by David Phinney
Monday August 20th 2018

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KBR’s ‘Blanket Insurance Waiver’ for Sub-Contractors

by David Phinney

Jan 26, 2007 — I finally received an official comment from the Department of Labor regarding KBR’s “blanket insurance waiver” after more than a month of requests.

The spokesman, David James, said DOL has never seen the document and “I cannot comment on another company’s internal memorandum.”

In other words, no comment.

Jack Martone, the former DOL defense base act expert and no longer with DOL said that he doesn’t believe the waiver affects DBA but added that: “If asked I’m sure that Labor would advise against this type of thing because failure by the general contractor to ensure that its subs had required insurance puts the gen con at risk but I guess that B & R believed that they had no choice if they wanted to get anything done.”

B&R being Brown and Root, a.k.a., KBR/Halliburton. More on the waiver here.

Martone also said:

Clearly recognizing that B&R has need of subs on short notice all over the place and recognizing that many of these subs will not have insurance so might as well “waive” the documentation requirement so the contracts can move forward.
Of course, nothing the parties do or contract for will affect the application of the DBA. You can’t confer or waive application by contract.
If the DBA applies to a contract and a sub does not have the required insurance, then the sub is an uninsured employer and Brown & Root will get stuck with any claims by the subs’ employees. .

Thanks so much. You were much more helpful than David French at Labor, who after a month of queries, said he can’t comment on another company’s internal memorandum.

I have been told that the insurance waiver was used by KBR contract officers on 60 percent of the LogCAP subs. The end result was that Middle Eastern subs could reduce costs while US firms doggedly offered most costly bids on work because US subs always carry insurance.

In other words, the Middle Eastern firms received more work because they received the insurance waiver.
Martone: “That adds up. Lower insurance costs mean a competitive advantage.”

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