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Government Contracting

Government contractors must navigate an increasingly complex regulatory environment when bidding and fulfilling terms and conditions. Our dedicated team of specialists can help you manage these risks and support your success.
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The United States government awards approximately $700 billion annually through federal contracts. But these dollars come with a distinctive set of legal, administrative, and regulatory rules, creating unique risks for government contractors.

With investments expected to ramp up with passage of the bipartisan Infrastructure Investment and Jobs Act, government contractors should be prepared for years of increased regulatory and enforcement scrutiny over the trillions of dollars in funding involved. US enforcement against government contractors for “waste, fraud, and abuse” is carried out under the False Claims Act (FCA) and Truth in Negotiation Act (TINA), as well as through government auditing agencies and other mechanisms. To navigate this increasingly complex environment, companies that receive funding from the US federal government need an advisor that understands their risks and can provide specialized insurance and risk management solutions that are tailored to their unique needs.

Marsh’s Government Contracting Practice provides creative and cost-effective practical and technical solutions for your most complex contracting risks. From risk identification and regulatory knowledge to claims and crisis management, our experienced team understands every aspect of the transaction. We provide a risk-focused approach that breaks down traditional industry-driven silos with a service model designed to help you effectively respond to government solicitations and protect against indemnification.

This expertise allows us to negotiate competitive terms for coverages that address government contractors’ most significant risks, supporting you in every key aspect of your government contracting transaction.

FAQs

Any business across multiple industries that provides goods or services to an agency of the US government or accepts funds pursuant to a contract, grant, or cooperative agreement with the US government is likely to be considered a government contractor.

Common industries and types of functions include:

  • Aerospace and defense
  • Base operation support services
  • Construction
  • Cybersecurity
  • Information technology
  • Artificial intelligence
  • Linguists
  • Logistics
  • Manufacturing
  • Non-governmental organizations (NGOs)
  • Nonprofit
  • Humanitarian and development
  • Private security
  • Stability operations
  • Research and development
  • Universities
  • Education
  • Healthcare
  • Consulting
  • Professional services
  • Training and mentorship

Some of the most active federal and civilian US government agencies involved in contracting are:

  • Department of Defense
  • Department of State
  • United States Agency for International Development (USAID)
  • Army
  • Navy
  • Air Force
  • Army Corps of Engineers
  • General Services Administration
  • Department of Housing and Urban Development
  • Department of Commerce
  • Unified Combatant Commands
  • Department of Agriculture
  • Department of Health and Human Services
  • Missile Defense Agency
  • Defense Advanced Research Projects Agency (DARPA)
  • Social Security Administration
  • Department of Labor
  • Department of Veterans Affairs
  • NASA
  • Department of Education
  • Department of Justice
  • Department of the Interior
  • Environmental Protection Agency (EPA)
  • Department of the Treasury
  • Department of Homeland Security
  • Department of Transportation
  • Defense Logistics Agency
  • Department of Energy

Companies that receive funds from the government tend to face a number of risks and have multiple obligations, including:

  • Contractual risk: Government contractors are governed by a unique set of contractual provisions codified in the Federal Acquisition Regulations (FAR). While rarely included in government contracts, powerful contractual indemnifications — such as, P.L. 85-804 — are sometimes available to contractors providing unusually hazardous goods or services to the US government.
  • Regulatory, administrative, and political risk: Government contractors are subject to a distinct set of statutory, administrative, and regulatory rules as well as political concerns and important case law — all making government contractors different from standard commercial enterprises from a liability perspective.
  • General liability and professional liability: While government contractors do face some of the same risks as commercial enterprises, there are unique defenses available to a government contractor in response to certain third party claims, including:
    • Government Contractor Defense
    • State Secrets Privilege
    • Political Question Doctrine
    • Derivative Sovereign Immunity
    • Westfall Act immunity
  • Management liability: Government contractors face management liability risks similar to those faced by commercial entities, but with the added complication that many workers perform services at US government owned and controlled facilities.
  • Cyber risk: Government contractors are at a heightened risk of being targeted by state-sponsored cyber threat actors seeking to obtain critical information. In addition, government contractors are subject to new contractual and regulatory cybersecurity requirements, such as the new Cybersecurity Maturity Model Certification (CMMC) and executive orders regarding cybersecurity.
  • Human capital and people risk: Government contractor workforces require an in-depth knowledge of risk management, compensation trends, benefits design and management, and talent and workforce planning to create industry specific solutions.
  • Workers’ compensation: In addition to typical domestic workers’ compensation mandates, employees performing services pursuant to a federally funded contract outside of the continental US must be afforded Defense Base Act coverage.

The Defense Base Act (DBA) provides workers performing services outside the continental US pursuant to a federally funded contract with robust workers’ compensation type benefits. These are administered through the US Department of Labor.

The DBA provides both disability compensation and medical coverage to US national, local national, and third-country national workers. It covers employees injured or killed during the course of employment, often regardless of whether it occurred during working hours. Prime contractors and any subcontractor (at any tier) performing overseas services on a federally funded contract are subject to DBA requirements.

Every government contractor employer must secure insurance for workers’ compensation type benefits under the Defense Base Act (DBA) for workers performing services outside the continental US or be authorized to be self-insured. In the event of injury or death, the contractor will be liable for compensation if the subcontractor fails to secure compensation on behalf of the employee. If the employer fails to provide DBA coverage, an injured employee or their survivors may sue and an employer in tort may be guilty of a misdemeanor. In addition to the corporation, executives may be held personally liable for failure to pay DBA benefits following employee injury or death.

Marsh has a dedicated team that offers a unique and comprehensive solution related to Defense Base Act insurance, including program design, brokerage, safety and loss control, and crisis claims management. These measures help protect your workers, substantially reduce your losses/costs, and increase your competitiveness.

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