50.104-1 Standards for use
Source: FAR 50.104-1 on acquisition.gov
Agency heads may require contractors to provide specific financial protections when granting indemnification under Public Law 85-804, and their determinations are final.
Overview
FAR 50.104-1 outlines the standards for using residual powers under Public Law 85-804, specifically regarding indemnification clauses in government contracts. It allows agency heads to authorize indemnification (using clause 52.250-1) when necessary, provided all relevant circumstances are considered and subject to limitations in FAR 50.102-3 and policies in 50.101-2. When indemnification is granted, the agency head may require the contractor to provide and maintain appropriate financial protection, such as insurance or self-insurance. The agency head must evaluate factors like the contractor’s existing insurance, financial responsibility, and the availability and cost of private insurance before making a final, binding determination on the type and amount of required financial protection.
Key Rules
- Use of Residual Powers
- Residual powers may be used when necessary and appropriate, considering all circumstances and subject to referenced limitations and policies.
- Indemnification Clause Authorization
- Agency heads may authorize the inclusion of the indemnification clause (52.250-1) and require contractors to maintain suitable financial protection.
- Evaluation of Financial Protection
- Agency heads must consider self-insurance, other financial responsibility, workers’ compensation, and private insurance options before determining requirements.
- Finality of Determination
- The agency head’s approval and determination regarding indemnification and financial protection are final.
Responsibilities
- Contracting Officers: Ensure compliance with referenced FAR sections and agency head determinations.
- Contractors: Provide and maintain required financial protection as determined by the agency head.
- Agencies: Evaluate and document all relevant factors before approving indemnification and set appropriate financial protection requirements.
Practical Implications
- This section ensures that indemnification under extraordinary contractual relief is carefully controlled and financially protected.
- Contractors must be prepared to demonstrate financial responsibility and secure insurance as required.
- Agency determinations are final, so contractors should proactively address financial protection requirements during negotiations.
Subject to the limitations in 50.102-3, residual powers may be used in accordance with the policies in 50.101-2 when necessary and appropriate, all circumstances considered. In authorizing the inclusion of the clause at 52.250-1, Indemnification Under Public Law 85-804, in a contract or subcontract, an agency head may require the indemnified contractor to provide and maintain financial protection of the type and amount determined appropriate. In deciding whether to approve use of the indemnification clause, and in determining the type and amount of financial protection the indemnified contractor is to provide and maintain, an agency head shall consider such factors as self-insurance, other proof of financial responsibility, workers’ compensation insurance, and the availability, cost, and terms of private insurance. The approval and determination shall be final.