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DOE Management: Consistent Cleanup Indemnification Policy Is Needed

  Premium   Download PDF Now (24 pages)
Report Type Reports and Testimonies
Report Date July 12, 1993
Report No. RCED-93-167
Subject
Summary:

In indemnifying its cleanup contractors, the Department of Energy (DOE) has adopted an inconsistent approach in which the government often accepts liabilities and contractors assume little financial responsibility. Individual contractors are indemnified not on the basis of a well-analyzed policy but as the result of negotiations, during which DOE does not first test to see whether indemnification is needed or set limits to its potential cost. As a result, some contractors have received more-favorable indemnification provisions than have others. More importantly, this approach has exposed the government to unknown but potentially significant financial risk since more than $5 billion in environmental damage lawsuits and claims have been filed under existing contracts. A consistent policy for indemnification that takes into account use of section 119 of the Superfund Amendments and Reauthorization Act, as well as other specific statutes, such as the Price-Anderson Act, can ensure that cleanup contractors are indemnified in a way that protects both the contractors' and the government's interests.

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