Develop written policies to address liability issues early.
A national experience in assigning liability among project participants.
Phoenix,Arizona,United States; San Antonio,Texas,United States; Seattle,Washington,United States; New York City,New York,United States
- Develop written policies to address liability issues early. Policies developed for the AZTech project stressed that each MDI partner should be legally responsible for the actions of its employees, including subcontractors. The contract between the Maricopa County Department of Transportation, the public sector contracting agency, and private sector participants includes: an indemnification clause and a limitation of liability. The indemnification clause states that the private sector participant agrees to hold the County, State, and the Federal Highway Administration harmless in all suits arising from wanton, willful, or negligent acts and omissions on the part of the private sector contractor, its agents, or subcontractors. Liability under the contracts between public sector and private sector partners is limited to the amount of the contract and does not extend to indirect or consequential losses incurred by the Maricopa County Department of Transportation. In basic terms, the effect of the indemnification clause is to hold the private firms responsible for the actions of their employees and public agencies responsible for the actions of their employees.
- Include subcontractors in indemnification clauses. Boilerplate indemnification clauses, however, do not cover some of the subcontractors. These firms provide goods and services through informal agreements, and these clauses create only selected coverage for them. This is one factor that led all parties involved with AZTech to agree to terms of indemnification.
- Allay the concerns of the public and private sector participants. The benefits of addressing liability concerns are to allay the concerns of the public and private sector participants. The cost of addressing liability concerns includes staff time. Even with the time taken to overcome liability concerns, an Arizona Department of Transportation official was relieved that "public sector-private sector liability" was less of an issue than was expected.
- It should be noted, however, that while actions may limit liability, no particular approach will eliminate lawsuits. An agency should not be as concerned with being sued if it were able to put forth a credible defense based on the underlying merits of having and following standard formal and written policies and procedures.
The cited example may not work for all areas, and policies do not have to be the same as what has been described. But the early development of written policies and the inclusion of subcontractors in the indemnification clauses will go a long way in addressing the concerns of both the public and private participants in the project. Because they achieve greater efficiency, cooperation, consistency, and legal protection, written policies have proven to be more beneficial than costly. Even though written policies may not eliminate lawsuits, they provide contract mechanisms for managing projects more effectively.
Author: Allan DeBlasio, et al.
Published By: Intelligent Transportation Systems (ITS) Joint Program Office
Source Date: 3/1/1999
EDL Number: 8483
Other Reference Number: FHWA-JPO-99-032; DOT-VNTSC-FHWA-98-7URL: http://ntl.bts.gov/lib/jpodocs/repts_te/8483.pdf
Volpe National Transportation Systems Center
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