Federal Contractors Seek Liability Shields
Tuesday, September 20, 2005
Contractors working on Hurricane Katrina relief efforts for the federal government want Congress to limit their liability from lawsuits and are drafting legislation to seek such protection, industry officials said yesterday.
The Army Corps of Engineers and the Federal Emergency Management Agency have relied on contractors, including several who started work without a contract, to fix the levees in New Orleans and pump water out of the city. But the companies have become concerned about the liability issue because of lawsuits filed against construction firms that helped clean up the World Trade Center after the Sept. 11, 2001, terrorist attacks.
"We're asking for some reasonable limits for going into the Gulf Coast and dealing with unknowns," Michael E. Kennedy, general counsel for the Associated General Contractors of America, said after a meeting of the trade group in Washington. "A contractor goes into an unknown situation to remove debris or fix a utility line, and three years from now someone decides they did it improperly."
The Corps has already contracted with more than a dozen companies for work worth $2.8 billion during the next year. Those companies will be joined by dozens more as reconstruction of the region begins.
The bill that the trade group is drafting would limit contractors' liabilities but still hold them responsible for following government regulations, Kennedy said. It would be similar to regulations the Homeland Security Department unveiled last year that protect companies selling security technology from lawsuits triggered by a terrorist act.
Legislation was introduced in the House last week to shield volunteer contractors from liability. The general contractors' bill would extend the coverage to companies working under the government.
"You can consider these contractors as an extension of the government; they are performing a lot of public" duties, Kennedy said.
Robert S. Boh, president of Boh Bros. Construction Co. of New Orleans, said yesterday that he favors such a bill. His firm moved its New Orleans offices to Baton Rouge, La., after the hurricane hit but was soon hired by the Corps to fix the levees and pump water out of the city.
"We're simply showing up and responding to verbal direction," Boh said. "We're not adequately able to assess the request for risks."
Also yesterday, the Homeland Security Department's inspector general appointed a National Weather Service official who once served as acting chief financial officer of FEMA to lead the office's work overseeing Katrina spending.
Matthew A. Jadacki, who worked at FEMA from 1991 to 2004, will "be responsible for overseeing the management and expenditures of all contracts, grants and governmental operations related to Hurricane Katrina relief efforts," according to a Homeland Security Department statement.
Jadacki's appointment comes as members of Congress continue to debate other ideas for how the government will monitor the flow of money for Gulf Coast reconstruction. The proposals include establishing a special inspector general's office, expanding the duties of the special inspector general for Iraq reconstruction or establishing a chief financial officer.
Some in Congress are concerned that Homeland Security's inspector general's office will not have the resources to monitor the department's regular work, as well as the tens of billions of dollars flowing into the Gulf Coast. Homeland Security Department officials, however, have said the department's IG office is up to the task.
Staff writers Spencer Hsu and Griff Witte contributed to this report.