Executive Order 11610—Further Amending Executive Order 10789 Authorizing Agencies of the Government to Exercise Certain Contracting Authority in Connection with National Defense Functions and Prescribing Regulations Governing the Exercise of Such Authority

By virtue of the authority vested in me by the Act of August 28, 1958, 72 Stat. 972, and as President of the United States, it is ordered that Executive Order No. 10789 of November 14, 1958, as amended by Executive Order 11051 of September 27, 1962, and Executive Order 11382 of November 28, 1967, be further amended as follows: 1. By adding, following Part I, paragraph 1, a new paragraph 1A, as follows: "1A. (a) The limitation in paragraph 1 to amounts appropriated and the contract authorization provided therefor shall not apply to contractual provisions which provide that the United States will hold harmless and indemnify the contractor against any of the claims or losses set forth in subparagraph (b), whether resulting from the negligence or wrongful act or omission of the contractor or otherwise (except as provided in subparagraph (b) (2)). This exception from the limitations of paragraph 1 shall apply only to claims or losses arising out of or resulting from risks that the contract defines as unusually hazardous or nuclear in nature. Such a contractual provision shall be approved in advance by an official at a level not below that of the Secretary of a military department and may require each contractor so indemnified to provide and maintain financial protection of such type and in such amounts as is determined by the approving official to be appropriate under the circumstances. In deciding whether to approve the use of an indemnification provision and in determining the amount of financial protection to be provided and maintained by the indemnified contractor, the appropriate official shall take into account such factors as the availability, cost and terms of private insurance, self-insurance, other proof of financial responsibility and workmen's compensation insurance. Such approval and determination, as required by the preceding two sentences, shall be final. "(b) (1) Subparagraph (a) shall apply to claims (including reasonable expenses of litigation and settlement) or losses, not compensated by insurance or otherwise, of the following types: "(A) Claims by third persons, including employees of the contractor, for death, personal injury, or loss of, damage to, or loss of use of property; "(B) Loss of, damage to, or loss of use of property of the contractor; "(C) Loss of, damage to, or loss of use of property of the Government; "(D) Claims arising (i) from indemnification agreements between the contractor and a subcontractor or subcontractors, or (ii) from such arrangements and further indemnification arrangements between subcontractors at any tier; provided that all such arrangements were entered into pursuant to regulations prescribed or approved by the Secretaries of Defense, the Army, the Navy, or the Air Force. "(2) Indemnification and hold harmless agreements entered into pursuant to this subsection, whether between the United States and a contractor, or between a contractor and a subcontractor, or between two subcontractors, shall not cover claims or losses caused by the willful misconduct or lack of good faith on the part of any of the contractor's or subcontractor's directors or officers or principal officials which are (i) claims by the United States (other than those arising through subrogation) against the contractor or subcontractor, or (ii) losses affecting the property of such contractor or subcontractor. Regulations to be prescribed or approved by the Secretaries of Defense, the Army, the Navy or the Air Force shall define the scope of the term 'principal officials'. "(3) The United States may discharge its obligation under a provision authorized by subparagraph (a) by making payments directly to subcontractors or to third persons to whom a contractor or subcontractor may be liable. "(c) A contractual provision made under subparagraph (a) that provides for indemnification must also provide for "(1) notice to the United States of any claim or action against, or of any loss by, the contractor or subcontractor which is covered by such contractual provision; and "(2) control or assistance by the United States, at its election, in the settlement or defense of any such claim or action". 2. By deleting at the beginning of paragraph 11, Part I, the word "All" and inserting in lieu thereof the words "Except as provided in the Act of September 27, 1966, 80 Stat. 850" and by adding at the end of that paragraph the following sentence: "Before exercising the authority provided in the Act of September 27, 1966, 80 Stat. 850, the Secretaries of Defense, the Army, the Navy, or the Air Force, or their designees, shall first determine that all reasonable efforts have been made to include the clause prescribed above and that alternate sources of supply are not reasonably available". RICHARD NIXON The White House July 22, 1971