Liability Limits

The recently approved Homeland Security Act includes funding for the research and development of antiterrorism technologies. In fact, the federal government estimates that it needs $45 billion worth of funding to combat terrorism in FY 2003 alone. In order to encourage private industry to develop these new technologies, the government will accept liability for products if they fail in another catastrophe such as 9/11. The lawmakers hope that this shift in liability churns the creative juices needed to protect the country.

The Safety Act (Support Anti-terrorism by Fostering Effective Technologies) of 2002 protects new technologies deemed by the government as antiterrorism technologies and placed on the Homeland Security Department’s Approved Product List for Homeland Security. In short, it protects technologies designed or developed for the specific purpose of preventing, detecting, identifying or deterring terrorism.

Information Technology Association of America President Harris Miller calls this piece of legislation key to the advancement of antiterrorism systems. During the past year, he claims to have seen a decrease in the number of companies bidding for government contractsmostly because companies do not want to be liable for catastrophic losses. “These companies were being asked to bid on contracts that if they won andheaven help ussomething happened, they could literally have lost their companies because lawsuits could put them out of business,” says Miller.

Miller gives the example of a company working on new technologies to secure airports. Say you develop a new scanner device that detects explosives, but a terrorist, who has found a way to get past your system, brings a bomb on a plane and it crashes. If this liability clause did not exist, the software or hardware maker of this new technology could be held liable for any deaths or damages associated with the crash.

But this exemption doesn’t give blanket coverage to vendors looking to develop subpar products. Lawsuits asking for damages are not banned, and if a company has misrepresented itself to the government, the liability protection disappears. Vendors are required to obtain the maximum amount of liability insurance for any antiterrorism product they develop. “This is not a [situation] where companies can produce anything they want. Congress is not going to step forward and give corporations that kind of out,” says Miller.

This practice of government assuming liability is not a new one. For more than 50 years, the Department of Defense has assumed liability for experimental weapons development, says Miller. And since 9/11, the government has even stood behind health-care companies such as those developing the anthrax antidote Cipro. Miller says since the government asked the producers of Cipro to produce a mass amount of the product in a short time, they assumed liability if the antidote did not work, Miller says.