B-143241, JUL. 26, 1960

B-143241: Jul 26, 1960

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IT IS STATED IN YOUR LETTER THAT THE NATIONAL SCIENCE FOUNDATION PLANS TO ENTER INTO A COST REIMBURSABLE TYPE CONTRACT WITH UCAR WHICH IS A NON- PROFIT EDUCATIONAL CORPORATION FORMED BY 13 UNIVERSITIES FOR THE ORGANIZATION. UNDER THE PROPOSED CONTRACT UCAR WILL ORGANIZE. WILL PLAN AND EXECUTE BASIC RESEARCH PROGRAMS IN COLLABORATION WITH OTHER SCIENTIFIC AND EDUCATIONAL INSTITUTIONS OR ORGANIZATIONS. WILL STIMULATE. THE CONTRACTOR WILL RECEIVE A MANAGEMENT ALLOWANCE. THE POSSIBILITY EXISTS THAT LARGE SCALE DAMAGE MIGHT BE ALLEGED TO HAVE BEEN CAUSED BY SUCH ACTIVITIES. WE HAVE BEEN ADVISED INFORMALLY BY YOUR STAFF THAT IN ORDER TO OBTAIN THE REQUIRED SERVICES OF UCAR. IT IS ABSOLUTELY NECESSARY TO PROVIDE FOR THE ASSUMPTION BY THE GOVERNMENT OF LIABILITY FOR UNUSUALLY HAZARDOUS RISKS WHICH MIGHT ARISE FROM THE CONTRACT PERFORMANCE.

B-143241, JUL. 26, 1960

TO THE DIRECTOR, NATIONAL SCIENCE FOUNDATION:

BY LETTER DATED JUNE 17, 1960, YOU REQUESTED OUR DECISION AS TO WHETHER IT WOULD BE LEGALLY PERMISSIBLE AND APPROPRIATE FOR THE NATIONAL SCIENCE FOUNDATION TO INCLUDE IN A PROPOSED CONTRACT WITH THE UNIVERSITY CORPORATION FOR ATMOSPHERIC RESEARCH (UCAR) A PROVISION TO INDEMNIFY UCAR FOR ANY UNUSUAL LIABILITIES WHICH MIGHT RESULT FROM DAMAGE OCCURRING DURING CONTRACT PERFORMANCE.

IT IS STATED IN YOUR LETTER THAT THE NATIONAL SCIENCE FOUNDATION PLANS TO ENTER INTO A COST REIMBURSABLE TYPE CONTRACT WITH UCAR WHICH IS A NON- PROFIT EDUCATIONAL CORPORATION FORMED BY 13 UNIVERSITIES FOR THE ORGANIZATION, OPERATION, AND MAINTENANCE OF A CENTRAL ESTABLISHMENT OR ,CENTER" FOR ATMOSPHERIC RESEARCH. UNDER THE PROPOSED CONTRACT UCAR WILL ORGANIZE, OPERATE AND MAINTAIN THE CENTER, WILL PLAN AND EXECUTE BASIC RESEARCH PROGRAMS IN COLLABORATION WITH OTHER SCIENTIFIC AND EDUCATIONAL INSTITUTIONS OR ORGANIZATIONS, AND WILL STIMULATE, PLAN AND COORDINATE RESEARCH ACTIVITIES AMONG UNIVERSITY GROUPS. IN ADDITION TO REIMBURSEMENT OF ALL COSTS, THE CONTRACTOR WILL RECEIVE A MANAGEMENT ALLOWANCE, ADJUSTED ANNUALLY AND PAYABLE MONTHLY, DURING THE FIVE-YEAR PERIOD OF THE CONTRACT. THE WORK TO BE UNDERTAKEN MAY INCLUDE EXPERIMENTAL ACTIVITIES TO DETERMINE THE FEASIBILITY OF MODIFYING THE WEATHER BY ARTIFICIAL MEANS, AND THE POSSIBILITY EXISTS THAT LARGE SCALE DAMAGE MIGHT BE ALLEGED TO HAVE BEEN CAUSED BY SUCH ACTIVITIES. YOU THEREFORE FEEL THAT IT WOULD BE EQUITABLE TO INCLUDE IN THE CONTRACT A PROPOSED ARTICLE ,"SPECIAL HAZARDS," IN ORDER, AMONG OTHER THINGS, TO INDEMNIFY UCAR FOR ANY UNUSUAL LIABILITIES WHICH MIGHT RESULT FROM DAMAGE OCCURRING DURING THE CONDUCT OF SUCH RESEARCH. AND, WE HAVE BEEN ADVISED INFORMALLY BY YOUR STAFF THAT IN ORDER TO OBTAIN THE REQUIRED SERVICES OF UCAR, IT IS ABSOLUTELY NECESSARY TO PROVIDE FOR THE ASSUMPTION BY THE GOVERNMENT OF LIABILITY FOR UNUSUALLY HAZARDOUS RISKS WHICH MIGHT ARISE FROM THE CONTRACT PERFORMANCE.

AS TO THE AUTHORITY FOR THE PROPOSED CONTRACT, REFERENCE IS MADE IN YOUR LETTER TO THE PROVISIONS OF THE NATIONAL SCIENCE FOUNDATION ACT OF 1950, AS AMENDED, CODIFIED IN TITLE 42 OF THE UNITED STATES CODE. YOU MENTION SPECIFICALLY SECTION 42 U.S.C. 1862 (A) (2) WHICH AUTHORIZES NSF TO INITIATE AND SUPPORT BASIC SCIENTIFIC RESEARCH PROGRAMS; SECTION 42 U.S.C. 1862 (A) (9) WHICH EXPRESSLY AUTHORIZES STUDY AND RESEARCH IN THE FIELD OF WEATHER MODIFICATION; AND SECTIONS 42 U.S.C. 1870 AND 1872A WHICH PROVIDE NSF WITH BROAD GENERAL AUTHORITY "NECESSARY TO CARRY OUT" ITS RESPONSIBILITIES, INCLUDING EXPRESS AUTHORITY TO ENTER INTO CONTRACTS WITH PRIVATE OR PUBLIC INSTITUTIONS OR AGENCIES FOR WORK IN THE FIELD OF WEATHER MODIFICATION.

THE PROPOSED ARTICLE 10 OF THE CONTRACT APPARENTLY IS PATTERNED AFTER CONTRACT CLAUSES COVERING LIABILITY FOR UNUSUALLY HAZARDOUS RISKS WHICH HAVE BEEN USED BY THE MILITARY DEPARTMENTS PURSUANT TO THE SPECIFIC AUTHORITY GRANTED BY 10 U.S.C. 2354 TO INCLUDE INDEMNIFICATION PROVISIONS IN CONTRACTS FOR RESEARCH AND DEVELOPMENT. SUCH SPECIFIC AUTHORITY HAS NOT BEEN SPECIFICALLY EXTENDED TO THE NATIONAL SCIENCE FOUNDATION, AND IN VIEW OF THE CONSIDERATION WHICH THE CONGRESS HAS ACCORDED THIS FIELD OF CONTRACTING WITH RESPECT TO CONTRACTS OF THE MILITARY DEPARTMENTS AS WELL AS OTHER AGENCIES, SUCH AS AEC AND NASA, AND THE UNUSUAL CHARACTER AND SCOPE OF THE VARIOUS PROGRAMS WHICH MAY BE UNDERTAKEN BY NSF, IT SEEMS TO US APPROPRIATE AND PERHAPS NECESSARY THAT STEPS BE INITIATED PROMPTLY TO OBTAIN SIMILAR LEGISLATION FOR APPLICATION TO NSF CONTRACTS. IN THIS PARTICULAR INSTANCE, HOWEVER, CONSIDERING THE UNIQUE AND ADMITTEDLY UNUSUALLY HAZARDOUS NATURE OF THE RISKS WHICH MAY BE INVOLVED UNDER THE PROPOSED CONTRACT WITH UCAR AND THE BROAD STATUTORY PROVISIONS SPECIFICALLY AUTHORIZING CONTRACTS IN THE FIELD OF WEATHER MODIFICATION, WE WILL INTERPOSE NO OBJECTION TO THE INCLUSION OF INDEMNITY PROVISIONS IN THE PROPOSED CONTRACT WITHIN THE LIMITATIONS PRESCRIBED BY CONGRESS UNDER 10 U.S.C. 2354 FOR SIMILAR RESEARCH AND DEVELOPMENT CONTRACTS BY THE MILITARY DEPARTMENTS.

WITH REFERENCE TO THE TERMS OF THE PROPOSED ARTICLE 10, WE ARE ENCLOSING A COPY OF OUR REPORT OF MARCH 29, 1960, B-141387, TO THE CHAIRMAN OF THE HOUSE COMMITTEE ON SCIENCE AND ASTRONAUTICS ON H.R. 9675, 86TH CONGRESS--- A BILL TO EXTEND TO THE NATIONAL AERONAUTICS AND SPACE AGENCY AUTHORITY TO INCLUDE INDEMNITY PROVISIONS IN RESEARCH AND DEVELOPMENT CONTRACTS SIMILAR TO THAT GRANTED UNDER 10 U.S.C. 2354 TO THE MILITARY DEPARTMENTS. IN OUR COMMENTS IN THIS REPORT WE EXPRESSED OUR VIEWS WITH RESPECT TO THE COVERAGE AND THE EXTENT OF OBLIGATIONS AUTHORIZED BY 10 U.S.C. 2354. INSOFAR AS THE PROVISIONS OF THE PROPOSED ARTICLE 10 MAY BE INCONSISTENT THEREWITH, WE ADHERE TO THESE VIEWS. FOR EXAMPLE, THE PROPOSED PROVISIONS WHEREBY THE GOVERNMENT APPARENTLY WOULD BE OBLIGATED TO INDEMNIFY THE CONTRACTOR AGAINST ALL RISKS DURING THE PERFORMANCE OF THE CONTRACT (NOT COVERED BY INSURANCE OR OTHERWISE), AS WELL AS LIABILITY FOR DAMAGES OR LOSSES OCCURRING AFTER COMPLETION OR TERMINATION OF THE CONTRACT, WITHOUT ANY CEILING AS TO THE AMOUNT OF THE GOVERNMENT'S OBLIGATION, IN OUR OPINION, ARE OF DOUBTFUL PROPRIETY IN THE ABSENCE OF APPROPRIATE LEGISLATION SANCTION.