[Congressional Record Volume 140, Number 29 (Wednesday, March 16, 1994)]
[House]
[Page H]
From the Congressional Record Online through the Government Printing Office [www.gpo.gov]


[Congressional Record: March 16, 1994]
From the Congressional Record Online via GPO Access [wais.access.gpo.gov]

 
 CONTRACTUAL ACTIONS, CALENDAR YEAR 1993 TO FACILITATE NATIONAL DEFENSE

  The Clerk of the House of Representatives submits the following 
report for printing in the Congressional Record pursuant to section 
4(b) of Public Law 85-804:
                                          National Aeronautics and


                                         Space Administration,

                                    Washington, DC, March 2, 1994.
     Hon. Thomas Foley,
     Speaker of the House of Representatives, Washington, DC.
       Dear Mr. Speaker: In accordance with Section 4(a) of Public 
     Law 85-804 (50 U.S.C. 1431-35), I am reporting to the United 
     States Senate on all calendar year actions taken by the 
     National Aeronautics and Space Administration (NASA) under 
     authority of that Act which involve actual or potential cost 
     to the United States in excess of $50,000. These actions 
     include the granting of extraordinary contractual relief and 
     the indemnification of certain contractors.
       During calendar year 1993, the NASA Contract Adjustment 
     Board did not meet to consider any cases and granted no 
     requests for extraordinary contractual relief under Public 
     Law 85-804.
       With respect to contractor indemnification, NASA has 
     previously provided for that contingency. Specifically, on 
     January 19, 1983, the Administrator made a decision to 
     provide indemnification to certain NASA Space Transportation 
     System contractors for specified risks arising out of 
     contract performance directly related to NASA space 
     activities. The authority of that decision was extended from 
     September 30, 1984, through September 30, 1989, and has been 
     extended again through September 30, 1994. In addition, on 
     July 11, 1990, the Administrator decided to provide 
     indemnification to certain NASA contractors involved in 
     providing commercial Expendable Launch Vehicle launch 
     services for NASA spacecraft or for activities which are 
     carried out by NASA on behalf of the United States. The 
     authority of that decision extends through June 30, 1995. 
     Copies of the Administrator's Memorandum Decisions Under 
     Public Law 85-804 dated November 5, 1989, and July 11, 1990, 
     are enclosed.
       During calendar year 1993, one NASA prime contractor was 
     indemnified under the Memorandum Decision dated November 5, 
     1989. No contractors were indemnified under the Memorandum 
     Decision dated July 11, 1990. A summary description of the 
     contract indemnified is also enclosed.
           Sincerely,
                                                 Daniel S. Goldin,
                                                    Administrator.
                                  ____


              Memorandum Decision Under Public Law 85-804

       Authority for National Aeronautics and Space Administration 
     Contracting Officers to indemnify certain NASA contractors 
     and subcontractors involved in ASA space activities.
       1. On July 4, 1982, the Space Transportation System 
     (hereinafter STS) completed its design, development, test and 
     evaluation phase and was declared an operational system of 
     the United States for the transportation of payloads into the 
     out of outer space for governmental and commercial purposes. 
     Except for suspension of STS launches as a result of the 
     Challenger accident, the STS has conducted and will continue 
     to conduct launch, in orbit and landing activities on a 
     repetitive basis and at a prudent frequency.
       2. Scheduled STS operations have dictated a continuing 
     examination of the risks in repetitive space activities of 
     the STS and of the present availability of adequate insurance 
     at reasonable premiums to manufacturers and operators of the 
     system. While NASA's STS space activities are designed to be 
     safe, there exists the low statistical probability that a 
     malfunction of either hardware, software or operator error 
     could occur resulting in an accident. This low probability of 
     occurrence cannot be totally removed. In the event that such 
     a malfunction or operator error led to an accident, the 
     potential liability arising from such an accident could be 
     substantially in excess of the insurance coverage NASA 
     contractors could reasonably be expected to acquire and 
     maintain, considering the availability, cost and potential 
     terms and conditions of such insurance at the present time.
       3. Pursuant to the authority of Public Law 85-804 and 
     Executive Order 10789, as amended, and notwithstanding any 
     other provisions of the contracts to which this determination 
     may apply, I therefore authorize that certain NASA 
     contractors, as further defined in paragraphs 4 and 5 below, 
     be held harmless and indemnified against certain risks as 
     specifically set forth herein. Accordingly, and subject to 
     the limitations hereinafter stated, cognizant NASA 
     Contracting Officers are authorized to include in prime 
     contracts, described in paragraphs 4 and 5 below, contract 
     provisions for the indemnification of the contractors and 
     their subcontractors at any tier, against claims or losses, 
     as defined in paragraph 1A of E.O. 10789, as amended, arising 
     out of contract performance directly related to NASA's space 
     activities.
       4. This authorization is limited to prime contracts which 
     have an effective date before October 1, 1994, by or for NASA 
     for:
       a. provision of Space Transportation System and cargo 
     flight elements or components thereof;
       b. provision of Space Transportation System and cargo 
     ground support equipment or components thereof;
       c. provision of Space Transportation System and cargo 
     ground control facilities and services for their operation; 
     and
       d. repair, modification, overhaul support and services and 
     other support and services directly relating to the Space 
     Transportation System, its cargo and other elements used in 
     the NASA's space activities.
       5. This authorization is further limited solely to claims 
     or losses resulting from or arising out of the use or 
     performance of the products or services described in 
     paragraph 4 in NASA's space activities. For this purpose, the 
     use or performance of such products or services in NASA's 
     space activities begins solely when such products or services 
     are provided to the U.S. Government at a U.S. Government 
     installation for or in connection with one or more Space 
     Transportation System launches and are actually used or 
     performed in NASA's space activities.
       6. The risks for which indemnification is authorized are 
     the risks arising under the contracts described in paragraphs 
     4 and 5 causing personal injury or death, or loss of or 
     damage to property, or loss of use of property. These risks 
     are considered unusually hazardous risks solely in the sense 
     that if, in the unlikely event, the Space Transportation 
     System, its cargo or other elements or services used in the 
     NASA's space activities malfunctioned causing an accident, 
     the potential liability could be in excess of the insurance 
     coverage that a NASA prime contractor would reasonably be 
     expected to purchase and maintain, considering the 
     availability, cost, and terms and conditions of such 
     insurance. In no other sense are the Space Transportation 
     System, its cargo or other elements or services used in 
     NASA's space activities unusually hazardous.
       7. a. This authorization may be applied prospectively, 
     without additional consideration, to existing prime contracts 
     and subcontracts and in new prime contracts and subcontracts 
     which otherwise meet the conditions of this memorandum.
       b. Indemnification of prime contractors and subcontractors 
     may be provided under this authorization only when the 
     Government will receive the benefit of all cost savings, if 
     any, to the prime contractor and its subcontractors at every 
     tier.
       8. All contract indemnification clauses and procedures 
     shall comply with applicable provisions of Federal 
     Acquisition Regulation (FAR) Subpart 50.4 as supplemented by 
     NASA FAR Supplement (NFS) 18-50.4.
       9. This authorization is given upon condition that each 
     prime contractor is approved by me and that such contractor 
     maintains financial protection of such type and in such 
     amounts as may be determined by me in writing to be 
     appropriate under the circumstances. Each prime contractor 
     shall provide a statement of applicable financial protection 
     through the cognizant Contracting Officer for my review and 
     determination. In making this determination, I shall take 
     into account such factors as the availability, cost and terms 
     of private insurance, self-insurance and other proof of 
     financial responsibility and workman's compensation 
     insurance.
       10. When indemnification provisions are included in a prime 
     contract pursuant to the authority of this decision, the 
     cognizant Contracting Officer shall immediately submit 
     directly to the Contract Adjustment Board a report 
     referencing this decision and containing the information 
     required by NFS 18-50.403-70, Reporting and records 
     requirements.
       11. The actual or potential cost, if any, of the actions 
     hereby authorized is impossible to estimate since it is 
     contingent upon the remote possibility of an occurrence and 
     extent of loss resulting from certain space activities which 
     malfunction. Such an event may never occur; however, should a 
     major incident occur, millions of dollars of damage could 
     result.
       12. I find that this action will facilitate the national 
     defense. In the remote event that the Space Transportation 
     System, its cargo or other elements or services used in 
     NASA's space activities malfunctioned causing damage in 
     excess of insurance maintained by contractors and 
     subcontractors, the resulting excess liability could place 
     the contractors' and subcontractors' continued existence in 
     jeopardy, making those contractors and subcontractors 
     unavailable to continue to support space activities and the 
     Department of Defense. I note that for purposes of the 
     Defense Production Act of 1950, the term ``national defense'' 
     is defined as ``programs for . . . space, and directly 
     related activity.'' (50 U.S.C. App. 2152(d))
                                                 Richard H. Truly,
                                                    Administrator.
                                  ____

                                                    July 11, 1990.

              Memorandum Decision Under Public Law 85-804

       Authority for National Aeronautics and Space Administration 
     contracting officers to indemnify certain NASA contractors 
     and subcontractors involved in providing commercial 
     Expendable Launch Vehicle (ELV) launch services for NASA 
     spacecraft or for activities which are carried out by NASA on 
     behalf of the United States.
       1. Prior to the Challenger accident and consistent with 
     national policy, NASA's phase-out of our Expendable Launch 
     Vehicle (ELV) program was near completion and most missions 
     were transitioned to the Shuttle for launch. Up until this 
     time, NASA had total responsibility for the design, 
     development, fabrication, test, and launch of both Government 
     and commercial payloads on the Scout, Delta, and Atlas-
     Centaur launch vehicles. The President's National Space 
     Policy of November 2, 1989, which reaffirmed the key tenants 
     of earlier national policy statements, directed Federal 
     Agencies to establish a Mixed Fleet Launch Policy utilizing 
     the unique capabilities of the Space Shuttle and ELVs to 
     support Government launch requirements. The policy also 
     precluded NASA from maintaining an ELV adjunct to the Space 
     Shuttle and directed NASA to procure requisite ELV launch 
     services directly from the private sector or through the 
     Department of Defense. In accordance with the Deputy 
     Administrator's Decision Memorandum #22, dated January 27, 
     1989, NASA will acquire launch services whenever possible 
     directly from commercial operators.
       2. Increasing need of launch services with a high degree of 
     mission success has dictated a continuing examination of the 
     risks in repetitive launch activities and the present 
     availability of adequate insurance at reasonable premiums to 
     providers of commercial expendable launch services. While 
     commercial launch activities are designed to be safe, there 
     exists the low statistical probability that a malfunction of 
     either hardware, software, or operator error could occur 
     resulting in an accident. This low probability of occurrence 
     cannot be totally removed. In the event that such a 
     malfunction or operator error led to an accident, the 
     potential liability arising from such an accident could be 
     substantially in excess of the insurance coverage NASA 
     contractors could reasonably be expected to acquire and 
     maintain, considering the availability, cost, and potential 
     terms and conditions of such insurance at the present time.
       3. Pursuant to the authority of Public Law 85-804 and 
     Executive Order 10789, as amended, and notwithstanding any 
     other provisions of the contracts to which this determination 
     may apply, I therefore authorize that certain NASA 
     contractors, as further defined in paragraphs 4 and 5 
     below, be held harmless and indemnified against certain 
     risks as specifically set forth herein. Accordingly, and 
     subject to the limitations hereinafter stated, cognizant 
     NASA contracting officers are authorized to include in 
     prime contracts, described in paragraphs 4 and 5 below 
     contract provisions for the indemnification of the 
     contractors and their subcontractors at any tier, against 
     claims or losses, as defined in paragraph 1A of Executive 
     Order 10789, as amended, arising out of contract 
     performance directly related to providing NASA commercial 
     ELV launch services.
       4. This authorization is limited to prime contracts which 
     have an effective date before June 10, 1995, by or for NASA 
     for provision of commercial ELV launch services.
       5. This authorization is further limited solely to claims 
     or losses resulting from or arising out of the use or 
     performance of commercial launch services provided to NASA, 
     where NASA, under its contract, maintains sufficient 
     oversight and approval rights to assess and influence mission 
     risk. For this purpose, the use or performance of such launch 
     service activities begins only after such services are 
     provided to the U.S. Government at a U.S. Government 
     installation for or in connection with one or more ELV 
     launches and are actually used to provide launch services for 
     NASA or NASA-sponsored activities which are carried out by 
     NASA on behalf of the United States. The use or performance 
     referred to is limited to the explosion, detonation, 
     combustion, or impact of a launch vehicle, its payloads, or a 
     component thereof, whether or not the payload is separated 
     from the launch vehicle.
       6. The risks for which indemnification is authorized are 
     the risks arising under the contracts described in paragraphs 
     4 and 5 which result in claims by third persons, including 
     employees of the contractor, for death, personal injury, or 
     loss of, damage to, or loss of use of property; loss of, 
     damage to, or loss of use of property of the Government. 
     These risks are considered unusually hazardous risks solely 
     in the sense that if, in the unlikely event, the ELV, its 
     cargo or other elements or services used in providing NASA 
     launch services malfunctioned causing an accident, the 
     potential liability could be in excess of the insurance 
     coverage that a NASA prime contractor would reasonably be 
     expected to purchase and maintain, considering the 
     availability, cost, and terms and conditions of such 
     insurance. In no other sense is the provision of commercial 
     ELV launch services for NASA spacecraft unusually hazardous.
       7. a. This authorization may be applied prospectively, 
     without additional consideration, to existing prime contracts 
     and subcontracts and in new prime contracts and subcontracts 
     which otherwise meet the conditions of this memorandum.
       b. Indemnification of prime contractors and subcontractors 
     may be provided under this authorization only when the 
     Government will receive the benefit of all cost savings, if 
     any, to the prime contractor and its subcontractors at 
     every tier.
       8. All contract indemnification clauses and procedures 
     shall comply with applicable provisions of Federal 
     Acquisition Regulation (FAR) Subpart 50.4 as supplemented by 
     NASA FAR Supplement (NFS) 18-50.4.
       9. This authorization is given upon condition that each 
     prime contractor maintains financial protection of such type 
     and in such amounts as may be determined by me in writing to 
     be appropriate under the circumstances. Each prime contractor 
     shall provide a statement of applicable financial protection 
     through the cognizant contracting officer for my review and 
     determination. In making this determination, I shall take 
     into account such factors as the availability, cost and terms 
     of private insurance, self-insurance and other proof of 
     financial responsibility and workmen's compensation 
     insurance.
       10. When indemnification provisions are included in a prime 
     contract pursuant to the authority of this decision, the 
     cognizant contracting officer shall immediately submit 
     directly to the Contract Adjustment Board a report 
     referencing this decision and containing the information 
     required by NFS 18-50.403-70, Reporting and records 
     requirements.
       11. The actual or potential cost, if any, of the actions 
     hereby authorized is impossible to estimate since it is 
     contingent upon the remote possibility of an occurrence and 
     extent of loss resulting from commercial launch activities 
     which malfunction. Such an event may never occur; however, 
     should a major incident occur, millions of dollars of damage 
     could result.
       12. I find that this action will facilitate the national 
     defense. In the remote event that commercial ELV launch 
     service activities provided for NASA spacecraft cause damage 
     in excess of insurance maintained by contractors and 
     subcontractors, the resulting excess liability could place 
     the contractors' and subcontractors' continued existence in 
     jeopardy, making those contractors and subcontractors 
     unavailable to continue to provide commercial ELV launch 
     services. I note that for purposes of the Defense Production 
     Act of 1950, the term ``national defense'' is defined as 
     ``programs for * * * space, and directly related activity.'' 
     (50 U.S.C. App. 2152(d))
                                                 Richard H. Truly,
                                                    Administrator.
                                  ____


           Contractors Indemnified During Calendar Year 1993

       Rockwell International Corporation, October 19, 1993. 
     Affected NASA contract: NAS 9-18028.

                          ____________________