A recent article by Sylvia Pfeifer in the Financial Times contained several interesting insights on three UK businessmen’s advice on breaking into the US homeland security market. They stressed networking, market identification, relationships, and patience.
While each of these is important, a significant piece of strategy for entering the US homeland security was missing, however—the protections from the American civil justice system provided in the SAFETY Act.
One of the greatest concerns an enterprise can encounter in a marketplace is liability exposure. This is particularly true when making technologies, products and services available to counter terrorist threats and attacks. Acquiring protection under the US Support Anti-Terrorism by Fostering Effective Technologies (SAFETY) Act of 2002 is a vital first step for those entering or expanding in the US homeland security marketplace. It provides critical liability protections in the event there is an “Act of Terrorism.” The SAFETY Act protects an enterprise when it is most vulnerable–when the potential liability is extraordinarily large and the company’s current insurance policy likely excludes (or is significantly limited in) coverage.
As for the background of the SAFETY Act, the Act was created by the US Congress as part of the legislation that established the US Department of Homeland Security. They created it in order to encourage the development and deployment of anti-terrorism technologies, products, and services by mitigating the liability concern that businesses face when contributing anti-terrorism technologies to the homeland security marketplace.
The US has a well-deserved reputation as a very litigious society. This can be a rude wake-up call for those firms not familiar with the American tort system (especially, international firms that are not experienced in US deployments of their technologies, products and services). There is no restriction in the SAFETY Act concerning the nationality of the company seeking protection.
The benefits afforded by the SAFETY Act protect not only the enterprise, the “Seller” but also the Seller’s suppliers, contractors, and “downstream users” (i.e., customers). This creates a valuable market advantage over competitors that do not have SAFETY Act protections. As of early 2008, there were more than 200 products and services that had received SAFETY Act protections.*
There are two levels of liability protection offered by the SAFETY Act*:
DESIGNATION: The Seller’s liability for products or services that are deemed “Designated Technologies” is limited to the amount of liability insurance that the US Department of Homeland Security determines the Seller must maintain. A limited form of Designation, called Developmental Test and Evaluation Designation (DTED), can also be obtained for promising anti-terrorism technologies that are undergoing testing and evaluation.
CERTIFICATION: In addition to the benefits provided under Designation, Certification allows the Seller of an anti-terrorism technology to assert the Government Contractor Defense for claims arising from Acts of Terrorism. Successful use of the Government Contractor Defense has eliminated all liability to defendants in pre-SAFETY Act litigation, and there is every reason to believe a similar result would occur in a SAFETY Act-related case. Technologies that receive Certification will be placed on DHS’s Approved Products List for Homeland Security.
By no means am I implying that the suggestions in Pfeifer’s article are not important. However, getting into the US market requires many strategies and a lot of work. To risk it all by not taking advantage of a risk mitigation tool like the SAFETY Act would represent a major flaw in any strategy.
* (Source: www.safetyact.gov)
