Bill would allow foreign contractors to be sued in U.S. courts

More than six years ago, Lt. Col. Dominic "Rocky" Baragona was serving in Iraq when he was killed after his Humvee was struck by a supply truck driven by an employee of a Defense Department contractor. Since that time, Baragona's family has attempted to sue the contractor, Kuwait Gulf & Link Transport Co, for wrongful death. But the company has successfully argued that American courts lack jurisdiction over the matter.

Lawmakers, however, hope to close that legal loophole. A Senate bill, first introduced in March, and re-introduced this week, would require foreign companies that agree to work on government contracts to consent to "personal jurisdiction" in U.S. federal courts.

The legislation (S. 526), named for Baragona, would provide legal protection to any U.S. service member, government employee or U.S. contract employee that alleges an overseas company caused serious bodily injury, including death, rape or sexual assault.

The bill was the subject of a hearing Wednesday of the Senate Homeland Security and Governmental Affairs Subcommittee on Contracting Oversight.

"This bill provides needed tools to ordinary Americans and the U.S. government to hold foreign contractors accountable," said Sen. Claire McCaskill, D-Mo, the subcommittee's chairwoman and the bill's sponsor. Other co-sponsors include Sens. Bill Nelson, D-Fla., Sherrod Brown, D-Ohio, Bob Casey, D-Pa., Susan Collins, R-Maine and Bob Bennett, R-Utah.

The bill would cover prime and subcontractors, parent companies and successor entities and apply to all overseas contracts-including new task orders under existing indefinite delivery, indefinite quantity contracts-¬of more than $1 million.

The legislation also would amend the Federal Acquisition Regulation to give federal officials the authority to suspend or debar foreign contractors that fail to appear in court to answer charges.

Legal experts argued that the legislation would close an important jurisdictional gap for federal courts, particularly for incidents in Iraq, in which contractors already have immunity from prosecution.

"If the United States wants to establish host government immunity for the benefit of contractors, at least to the extent of their conduct within the scope of their contract, then it's essential for the United States to clearly define its jurisdiction over those contractors," said Scott Horton, a lecturer in law at Columbia Law School. "If it fails to do so, there is an obvious potential problem: a jurisdictional void."

But Horton and others argued that the assertion of jurisdiction likely will be challenged by foreign contractors as unconstitutional. Current law states that that a defendant must have some "minimal connections" to a jurisdiction before a court can pass a claim against it.

Defense Department officials raised other concerns with the bill. Richard Ginman, DoD's deputy director for program acquisition and contingency contracting, argued that liability should be limited only to actions performed during the execution of a contract and that extending the provision to subcontractors would be problematic.

"It is likely, in order to protect themselves, that prime contractors would require all their subcontractors, at all tiers, to certify compliance with the provision," Ginman said. "This will undoubtedly impact the issuance of contracts in a combat environment and support in the field, and impact the ability to get our troops what they need in the required time they need it."

The Pentagon also argued that the legislation should not be used to modify existing contracts and that field commanders should be allowed to waive the legislation in cases where only one company provides a critical service to the military.

"If foreign contractors opt not to bid on U.S. contracts as a result of the legislation, there would be negative impacts on the department's mission," Ginman said.

The legislation, which is not retroactive, was inspired by Baragona, a West Point graduate who was commander of the 19th Maintenance Battalion in Iraq. Following his death, the Baragona family filed suit against the Kuwait Gulf & Link Transport Co., arguing that the company was negligent.

The firm ignored the suit and did not respond to the family's complaint. But, after a district court judge awarded the Baragona family nearly $5 million in damages, the company filed a motion to vacate the judgment on the grounds that the court lacked jurisdiction. Last May, the court agreed with the company and moved to vacate the judgment.

The family, which is appealing the recent decision, also has tried unsuccessfully to get KGL debarred from future contracts with the government. But Uldric Fiore, a suspension and debarment official with the Army, testified that while he may have found the company's behavior "abhorrent," it did not warrant debarment.

"Neither the existence of a wrongful death lawsuit, nor KGL's decision to contest jurisdiction, constitute a basis for debarment of a contractor," he said.

Rocky Baragona's father, Dominic, said that while the bill would not bring his family justice or peace, it would ensure that no other family ever had to endure their experience.

"When this bill passes, the Wild West of government contracting will finally be over," Dominic Baragona said.

Since 2000, KGL has received nearly $44 million in prime federal contracts and more than $230 million from subcontracts. The firm is preparing to bid on a new 10-year, multi-billion-dollar contract to supply food to troops in the Middle East.