(b) If, after a study of the maximum conceivable damage which can result from an incident arising out of or in connection with the contractor's activities, the Head of a Procuring Activity concludes that the maximum conceivable damage per incident to property and persons is $60 million or more, the contractor may be found to be under a risk of public liability for a substantial nuclear incident and the Head of the Procuring Activity is authorized to execute a statutory indemnity agreement under such a contract. If such a study of the maximum conceivable damage indicates a figure of $1 million or less, the contractor should not be considered to have a risk of public liability for a substantial nuclear incident, and therefore, shall not be made a party to a statutory indemnity agreement. If the study indicates that the maximum conceivable damage falls between $1 million and $60 million, the Head of a Procuring Activity will submit the proposed indemnification of such contractor to the Head of the Agency or designee with a recommendation and all supporting data. (c) The Head of the Agency or designee, on such a recommendation, may take one of the following actions: (1) Determine that the contractor is under risk of public liability for a substantial nuclear incident and that the contractor should be extended a statutory indemnity agreement; or (2) Determine that the contractor should not be extended a statutory indemnity. In this case, the Head of the Agency or designee may authorize the Head of a Procuring Activity to authorize the contractor to purchase nuclear liability insurance or to offer the contractor a general authority indemnity agreement. §9-10.5006 Statutory indemnity contract article. The contract article contained in §9-50.704-6 shall be incorporated in all contracts in which a statutory indemnity agreement is to be included upon a determination that the contractor is under risk of public liability for the occurrence of a substantial nuclear incident in the course of performance of the contract work. The contract article contained in §9-50.704-7 shall be incorporated in all contracts in which a statutory indemnity agreement is to be included upon a determination that the contractor is under risk of public liability only for a substantial nuclear incident caused by a product delivered to or for DOE, under the contract where such product is expected to be used in connection with a facility or device not covered by a statutory indemnity agreement. §9-10.5007 Contractual assurance. Heads of Procuring Activities are authorized to include in all contracts for: (a) Architect-engineer services in connection with the construction of a production or utilization facility; (b) The supply of component parts (including construction contracts where the work does not entail the risk of occurrence of a substantial nuclear incident) for a production or utilization facility; and (c) The supply of equipment or services which would be a part of, or, contribute to, or be used in connection with the construction or operation of a production or utilization facility, assurances that DOE will enter into a statutory indemnity agreement with the contractor who will operate a facility on its completion. Assurances will be given, however, only to those contractors and suppliers who might be held liable in connection with a substantial nuclear incident occurring after completion of the facility. The form of contractual assurance which shall be utilized is contained in §9-50.704-8. §9-10.5008 "Representation" for use in subcontracts and purchase orders of prime contractor holding statutory indemnity agreement. A DOE contractor with whom a statutory indemnity agreement has been executed in the form contained in §9-50.704-6 may include in any of its subcontracts and purchase orders a representation that the work under the prime contract is covered by a statutory indemnity agreement with DOE, and that this indemnity covers all persons who may be liable for public liability for any nuclear incident arising out of or in connection with the activity under the prime contract. A suggested form of "representation" follows: The contractor represents that there is included in its prime contract with DOE an indemnity agreement, entered into by DOE under the authority of Section 170 of the Atomic Energy Act of 1954, as amended by Public Law 85-256 (the "Price-Anderson Act"), a copy of which may be obtained from the contractor [is attached hereto]; that, under said agreement, DOE has agreed to indemnify the contractor and other persons indemnified, including the subcontractor, against claims for public liability (as defined in said Act) arising out of or in connection with the contractual activity; that the indemnity applies to covered nuclear incidents which (1) take place at a "contract location" (which term, as defined in the indemnity agreement, does not include the location of the subcontractor's plant and facilities); or (2) arise out of or in the course of transportation of source, special nuclear or by-product material to or from a "contract location"; or (3) involve items produced or delivered under the prime contract. The obligation of DOE to indemnify is subject to the conditions stated in the indemnity agreement. DOE will not approve the inclusion, in the subcontracts and purchase orders of an indemnified prime contractor, of any provision whereby the prime contractor indemnifies the subcontractor or supplier against public liability for a nuclear incident because any such liability will be covered by the statutory indemnity agreement of the prime contractor. §9-10.5009 Fees. No fee will be charged a DOE contractor for a statutory indemnity agreement. §9-10.5010 Financial protection requirements. (a) DOE contractors with whom statutory indemnity agreements under the authority of section 170 d of the Atomic Energy Act of 1954, as amended, are executed will not normally be required or permitted to furnish financial protection by purchase of insurance to cover public liability for nuclear incidents, except (1) that DOE contractors now covered by insurance against such liability, with the approval of the DOE, may continue to carry such insurance; and (2) with the approval of the Controller, contractors engaged in the operation of DOE facilities may be required or permitted to furnish financial protection in an amount not to exceed $1 million. (b) If nuclear liability insurance is carried by a contractor who is a Nuclear Regulatory Commission (NRC) licensee, DOE will pay an equitable portion of the insurance premium under its contract (or would include such an item in the calculation of a fixed price), but normally a statutory indemnity agreement would not be granted under the contract. §9-10.5011 General contract authority indemnity. (a) DOE also has general contract authority to enter into indemnity agreements with its contractors. Under such authority a certain measure of protection is extended to the DOE contractor against risk of liability, but the assumption of liability by DOE will be expressly subject to the availability of appropriated funds. Prior to enactment of section 170 of the Atomic Energy Act of 1954, as amended, this authority was exercised in a number of Atomic Energy Commission contracts and this type of indemnification remains in some DOE contracts. (b) It is the policy of DOE, subsequent to the enactment of section 170, to restrict indemnity agreements with DOE contractors, with respect to protection against public liability for a nuclear incident, to the statutory indemnity provided under section 170. However, it is recognized that circumstances may exist under which a DOE contractor may be exposed to a risk of public liability for a nuclear occurrence which would not be covered by the statutory indemnity. (c) While it is normally DOE policy to require its contractors to obtain insurance coverage against public liability for nonnuclear risks, there may be circumstances in which a contractual indemnity may be warranted to protect a DOE contractor against liability for uninsured nonnuclear risks. (d) If circumstances as mentioned in paragraph (b) or (c) of this section do arise, it shall be the responsibility of the Heads of the Procuring Activities to submit to the Head of the Agency or designee for his review and decision, all pertinent information concerning the need for, or desirability of, providing a general authority indemnity to a DOE contractor. (e) Where the indemnified risk is nonnuclear, the amount of general authority indemnity extended to a fixed-price contractor should normally have a maximum obligation equivalent to the amount of insurance that the contractor usually carries to cover such risks in his other commercial operations or, if the risk involved is dissimilar to those normally encountered by the contractor, the amount that it otherwise would have reasonably procured to insure this contract risk. (f) In the event that a DOE contractor has been extended both a statutory indemnity and a general authority indemnity, the general authority indemnity will not apply to the extent that the statutory indemnity applies. (g) The provisions of this subsection do not restrict or affect the policy of DOE to pay its cost-reimbursement type contractors for the allowable cost of losses and expenses incurred in the performance of the contract work, within the maximum amount of the contract obligation. §9-10.5012 Service type insurance policies. (a) Service type insurance policies are cost reimbursement type contracts or subcontracts in which the insurer provides claim and loss adjustment services on a cost reimbursement basis, which satisfies state and Federal insurance requirements. (b) Service type insurance policies may be used when one or more of the following criteria are present and the Contracting Officer approves: (1) Pure risk commercial insurance is not available or, if available, cost is not considered reasonable; est. (2) Inherent risks in the contract are new and a part of the process of commercialization; |