AID Needs Clarification on Defense Base Act Insurance Requirements

ID-81-8: Published: Oct 30, 1980. Publicly Released: Oct 30, 1980.

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A review was undertaken of the insurance requirements of the Defense Base Act (DBA) as they relate to Agency for International Development (AID) contractors working overseas. DBA was enacted in order to extend workers' compensation protection to employees of Government contractors working at overseas defense bases. As a result, AID requires DBA insurance for employees working overseas, including: (1) those under AID direct contracts; (2) those under contracts between host governments and third parties financed by AID loans; and (3) those under contracts between AID grantees and third parties.

In its review, GAO found that: (1) substantial confusion and misunderstanding exist between AID and the Department of Labor (Labor) concerning when DBA insurance requirements apply and when they do not; (2) the exemption of development loans from DBA requirements may have caused inequities in worker coverage overseas; and (3) to obtain the required coverage, some AID-financed contractors must pay DBA premiums which approach or exceed their salary costs. Moreover, at least $245,000 could have been saved over the last 3 years had the AID-blanket DBA contract been extended to these contractors.

Recommendations for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator of AID should exercise the option specified in section 1(a)(5) of the act by requesting that the Secretary of Labor bring individual development loans under the DBA requirements.

    Agency Affected: United States Agency for International Development

  2. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator of AID should contingently plan for inclusion of contracts under development loans in the appropriate blanket contract should you decide to request that these loans be brought under DBA.

    Agency Affected: United States Agency for International Development

  3. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Administrator of AID should (1) ensure that DBA coverage is available to all affected contractors at the lowest possible cost and (2) proceed with work towad a blanket contract for DBA coverage on host country contracts.

    Agency Affected: United States Agency for International Development

  4. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Secretary of Labor should direct appropriate Labor officials to: (1) formalize Labor's position concerning DBA requirements; (2) prepare either broad agency guidelines or a written statement of Labor's opinions on when DBA requirements should be extended to overseas Government contracts; and (3) disseminate the guidelines or statements to all agencies which Labor believes to be affected by DBA.

    Agency Affected: Department of Labor

 

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