Summary: A review was undertaken of the insurance requirements of the Defense Base Act (DBA) as they relate to Agency for International Development (AID) contractors working overseas. DBA was enacted in order to extend workers' compensation protection to employees of Government contractors working at overseas defense bases. As a result, AID requires DBA insurance for employees working overseas, including: (1) those under AID direct contracts; (2) those under contracts between host governments and third parties financed by AID loans; and (3) those under contracts between AID grantees and third parties.
In its review, GAO found that: (1) substantial confusion and misunderstanding exist between AID and the Department of Labor (Labor) concerning when DBA insurance requirements apply and when they do not; (2) the exemption of development loans from DBA requirements may have caused inequities in worker coverage overseas; and (3) to obtain the required coverage, some AID-financed contractors must pay DBA premiums which approach or exceed their salary costs. Moreover, at least $245,000 could have been saved over the last 3 years had the AID-blanket DBA contract been extended to these contractors.
