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December 15, 2005

The Defense Base Act and Contractor Liability: Give Federal Courts Exclusive Jurisdiction

By

Before it adjourns for the year, Congress should address liability issues that have been dogging military contractors that have employees working in foreign theaters. Contractors perform needed services abroad, but if they continue to face unmanageable liability risks, many could leave the United States' employ, diminishing the nation's base of responsible and qualified firms that can support military, humanitarian, peacekeeping, and reconstruction operations.

 

Contractors deploy their workers to some of the most dangerous regions of the world, and these workers are well compensated for the risks that they assume. Unfortunately, injuries do happen. The problem is that contractors are finding themselves subject to massive potential liability when employees pursue tort claims in state courts. In addition to driving up costs, these claims could drive some contractors out of the United States entirely.

 

Congress already dealt with this problem, albeit imperfectly. The Defense Base Act (DBA) was intended to make workers' compensation the exclusive remedy for employees of military contractors who are working abroad on federal contracts or land. If the DBA had succeeded in this, there wouldn't be a problem today. But the Act left open a couple holes that Congress needs to go back and patch.

 

The DBA requires contractors to obtain workers' compensation insurance for employees working overseas and establishes that compensation as the sole remedy for employees and their families. This insurance can be secured through an outside company, or the contractor can self-insure. Military contractors usually fall under the DBA because they perform contracts under the direction of a federal agency or officer or on military bases or other federally-controlled land.

 

The solution to the current contractor-liability problem is simple: Congress should give federal courts exclusive jurisdiction over the claims that are now being litigated in state courts. In addition, federal courts should have exclusive jurisdiction over third-party claims against military contractors that arise on government contracts because these suits, too, involve primarily federal issues. By amending Title 10 to clarify the intent of the DBA, Congress would ensure that the U.S. government has a competent and responsible pool of military contractors from which to choose.

 

Congress already limited remedies for military contractors' employees to workers' compensation when those employees are working abroad under the DBA. Altering Title 10 to give federal courts exclusive jurisdiction over such claims clarifies congressional intent in the DBA to prevent state tort claims against military contractors. Furthermore, exclusive federal jurisdiction is also appropriate for third-party claims against military contractors arising from their contracts because there are unique federal interests implicated. Congress already got the big idea right; now it needs to go back and fix a few of the small details.

 

Alane Kochems is a Policy Analyst for National Security in the Kathryn and Shelby Cullom Davis Institute for International Studies at The Heritage Foundation.

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