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Navy Marine Corps Acquisition Regulation Supplement

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           5228.301 Policy.

                5228.301-90 Authority to act.

                5228.301-91 Payment of claims to third parties.

           5228.305 Overseas workers' compensation and war-hazard insurance.

           5228.307 Insurance under cost-reimbursement contracts.

                5228.307-1 Group insurance plans.

                5228.307-90 Liability of subcontractors to third parties.


           5228.9000 General.

           5228.9001 Waiver.

           5228.9002 Lease provisions.

           5228.9003 Insurance policies.




5228.301 Policy.

(a)(1) DON policy is to rely upon the commercial  insurance industry to the maximum extent practicable to protect contractors against  risks arising under contracts. However, it may be preferable or necessary to provide  Government indemnification--

(A) Where there is a continuing program, such as  for nuclear vessels, and insurance premium costs over a period of time could equal the  amount of coverage;

(B) Where war risk is involved;

(C) Where the cost of insurance is so excessive  it is unreasonable and constitutes a "turndown quotation";

(D) Where the Government risk is rated only on  its isolated experience and not shared with the risks of others, whether or not the risk  is unusually hazardous;

(E) Where an urgent requirement allows  insufficient time to receive a competitive insurance quotation;

(F) Where the degree of risk is either very  small or catastrophic; or

(G) Where indemnification of the deductible  portion of insurance coverage will substantially reduce insurance costs.

(b) All matters concerning indemnification shall  be referred to DASN(AP) for decision or recommendation sufficiently in advance of  contract award.


5228.301-90 Authority to act.

DASN(AP) is authorized to act by direction of  the Secretary of the Navy, or as the duly authorized representative of the HCA, the  contracting officer, or any other Naval official designated in the contract to:

(a) Require or approve contract insurance;  and

(b) Execute, sign or endorse all lost policy  releases; proofs of loss; subrogation agreements; endorsements of policies for claims  and/or return premiums; payment orders; and insurance drafts made payable to SECNAV  and not affecting the obligation of appropriations.


5228.301-91 Payment of claims to  third parties.

The following procedure shall be used in  making all payments under contracts in which the Government assumes the risk of  liability to third parties and such liability is not compensated for by insurance or  otherwise:

(a) If any suit or action is filed or any  claim is made against the contractor pursuant to the clause at FAR 52.228-7,  Insurance--Liability to Third Persons, for loss of or damage to property, death or  bodily injury arising out of performance of a contract, the contracting officer, in  consultation with legal counsel, shall submit the following information via the HCA to  DASN(AP) for a determination as to whether the Government has assumed liability for  the claim and if so, the amount to be paid:

(1) statements of all pertinent facts;

(2) the contracting officer's recommendation  as to the action to be taken with respect to the claim; and

(3) the proposed payment amount.

(b) Unless DASN(AP) advises otherwise within  30 calendar days after receipt of the information from the contracting officer, the  third party may be paid the proposed payment amount unless pursuant to appeal by the  contractor under the Disputes clause, a different amount is allowed.

(c) If DASN(AP) determines that the Government  did not assume liability, the contracting officer will be notified and no payment  shall be made, unless pursuant to appeal by the contractor under the Disputes clause,  a different decision is made.


5228.305 Overseas workers' compensation  and war-hazard insurance.

(d) Submit requests for waiver through DASN(AP)  by email at RDAJ& with the subject [Activity Name] PGI 288.305-  Overseas Workers' Compensation and War-Hazard Insurance Waiver.


5228.307 Insurance under  cost-reimbursement contracts.


5228.307-1 Group insurance  plans.

(a) Prior  approval requirement. Group insurance plans under cost-reimbursement contracts  for which contract administration is retained by the DON shall be submitted for  approval to the DON contracting officer responsible for contract administration.


5228.307-90 Liability of  subcontractors to third parties.

(a) In general, DON will not assume liability  of subcontractors to third parties.

(b) Under cost-reimbursement contracts,  contracting officers may, when in the best interest of Government, provide for flow  down of the clause at FAR 52.228-7, Insurance--Liability to Third Persons, to  cost-reimbursement subcontracts.




5228.9000 General.

When Government property is leased under the  authority of 10 U.S.C. 2667, the lessee, at its own expense, should insure the property  and the liabilities of itself and the Government to third parties, including  employees.


5228.9001 Waiver.

The requirement to insure the property may be  waived by DASN(AP) when more than 75% of its use is for Government work. In such case  the Government will assume the risk of loss or damage to the property and the lease will  be modified accordingly.


5228.9002 Lease provisions.

(a) Where insurance is required, the lease shall  require the lessee to:

(1) purchase and maintain Fire and Extended  Coverage insurance or its equivalent and, if applicable, Boiler and Machinery insurance,  in an amount equal to replacement value less depreciation or in any lesser amount  determined by the contracting officer.

(2) provide insurance on special types of  property (e. g., floating drydocks, mobile power plants, etc.) as designated by  lessor.

(b) When a co-insurance clause is used, failure  of the lessee to maintain adequate insurance does not relieve the lessee of its  responsibilities under any other terms of the lease.


5228.9003 Insurance policies.

(a) Insurance policies for leased property shall  be issued in the names of the lessee and of the Department of the Navy and contain a  loss payable provision as follows: "Loss, if any, under this policy shall be adjusted  with (Lessee) and the proceeds, at the election of the Government, shall be payable to  the (Lessee); any proceeds not paid to the (Lessee) shall be payable to the Treasurer of  the United States."

(b) Each insurance policy shall contain a  provision for thirty days prior notice to DASN(AP) in the event of cancellation of the  policy.

(c) A certificate of insurance or copy of each  insurance policy shall be deposited with DASN(AP) via hardcopy or by email at  RDAJ& with the subject [Activity Name] FAR 28.9003 Insurance Policy  Deposit.


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