THE DEFENSE BASE ACT: WAR RISK SYNDROME

Bromley, C Jason. Public Contract Law Journal; Chicago Vol. 46, Iss. 4,  (Summer 2017): 717-751.

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I. Introduction………………………….. 718

II. Background……………………………. 720

A. The Defense Base Act and War Hazard Compensation Act 720

B. Department of Labor’s Role in Processing DBA and WHCA Claims…………………………………… 722

C. The DBA Brokers and DBA Insurance Carriers……. 724

D. Cost Reform in DoD Service Acquisitions…………… 725

III. Current DBA Dilemmas in Iraq and Afghanistan………… 726

A. The DBA War Risk Syndrome-WHCA Reimbursement… 726

1. War Risk Syndrome-Claims and Loss Ratio……………. 727

2. War Risk Syndrome-Claims Reserves………………… 730

3. War Risk Syndrome-Incurred But Not Reported Percentages……………………………………. 732

B. Inadequate Oversight……………………………. 733

C. The Contractor…………………………………. 734

IV. DBA Cost Reform Strategies and Oversight Methods………….. 735

A. DoD Contracting Can Mitigate the DBA War Risk Syndrome……………………………………… 735

1. Contract Formation……………………….. 736

2. Contract Performance………………………… 743

B. Interface with Department of Labor……………….. 747

V. Conclusion…………………………………. 750

I. INTRODUCTION

The federal government left billions of potential savings on the table due to lack of oversight of wartime contracting in Iraq and Afghanistan.1 As Congress’s power of the purse prompts the Department of Defense (DoD) to wring out billions in reductions to its headquarters, administrative and support staff, military retirement plans, and the total number of service members, they not only miss the boat on a larger cost savings but also weaken the future of our force.2

In fiscal year 2015, the DoD funded over $277 billion in contract awards.3 The spending on DoD contracts became so high that when juxtaposed with the gross domestic product (GDP) of developed countries, such as Finland, Chile, or Pakistan, the DoD’s contract awards for fiscal year 2015 were actually higher.4 In fact, DoD contracts awarded during fiscal year 2015 valued more than the GDP of 154 countries around the world.5

Over the last five years, the DoD consistently obligated a majority of its contract dollars for service acquisitions.6 The DoD…

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