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  • Question

    Can the Government require the contractor to "insure to the value of the equipment staged at the warehouse as required" when the warehouse will hold GFP (including CAP) and Government Property?


    Answer

    Generally, the Government acts as a self-insurer with respect to loss or damage to Government property. Chapter 3 of GAO-17-797SP (2017 Revision), Principles of Federal Appropriations Law states that in the absence of express statutory authority to the contrary, appropriated funds are not available for the purchase of insurance to cover loss or damage to Government property. The policy at FAR Subpart 28.3 Insurance identifies circumstances under which contractors have to carry insurance as well as the exceptions. Two exceptions listed in FAR 28.201(a)(1) are when the Government, by providing in the contract in accordance with the law, agrees to indemnify the contractor under specified circumstances; or the contract specifically relieves the contractor of liability for loss or damage to Government property. It further states that allowability of the insurance program’s cost shall be determined in accordance with the criteria of FAR 31.205-19 Insurance and indemnification. FAR 31.205-19(e) states costs of insurance for the risk of loss of Government property are allowable to the extent that- the contractor is liable for such loss, the contracting officer has not revoked the Government’s assumption of risk; and such insurance does not cover loss of Government property that results from willful misconduct or lack of good faith on the part of contractor managerial personnel. For more information you should check with legal department.

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