Contract Policy - Defense Base Act (DBA) Insurance

Acquisition Strategy for Defense Base Act (DBA) Insurance

The Defense Base Act (DBA) (42 U.S.C. 1651 et seq.) provides workers compensation type insurance coverage for contractor employees performing under government contracts outside the United States. It is intended to be a counterpart to domestic workers compensation coverage and, as such, is the sole recourse for workers who suffer on-the-job injuries or death while engaged in work in foreign locations under government prime contracts and subcontracts. Under a companion law, the War Hazard Compensation Act (WHCA) (42 U.S.C. 1701 et seq.), the government essentially self-insures for those instances in which an injury to or death of a DBA-covered worker arises from a war risk hazard. Both the DBA and WHCA programs are overseen and administered by the Department of Labor (DOL).

With the significant and unprecedented buildup of contractors providing support to deployed military forces involved in both Operation Enduring Freedom and Operation Iraqi Freedom, the market for DBA insurance grew significantly. From a somewhat small and insignificant part of the casualty insurance business line—government-wide DBA premiums paid to the top four DBA insurance carriers totaled $18 million in 2002—it grew over twentyfold to a major market segment covering almost 200,000 prime and subcontractor employees and generating annual government-wide premiums of more than $400 million.

Section 843(d) of the Duncan Hunter National Defense Authorization Act for Fiscal Year 2009 (Public Law 110-417), enacted October 14, 2008, required the Secretary of Defense to submit a report to Congress on DoD’s acquisition strategy for Defense Base Act (DBA) insurance. The strategy needed to “minimize the cost of such insurance for…the Department” and addressed five mandated criteria, to include consideration of having a single DBA insurance contract for the entire Department.

The Department performed extensive market research including a Federal Register Notice for industry input and an internal DoD data call for information on DBA rates paid in the open market on DoD contracts. Based on that research, the Department determined that the current open market (weighted-average) rate for DBA insurance was substantially lower than the single-provider rate available under its “pilot” program with the Army. Nevertheless, several improvements to the existing open market approach were identified. In addition, the Department determined that government-wide self-insurance for DBA coverage has the potential for future savings. The 66 page report issued to Congress in September 2009 can be obtained from the link at the right above.

Waivers for Defense Base Act (DBA) Insurance

DBA insurance, is a form of workers compensation insurance, and is generally required for all public works contracts performed overseas (see FAR 52.228-4 for more information), unless a waiver is granted by the Secretary of the Department of Labor (DOL). DOL policy and practice does not apply waivers to citizens or legal residents of the U.S. or to employees hired in the U.S.

DBA waivers, for the contracts with performance in the countries identified, release the contracting agencies and contractors from the requirement to purchase DBA insurance for foreign workers, as stated in FAR 52.228-3 - Workers Compensation Insurance (Defense Base Act) and 52.228-4 -- Workers Compensation and War-Hazard Insurance Overseas.

For waived employees, the contractor must provide workers’ compensation coverage against the risk of work injury or death or ensure that adequate coverage is provided by the host or home country of the employee. The insurance coverage must also include liability for war-hazard injuries, death, capture, or detention of the employee and compensate their beneficiaries in the event of death.

More information on DBA is available at the DOL Longshore DBA webpage.

Types of DBA Waivers

There are two basic types of waivers – contract specific and geographic:

Contract Specific Waivers - a waiver may be granted for a contract due to the contractor being adequately “self-insured” or having purchased workers’ compensation insurance with coverage equivalent to that provided by DBA and War Hazards Act.
Geographic Waivers - a waiver may be granted based on the host country having an adequate workers’ compensation system which provides coverage for the local national employees or foreign workers performing work on an applicable contract in that country.

Obtaining Current Geographic Waivers

DoD acquisition offices can obtain copies of geographic waivers previously issued from the DOL DBA Waiver webpage.

Waiver Request Process for DOD Contracts

DoD acquisition offices may request waivers if sufficient justification and proof of coverage is available. The request for new waivers must be made in writing on Form BEC 565, Request for Waiver - Defense Base Act, and signed by the head of a department or agency of the United States government. The Form BEC 565 and supporting information should be submitted to the Contract Policy and International Contracting office at (703) 695-8569 or email osd.pentagon.ousd-a-s.mbx.dpc-cp@mail.mil. Copies of the Form BEC 565 may also be obtained by: