Contractors encouraged to seek Safety Act protection

IT contractors who have not yet begun to assess their technologies for anti-terrorism applications and possible coverage under the Safety Act should do so now, industry experts said July 30 at a Professional Services Council program in Arlington, Va.

PSC, an Arlington trade group representing companies that provide services to the government, brought IT executives and legal counsel together to discuss the proposed regulation implementing the Support Anti-terrorism by Fostering Effective Technologies Act of 2002, also known as the Safety Act. The regulation was published July 11 in the Federal Register.

The Safety Act, incorporated in the Homeland Security Act of 2002, provides limited liability protection to companies supplying "qualified anti-terrorism technologies" to federal, state and local governments, as well as commercial enterprises, in the event that an act of terrorism jeopardizes the operation of those technologies. IT firms lobbied for the legislation because they said they could not get enough insurance to cover their potential losses in such situations, and therefore, they would be unlikely to offer their solutions to the government.

"You have to look at your broad scope of products and services," to determine which should be covered by the Safety Act, said Paul Haseman, a senior counsel of Lexington, Mass., defense firm Raytheon Co. Technologies that are deployed; existing, but not deployed; and planned could all be potentially eligible for protection, he said.

In addition, technologies not currently used for anti-terrorism could have applications in that area, and companies should consider applying for protection for them, Haseman said. For example, ground radar used for drug enforcement purposes could be used for intrusion detection in other areas.

"To the extent that these products and services are available and you plan on selling them, it makes sense to obtain protection," he said.

Companies with "qualified anti-terrorism technologies" could benefit in several ways, industry experts said. The designation could help secure funding for additional development of the technology, Haseman said. It may also give the firms a competitive advantage over firms selling technologies that have not received the designation, said John Clerici, an associate with the Washington law firm McKenna Long & Aldridge LLP.

To ensure their technologies are eligible for protection under the Safety Act, firms must apply to the secretary of homeland security. The criteria for qualified anti-terrorism technologies include:

  • Prior U.S. government use or demonstrated use and effectiveness

  • Availability for immediate deployment

  • Extraordinarily large liability risk to the provider

  • Substantial likelihood the technology will not be deployed unless protections are extended

  • A high risk to the public if the technology is not deployed

  • The limits on contractor liability for eligible technologies include:

  • Only sellers can be sued, not customers

  • Sellers can only be sued in federal court

  • Sellers' liability is limited to its liability insurance coverage that is available at prices and terms that do not unreasonably distort the sales price of the technology

  • Punitive damages are not allowed

  • Many prime contractors are proactively pursuing Safety Act protection, although in some cases subcontractors are being more aggressive, applying for protection themselves, according to Raymond Biagini, a partner at McKenna Long & Aldridge.

    "Sometimes the sub is really providing the anti-terror component, or they are more established than the prime, which is a smaller company," he said.

    Applying for protection "is a matter of corporate responsibility," Biagini said. "If they don't get aggressive, get the protection, and they get sued and cannot invoke the Safety Act, imagine what their shareholders will think."

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