During this period, the DBA has processed 1,987 cases involving the death of a covered employee. 5136, Proposed Legislation to Deny Award Fees to Contractors due to Negligent Contractor Behavior

Congress has expressed concern over negligent contractor behavior that may jeopardize the health and safety of both contractors and government personnel. Accordingly, H.R. 5136 , the proposed NDAA for FY2011, includes a provision that requires the Secretary of Defense to report to the House and Senate Armed Services Committees, by September 1, 2011, on incidents where contractors have earned reduced award fees or been denied award fees because of incidents where the contractor jeopardized the health or safety of government personnel. P.L. 111-84 , the NDAA for FY2010, authorizes the Secretary of Defense to reduce or deny award fees due to such incidents, as defined in Section 823. Legislative History

The Defense Base Act, P.L. In 2006, Congress directed the Department of Defense (DOD) to examine ways it could improve its DBA procedures and Section 843 of the Duncan Hunter National Defense Authorization Act for FY2009 (NDAA) requires DOD to change the way its contractors provide DBA coverage for their workers and to prepare a report to Congress on a new DOD acquisition strategy for DBA insurance. Selection of Defense Base Act Providers

Although many federal agencies have had or currently have overseas contracts subject to the DBA, the Departments of State (DOS) and Defense (DOD) and the U.S. Agency for International Development (USAID) are the major DBA contractors operating in Iraq and Afghanistan. Department of Defense

DOD, with the exception of contracts issued by the U.S. Army Corps of Engineers (USACE) and the Joint Contracting Command-Iraq/Afghanistan (JCC-IA), permits its overseas contractors to purchase DBA insurance from any insurance company approved by DOL. Concerns have been raised over the following issues:
the overall cost and variability of DBA premiums paid; the basis for DBA premiums; the costs of the program to the federal government; the manner in which contractors select their DBA providers; and the coordination of the DBA with the WHCA. P.L. 5658 ) provision passed by the House provided an outline of several policy options that DOD was required to consider when formulating its overall DBA strategy. The three categories of policy options are
using a single contracted source, or a limited set of contracted sources, for all DOD DBA contracts, similar to the model used by DOS, USAID, and the USACE pilot program; using a rating system to set premiums based on past claims incurred, similar to the experience rating systems used in many private insurance lines; and having the federal government self-insure for all DBA costs similar to what is currently done with the workers' compensation for injuries and death related to war hazards under the WHCA and workers' compensation for federal employees under the FECA program. Single-Source Contract for DBA Insurance

Currently, DOS, USAID, and USACE use single-source contracts to provide DBA insurance for their contractors. Although there are indications that adoption by DOD of a single-source model for DBA insurance could result in cost savings, the size and complexity of the DOD and its contracts may result in difficulties in that agency adopting the system used by the smaller DOS and USAID. Although the DOD's analysis of four major policy alternatives is comprehensive, there are limitations to its utility as a guide for Congress in making changes to the overall DBA system. Appendix. List of Acronyms
Many overseas federal contractors are covered by the Defense Base Act (DBA), which mandates that they provide workers' compensation insurance for their employees. As the U.S. military has increased operations in Iraq, the size of the DBA program has grown. Since September 2001, there have been 49,472 DBA cases, including 1,584 cases involving the deaths of contractors in Iraq and Afghanistan. Nearly $200 million in cash and medical benefits were paid to DBA claimants in 2008.
Congress has become increasingly concerned with the costs involved in the DBA program because the federal government usually reimburses its contractors for their DBA premiums. The Department of State (DOS) and the U.S. Agency for International Development (USAID) have seen some cost savings since adopting single-source models for their DBA insurance in which contractors for each agency are required to purchase insurance from a single company selected by the agency. The U.S. Army Corps of Engineers (USACE) is currently testing such a model for its DBA system. For the rest of the Department of Defense (DOD), however, including the Army's large Logistics Civil Augmentation Program (LOGCAP) contract, individual contractors are free to select their own DBA insurers and negotiate their own rates, and one contractor, KBR, has been criticized by DOD auditors for failing to demonstrate that it sought to control DBA premium costs when selecting an insurer.
Although not directly related to the Defense Base Act, Congress has expressed concern over negligent contractor behavior that may jeopardize the health and safety of both contractors and government personnel. Accordingly, H.R. 5136, the proposed National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2011, includes a provision that requires the Secretary of Defense to report to the House and Senate Armed Services Committees, by September 1, 2011, on incidents where contractors have earned reduced award fees or been denied award fees because of incidents where the contractor jeopardized the health or safety of government personnel. P.L. 111-84, the NDAA for FY2010, authorizes the Secretary of Defense to reduce or deny award fees due to such incidents, as defined in Section 823 of P.L. 111-84.
The NDAA for FY2009 (P.L. 110-417) includes a provision that requires DOD to change the way its contractors provide DBA coverage for their workers. In a report issued pursuant to this legislation, DOD concluded that making improvements to the current open-market DBA insurance system would best meet the criteria for reform recommended by Congress and the agency. The report also found advantages that could result from having the federal government self-insure, with third-party administration, for DBA costs. However, there may be limitations to the utility of the report as a guide for Congress in making overall changes to the DBA program.
This report provides an overview of the DBA and the systems used to provide DBA insurance at DOS, USAID, DOD, and USACE. Also included are criticisms of the current DOD DBA policy raised by GAO and Army auditors as well as responses to those criticisms by DOD and USACE. The report concludes with a discussion of several DBA reform options suggested by the House of Representatives in recent legislation and analyzed by DOD. A list of acronyms used in this report is provided in the Appendix.