42 U.S.C. § 1655: Requirement for Department…

Summary

The Secretary of Defense must create a plan for buying Defense Base Act insurance that keeps costs low for the Department and for defense contractors. The plan must cut overhead and administration costs, keep coverage costs down using realistic ideas about claims, tie premiums to claims using best government and industry practices, keep the Department’s risk low, and keep the insurance market competitive when possible. The Secretary must consider different ways to meet these goals, including a single contract. A report on the chosen plan must be sent to the listed congressional committees within 270 days after October 14, 2008, showing the options considered and a plan to put the strategy in place within 18 months after October 14, 2008. The Secretary must review and update the plan as needed, but at least once every 3 years.

Title 42, §1655

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(a)In general

The Secretary of Defense shall adopt an acquisition strategy for insurance required by the Defense Base Act (42 U.S.C. 1651 et seq.) which minimizes the cost of such insurance to the Department of Defense and to defense contractors subject to such Act.

(b)Criteria

The Secretary shall ensure that the acquisition strategy adopted pursuant to subsection (a) addresses the following criteria:

(1)Minimize overhead costs associated with obtaining such insurance, such as direct or indirect costs for contract management and contract administration.

(2)Minimize costs for coverage of such insurance consistent with realistic assumptions regarding the likelihood of incurred claims by contractors of the Department.

(3)Provide for a correlation of premiums paid in relation to claims incurred that is modeled on best practices in government and industry for similar kinds of insurance.

(4)Provide for a low level of risk to the Department.

(5)Provide for a competitive marketplace for insurance required by the Defense Base Act [42 U.S.C. 1651 et seq.] to the maximum extent practicable.

(c)Options

In adopting the acquisition strategy pursuant to subsection (a), the Secretary shall consider such options (including entering into a single Defense Base Act insurance contract) as the Secretary deems to best satisfy the criteria identified under subsection (b).

(d)Report

(1)Not later than 270 days after October 14, 2008, the Secretary shall submit to the Committees on Armed Services of the Senate and the House of Representatives, the Committee on Homeland Security and Governmental Affairs of the Senate, and the Committee on Oversight and Government Reform of the House of Representatives a report on the acquisition strategy adopted pursuant to subsection (a).

(2)The report shall include a discussion of each of the options considered pursuant to subsection (c) and the extent to which each option addresses the criteria identified under subsection (b), and shall include a plan to implement within 18 months after October 14, 2008, the acquisition strategy adopted by the Secretary.

(e)Review of acquisition strategy

As considered appropriate by the Secretary, but not less often than once every 3 years, the Secretary shall review and, as necessary, update the acquisition strategy adopted pursuant to subsection (a) to ensure that it best addresses the criteria identified under subsection (b).

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Defense Base Act, referred to in section catchline and subsecs. (a) to (c), is act Aug. 16, 1941, ch. 357, 55 Stat. 622, which is classified generally to this chapter. For complete classification of this Act to the Code, see

Short Title

note set out under section 1651 of this title and Tables. Codification Section was enacted as part of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009, and not as part of the Defense Base Act which comprises this chapter.

Statutory Notes and Related Subsidiaries

Change of Name

Committee on Oversight and Government Reform of House of Representatives changed to Committee on Oversight and Reform of House of Representatives by House Resolution No. 6, One Hundred Sixteenth Congress, Jan. 9, 2019. Committee on Oversight and Reform of House of Representatives changed to Committee on Oversight and Accountability of House of Representatives by House Resolution No. 5, One Hundred Eighteenth Congress, Jan. 9, 2023.

§1655 Requirement for Department of Defense to Adopt an Acquisition Strategy for Defense Base Act Insurance