The Defense Base Act requires insurance coverage for any American citizen who is working for the U.S. government outside the United States. The Act was passed in 1941 and was designed to provide insurance coverage and protection for anyone who worked on a military installation located outside the U.S.
The Act was amended to include workers who were employed by public works contractors. The Act covered anyone employed by the U.S. government on projects such as schools, dams, roads, and harbors which were located outside the United States.
The Act was again amended to cover any contractor who was working for any federal agency and performing the work outside the United States. This includes both military and non-military projects.
DBA coverage is required for all employees working on a military installation outside the U.S. It is also required for any employees who are working on any U.S. federally funded project located outside the U.S. DBA coverage is required for any employee working on a project for a foreign government if that project has been deemed essential to U.S. National Security. DBA coverage is required for employees who are providing services which are funded by the U.S. federal government if those services fall outside regular military or U.S. diplomatic channels.
If a contractor or company fails to carry DBA insurance on their employees, they can face very stiff fines and penalties. Every government contract includes a provision requiring that contractors have the necessary DBA coverage. If they do not have the necessary coverage, they face losing the contract and paying fines.
Additionally, if a company contracted to provide services for the U.S. federal government fails to provide DBA coverage for its employees, that employee or their heirs can sue the company and do not have to prove negligence. Injured workers cases against the company under the DBA can prove very costly to the employer.