50.104-3
Special procedures for unusually hazardous or nuclear risks
Contractors seeking indemnification for unusually hazardous or nuclear risks must submit detailed requests and promptly update insurance changes, with approval and contract incorporation following a rigorous review process.
Overview
FAR 50.104-3 outlines the special procedures for contractors seeking indemnification against unusually hazardous or nuclear risks. It details the information contractors must submit with their requests, the review and approval process by contracting officers, and the requirements for updating insurance information. The regulation ensures that contractors are adequately protected when performing work that exposes them to extraordinary risks, while also safeguarding government interests.
Key Rules
- Indemnification Requests
- Contractors must submit detailed requests to the contracting officer, including contract identification, risk definitions, insurance details, financial protection factors, and parent company relationships if applicable.
- Insurance Changes
- Contractors must promptly report any significant changes (10% or more) in insurance coverage after the initial request but before approval.
- Review and Approval Process
- The contracting officer, with legal and program office input, reviews the request, ensures all information is provided, and either denies or forwards the request for higher-level approval.
- Memorandum of Decision
- Approval to include the indemnification clause must be documented in a Memorandum of Decision by the designated official.
- Contract Incorporation
- Approved indemnification clauses and risk definitions must be incorporated into the contract.
- Subcontractor Indemnification
- Indemnification may be extended to subcontractors if justified and approved using the same procedures.
Responsibilities
- Contracting Officers: Review and process indemnification requests, ensure all required information is included, and document decisions.
- Contractors: Submit comprehensive indemnification requests, update insurance information as required, and comply with all safety and reporting requirements.
- Agencies: Provide oversight, legal review, and ensure national defense interests are considered.
Practical Implications
- This section exists to manage the risks associated with contracts involving unusually hazardous or nuclear activities, ensuring contractors are not unduly exposed to liabilities beyond available insurance. It impacts daily contracting by requiring thorough documentation, timely updates, and careful coordination between contractors and government officials. Common pitfalls include incomplete submissions, failure to update insurance changes, and lack of clarity in risk definitions.