Contractors Challenges

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					 “Contractors on the Battlefield:
   Special Legal Challenges”
Government Contracts Council               Rand L. Allen
April 24, 2003                 Wiley Rein & Fielding LLP
                                  Washington, D.C. 20006
                                             202.719.7329
Contractors on the Battlefield
Not a new phenomenon
Three Categories
 – Systems Support
 – External Theater Support
 – Theater Support




                                 2
         Examples
 (External Theater Support)
Army Logistics Civil Augmentation
Program (LOGCAP)
– Managed by AMC – worldwide contract on a
  multiple-region basis
– First LOGCAP umbrella contract awarded in
  August ’92; activated in December ’92 in
  Somalia
– Since used in a dozen foreign countries
– LOGCAP III – ’97 award of CPAF contract for
  1 base year and 9 option years to Halliburton
  KBR

                                             3
          Examples
(External Theater Support) (contd.)
 Navy’s Construction Capabilities
 Program (CONCAP)
 – Awarded in June 2000 to Halliburton KBR
   for 1 base year and 4 option years
 – CPAF
 Air Force Contract Augmentation
 Program (AFCAP)
 – Current contract awarded in Feb. ’02 to
   Readiness Management Support, LCC for 1
   base year and 7 option years
 – CPAF
                                             4
        Disclosure of Risks
       and Living Conditions
Contractors must brief employees regarding
potential dangers.




Many contracts require the contractor to
obtain employees’ written acknowledgment.
                                             5
          Disclosure of Risks
         and Living Conditions (contd)
Contractor employees will generally eat, sleep,
and work with and enjoy all privileges available to
DoD civilian and military personnel (unless the
contract with the Government specifically
mandates or prohibits certain living conditions).
During contingency deployments, employees may
often be living under field conditions




                                                  6
Employee Management and Oversight

Contractors must ensure that employees comply
with applicable laws and regulations, and all
guidance and general orders from the theater
commander or his/her representative.
General orders concern mission accomplishment,
force protection, safety and unit cohesion.
Contractors must replace “unfit” or departed
employees.

                                                 7
Employee Management and Oversight
                   (contd)

Contractors must ensure adequate training and
licensing for equipment and vehicles.
Contractors must ensure that employees have
proper passports, visas, and are responsible for
those costs. Employees are also subject to
customs regulations.
Contractors may be deployed/redeployed through
centralized deployment points.

                                                   8
           Contractor Accounting
              For Personnel

Contractors must keep track of employees,
and may be required to report to the
contracting officer the status of employees
entering and leaving the area of operations.
Accounting and tracking of employees may
be critical for purposes of ensuring force
protection and other provisions.
                                           9
 Assignment to Designated Units

Contractor employees are typically assigned
to a particular units or elements for
purposes of accounting and coordination.
Employees are under the “administrative
control” of the unit or element to which
they are assigned for purposes of receiving
orders and instructions.

                                          10
Medical Processing and Screening
Contractors may be required to conduct or obtain physical
and mental evaluations of employees prior to deployment.
Employees must meet the same general fitness
requirements as DOD civilians:
 – Able to lift 40 pounds.
 – Able to walk one mile in 20 minutes.
 – Do not require medications that are unavailable in the theater.
 – Do not require medical treatment or physical therapy that is not
   available in the theater.
 – For areas requiring anthrax vaccination, must be between ages 18
   to 65.
 – 90-day supply of medication recommended.
                                                                      11
        Medical Processing
        and Screening (contd)

Immunizations required prior to
deployment.
For identification purposes, the Army
recommends that employees obtain a dental
panograph and/or have a DNA specimen
collected.

                                        12
Force Protection and Other Services
 The Government acknowledges its responsibility
 to provide protection and services to contractor
 employees.
 Force protection commensurate with that
 provided to DOD civilian personnel.
 Employees are provided physical security and
 protection, emergency medical and dental care,
 and evacuation.
                                                    13
         International Law and
     Status of Forces Agreements
Under the Geneva Convention Relative to
Prisoners of War (1949) authorized contractor
personnel generally are entitled to POW status if
captured by hostile forces.
Contractors are neither “combatants” nor “non-
combatants”, but instead are “civilians
accompanying the Armed Forces in the theater of
operations as authorized members of that force.”


                                                    14
         International Law and
  Status of Forces Agreements (contd)
The Army maintains that it is not a violation of the
law of war for DoD civilians or contractor
personnel to carry a weapon for personal self-
defense while accompanying a military force.
Accordingly, capture by an opposing force while
wearing a uniform or carrying a weapon does not
deprive an individual accompanying a military
force of status and protections.


                                                  15
         International Law and
  Status of Forces Agreements (contd)
Status of Forces Agreements (“SOFA”) are agreements
between the U.S. and a foreign Government regarding the
deployment of forces and various rights, obligations and
immunities of different categories of individuals.
Depending on the applicable SOFA, “contractors” may not
be specifically defined, or may be defined as having
different status than military or DoD civilian personnel.
SOFAs take precedence over contract provisions in the
event of a conflict.
Contractors should clarify with contracting officer all of
the relevant status issues for employees.

                                                         16
                  Employee Identification

Three forms of identification are typically issued
to contractor employees:
– DD Form 1173, Uniform Services Identification Card.
– DD Form 489, Geneva Convention Identity Card for
  Civilians Who Accompany the Armed Forces.
– Personal identification (i.e., “dog tags”).
Prior to deployment, contractors may be required
to ensure that employees fill out DD Form 93 for
next of kin notifications.
                                                        17
          Clothing and Equipment

Contractors must ensure that employees have proper
equipment, clothing, and supplies to perform the contract.
Generally, contractors are not required to wear battle
uniforms, but may be required to present a uniform
appearance, e.g. mess hall whites.
The Government will provide all military-unique
equipment, such as protective clothing (e.g. biological,
chemical or radiological protective gear). Such equipment
is governed by standard Government-furnished property
regulations and clauses.

                                                         18
     Weapons and Training


The Government may authorize certain employees
to carry firearms on a voluntary basis.
The Government is responsible for issuance of
firearms and training. Contractor-provided
firearms are not permitted.
Use of firearms will be governed by the same
rules of engagement applicable to military
personnel and DoD civilians.

                                           19
Compensation for Employee
 Injury, Detention or Death

Two federal statutes extend workers’
compensation for employees who are
injured, captured or killed while working
overseas on certain federal contracts.
– The Defense Base Act (“DBA”) 42 U.S.C. §
  1651 et seq.
– War Hazards Compensation Act (“WHCA”) 42
  U.S.C. § 1701 et seq.

                                             20
       Compensation for Employee
      Injury, Detention or Death (contd)
The extension of workers’ compensation for overseas
activities typically requires additional insurance coverage
because of exclusions in standard policies.
Contractors may recover the costs of insurance premiums
as an expense under contracts, and contractors or their
insurers may receive direct reimbursement for certain war-
related payments to employees.
Contractors should consult with their insurance carriers to
determine the coverage needed and whether any
anticipated activities void coverage under existing policies.

                                                           21
           Special Insurance Issue
for Activities in Countries Under Sanctions
 Insurance carriers are prohibited by law from providing
 coverage for business operations in any country against
 which the United States has sanctions, e.g. Iraq.
 The Department of Treasury’s Office of Foreign Asset
 Control (“OFAC”) may grant a license for transactions and
 assets for activities in countries and areas under sanctions.
 Currently, the Department of State (“DOS”) and USAID
 have agency-wide waivers from OFAC for contracts in
 Iraq.

                                                            22
       The Defense Base Act

Applies to employees on Government contracts
overseas for “public works.”
Requires contractors to provide workers’
compensation coverage by extending coverage of
the Longshoreman’s and Harbor Workers
Compensation Act (thereby provides coverage
under the substantive rules of workers’
compensation).
A contract subject to the DBA must include the
clause at Federal Acquisition Regulation (“FAR”)
§ 52.228-3.
                                               23
    The Defense Base Act (contd)

USAID and DOS have contracts with insurers to
provide DBA coverage at standard rates.
Employees (or their families) may receive
compensation for injuries or death, including
funeral and burial expenses, medical/hospital care,
or other necessary care.
Also provides coverage when an employee is
injured or killed during travel to or from the place
of employment when the contractor or
Government provides for the cost of
transportation.
                                                   24
 The War Hazards
 Compensation Act
Expands coverage of the DBA to
provide coverage for war-related
hazards, such as injury, death or capture resulting
from combat.
Unlike the DBA, which covers injuries sustained
only during the course of an employee’s
performance of duties, the WHCA covers injuries
sustained while present in a combat zone, whether
or not the employee was engaged in the
performance of the contract.
                                                  25
The War Hazards
Compensation Act (contd)
 The WHCA broadly defines “war risk hazards”
 and is not limited to actual declarations of war.
 Employees (or their families) may receive
 compensation for injuries, capture and detention,
 or death, including funeral and burial expenses,
 medical/hospital care, or other necessary care.
 The WHCA also provides for compensation if an
 employee is captured or reasonably believed
 captured by hostile forces, or not returned to home
 or place of employment due to failure of the
 contractor or the Government.
                                                   26
     Pay Incentives for Contractor
    Employees in Dangerous Areas
“Danger pay” premiums
Army February 2003 Memorandum: contracting
officers may negotiate up to 15% increase in
employee wages for the pre-war conditions, and a
25% increase during the war.
The Army Memorandum followed the DOS
Standard Regulations regarding the classification
of danger pay posts and the levels of pay
premiums authorized above basic compensation
levels.
                                                27
     Pay Incentives for Contractor
   Employees in Dangerous Areas (contd)
Additional amounts, such as danger pay, apply only to “base hours,”
and not to overtime.
The DOS regulations may be the basis for requesting danger pay in
other areas where the Government has not specifically authorized
danger pay.
Generally, additional contract costs for danger pay are allowable and
may be passed on to the Government.
The FAR, however, counsels that advanced agreement and
coordination with the contracting officer are strongly encouraged to
verify the allowability of these costs. See FAR § 31.109.
As with all costs, the additional danger pay amounts must be
reasonable.

                                                                        28
     Other Issues –
Away from the Front Lines




                            29
   Extended Military Leave Benefits

October 2001 DOD Memorandum concerning the
allowability of costs for additional fringe benefits
paid by contractors to employees who are “called
up”.
Costs for continuation of fringe benefits such as
health care and/or pay differential between
employees’ salaries and their military duty salaries
allowable.


                                                  30
 Defenses to Contractor Liability

Government Contractor Defense:
– A defense against liability for a contractor’s or its
  employee’s actions available to the extent that the
  employee was acting within the scope of a Government
  contract. See Boyle v. United States, 487 U.S. 500
  (1987).
– Although the defense was first raised in the context of a
  contractor’s liability for a manufacturing defect, courts
  have held that the defense applies to service contracting
  as well.

                                                          31
 Extraordinary Contractual Relief

Possible protection under Public Law
85-804
– But, relief is rarely granted, and only in
  “extraordinary” conditions.




                                               32
Government Restriction
Of Access to Worksites

 Restrictions on employee access due to heightened
 security at Government facilities.
 Depending on type of contract, the Government’s
 action could be deemed a constructive partial
 suspension or stop work or a constructive partial
 termination, for which the contractor may be
 entitled to an equitable adjustment in the contract
 price or other contract terms.

                                                  33
     Government Restriction
   Of Access to Worksites (contd)

Communicate with CO early and often
Keep detailed records of communications
and activities concerning idled employees
and resources, including efforts to mitigate
the costs of having them on stand-by.



                                               34
       The Defense Priorities
   And Allocation System (“DPAS”)

“Rated orders” that identify critical items and
establish a hierarchy of priority for their
production.
A contractor must give rated orders priority over
lower-rated orders and all non-rated orders.
A contractor must fill rated orders regardless of
the impact it may have on the non-rated or lower-
rated orders of Government or commercial sector
customers.
Special provisions of the DPAS grant immunity
from civil actions to contractors who accept rated
                                                   35
orders.
 Specific Clauses

The DoD Acquisition Deskbook Supplement,
“Contractor Support in the Theater of Operations,”
lists topics discussed above and provides sample
contract language to incorporate into contracts.
http://www.dscp.dla.mil/contract/doc/contractor.doc




                                                      36
   DoD Force Protection Clause
DFARS 252.225-7043 requires contractors to obtain
information necessary to ensure the safety of contractor
personnel.
 – The clause itself does not specify particular protections
   or guarantees available to contractors, but directs
   contractors to seek out information.
 – Contractors are required to contact the DOS’ Overseas
   Security Advisory Council and inform the United States
   embassy of the presence of employees.
 – Contractors must also provide employees with force
   protection awareness information commensurate with
   that provided to DOD civilian and military personnel
   and to ensure compliance with existing polices
   regarding force protection for contractors.             37
           Defense Threat
       Reduction Agency (DTRA)
Follows DFARS 252.225-9074 which provides
more specific information regarding “Contractor
Area of Operations Support.”
Briefing of employees on potential dangers and
field conditions and written acknowledgement
from employees.
Employees for deployment must have adequate
ability to perform, e.g., mental and physical
fitness. Mandatory medical conditions, such as
immunization, must be met.
                                                  38
           Defense Threat
   Reduction Agency (DTRA) (contd)
Contractor must provide proper equipment,
clothing, and supplies for employees (military-
specific equipment, such as protective clothing,
provided by Government)
Government force protection commensurate with
that provided to deployed DOD civilians. The
Government may authorize weapons and provide
training. No contractor-issued weapons are
permitted.
                                                   39
           Defense Threat
   Reduction Agency (DTRA) (contd)
In-theater personnel support commensurate with
that provided to deployed DOD civilians such as
shelter, subsistence, medical and dental treatment,
sanitary facilities, mail, laundry, and other
available services.
Specifies the chain of command for contractor
employees deployed to an area of operations.
Non-routine direct costs caused by performance,
not incurred as overhead or a direct charge on
another contract, may be a direct charge for this
contract (all contract types).
                                                  40
             Draft Army Clause

“Contractors Accompanying the
Force” (March 2003), AFARS
5152.225-79-900.
– Like the DTRA clause, the Army clause
  specifically identifies Government and
  contractor responsibilities regarding
  contractor employees who support
  Army activities.
– Sets forth notice of possible hazardous
  conditions.

                                            41
         Draft Army Clause (contd)

– Specifies that the clause applies to both contractor and
  subcontractor employees.
– Requires DD Form 93 regarding next of kin
  notification.
– Requires contractors to conduct security and
  background checks for employees prior to deployment.
– Requires medical screening, proper clothing and
  equipment, training and licensing, and travel
  documentation.


                                                             42
              Conclusion
Early and consistent communications with
contracting officers
Full disclosure to employees of risks and
hardships involved in deployment, and all steps
necessary to prepare employees prior to departure
Understand applicable regulations and clauses,
and the respective obligations and rights of the
Government and contractor employees


                                                43
      Sources of Information

“Contingency Contracting and Contractor On The
Battlefield Policy, Guidance, Doctrine, and Other
Relevant Information
http://www.amc.army.mil/amc/rda/rda-ac/ck/ck-prime.htm
“Contractor On the Battlefield Resource
Library”
http://www.osc.army.mil/others/Gca/battlefield.doc



                                                     45
      Sources of Information
                             (contd.)
“AMC-Contracts and Contractors Supporting
Military Operations”
http://www.amc.army.mil/amc/ci/pubs/p715_18.pdf
“Contractors On The Battlefield,” Army Field
Manual 3-100.21 (Jan., 2003)
http://www.adtdl.army.mil/cgi-bin/atdl.dll/fm/3-100.21/fm3_100X21.pdf
http://www.adtdl.army.mil/cgi-bin/atdl.dll/fm/3-100.21/toc.htm




                                                                        46
       Sources of Information
                       (contd.)
LOGCAP Technical Library, Policy and Doctrine
http://www.amc.army.mil/LOGCAP/Resources1.html
DOD Acquisition Deskbook Supplement
“Contractor Support in the Theater of Operations”
(28 March 2001)
http://www.dscp.dla.mil/contract/doc/contractor.doc
Department of State Standardized Regulations
http://www.state.gov/m/a/als/c1843.htm


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