What's more, a renewed skepticism has arisen about the effectiveness of existing protections against disclosure of proprietary information provided by applicants.

Currently, DHS requires that expert reviewers reading the applications sign non-disclosure agreements with the department, but the applicants are not included in those agreements, said Jacob Pankowski, a partner in Nixon, Peabody's Washington office. Because the applicants are not party to the agreements, they have no direct knowledge of, nor means to enforce, possible breaches to confidentiality, he said. 

REVISION SUGGESTION

Pankowski said he recently has discussed the issue with Wendy Howe, director of the Office of Safety Act Implementation at the department.

"I have suggested that they revise the non-disclosure agreement to make the applicant a signatory," Pankowski said. "It seems like a very reasonable fix that should not discourage the reviewers from doing their job."

The Professional Services Council, an industry group representing primarily defense and homeland security companies, also recognizes continuing concerns about the non-disclosure agreements in the Safety Act application, said Alan Chvotkin, the group's senior vice president and counsel.

"Right now, there is no ability for the private sector to monitor and enforce what kind of information is going out," Chvotkin said.

Despite these concerns, at least one major contractor, General Dynamics Corp.'s Armament and Technical Products Division, Charlotte, N.C., has just submitted its first application for the Safety Act protections.

The company submitted an application March 15 for certification of the Joint Biological Point Detection System, said John Suttle, senior director for communications.

Although Safety Act applications became available more than a year ago, General Dynamics carefully investigated the program before applying.

"It's a very important program for us, so we needed to take our time and make sure all the T's were crossed and the I's dotted," Suttle said.

Staff Writer Alice Lipowicz can be reached at alipowicz@postnewsweektech.com.