Rule provides liability protection for anti-terror technologies

The Homeland Security Department Friday will publish a proposed rule designed to accelerate the development of anti-terrorism technologies. Mandated by the law that created the department, the rule will protect companies from massive lawsuits in the event such technologies fail to prevent another terrorist attack.

A copy of the rule began circulating around Washington on Thursday. In it, the department notes twin aims: to produce "as much certainty as possible regarding the application of the liability protections," and "provide the department with sufficient program flexibility" to address individual cases that may arise.

Under the rule, companies can apply to have certain products and services qualified as anti-terrorism technologies. Once given that stamp of approval by the Homeland Security Department, firms will have liability protection in the event that their technology fails before or during a terrorist attack-assuming the failure was not based on negligent behavior. The liability protection extends to technologies used by federal, state or local governments, as well as the private sector.

The legislation creating the department bars suits for punitive damages. Firms applying for liability protection are required to get a basic level of insurance coverage. In the draft rule, the department does not specify the amount or type of such insurance.

"The secretary does not intend to set a 'one-size-fits-all' numerical requirement regarding required insurance coverage for all technologies," the proposal states. "The secretary will not require insurance beyond the point at which the cost of coverage would 'unreasonably distort' the price of the technology."

Several sources contacted by Government Executive did not comment on the proposed rule, because they had not yet read the 54-page document. However, in interviews earlier this week many company officials said they have been waiting for months for the regulations. They were leery of bringing new products, or even existing products, to the homeland security marketplace without liability protection.

"The problem is, we are not protected," said Steve Carrier, vice president of business development and strategic planning at Northrop Grumman. "It's not only a problem at [the federal level] but in the states, too. We are being asked to bid on things and there is unlimited liability. You can't put the company at risk. That is the bottom line. "

The department said it plans to implement the rule as quickly as possible. For federal acquisitions, Homeland Security will begin taking applications immediately. For products developed for other levels of government, companies can submit applications after Sept. 1.

There is a 30-day comment period on the proposed rule. The department may issue an interim final rule after that and continue to refine the regulation.

One area that is bound to gain significant attention during the comment period is how the rule treats services. The legislation-and regulation-clearly stipulate that such items as support services are covered, in addition to products. However, the proposal is fairly ambiguous in defining "services," making it difficult for firms to know if they are eligible for coverage.

"Everybody is pleased that the rules have finally come out and the 30-day comment period shows that the department is committed to moving forward quickly," said Stan Soloway, president of the Professional Services Council, an Arlington, Va.-based contractors association. "But on the services side, they are clearly not ready to implement the rule. "