[Comments on Proposed Addition to Defense Acquisition Regulation]

Comments were requested on a proposed addition to a Defense Acquisition Regulation which would incorporate and revise the master agreement for the repair and alteration of vessels. A section of this regulation sets forth a mandatory liability and insurance clause which provides that the Government shall assume the amount of the contractor's liability exceeding $1,000,000 for any damage to a vessel or other Government-owned property growing out of the work, except where such damage was caused by the contractor, and requires the contractor to purchase insurance against that $1,000,000 liability. In a prior report, GAO recommended that the Government assume the risk of loss in connection with any damage to its property under vessel repair contracts. Therefore, absent information to the contrary, GAO recommended that this section be revised to provide that the total risk of loss for damage to the vessel or Government property be assumed by the Government and that the requirement that contractors procure insurance for this risk at their expense be deleted.