GOP senators seek liability exemption for tech contractors

An amendment to the Senate bill to create a Homeland Security Department prepared by two key Republicans would require the White House to exempt government contractors from liability for homeland security technologies and services.

Sens. Fred Thompson, R-Tenn., and John Warner, R-Va., filed the amendment on Tuesday. Thompson is the ranking Republican on the Senate Governmental Affairs Committee, which passed the homeland security bill, S. 2452, now on the Senate floor.

Warner, who drove the amendment's completion, took a personal interest in the issue after learning of it, an industry source said.

"There are a number of companies that have products that would be very helpful to homeland security," Warner spokesman Carter Cornick said. "We think this will give access to resources for state and local governments, as well as federal government."

The amendment would add homeland security technologies and services to an existing executive order, allowing the president to use discretionary authority for the indemnification of contractors for national security reasons. The Defense Department, which has had the authority since World War II, uses it 30 to 50 times a year, an industry source said.

As amended, the executive order would cover contracts with federal, state and local governments. Indemnification means the government would cover companies' costs above the level of their private liability insurance in the event of a lawsuit.

The White House is upset about the amendment because it would be too prescriptive, one source said. For instance, it states that an official "shall" establish procedures under which states and units of local governments may procure anti-terrorism technologies through contracts. It also contains some deadlines.

The amendment is supported by a coalition of technology industry and defense contractors, including IBM, Lockheed Martin, Northrup Grumman, EDS, KPMG and TRW.

The White House Office of Management and Budget (OMB) opposed the indemnification concept in a statement on the homeland security bill issued last week. OMB suggested that the Senate consider an approach such as the one passed by the House in its homeland security bill, H.R. 5005. The House liability provision would protect only products, not services.

White House Chief of Staff Andrew Card has been involved in consultations on the Senate amendment, an industry source said.