Federal: The government requires contractors receiving cost reimbursement, research and development contracts, whether or not their contracts are subject to the Cost Accounting Standards, to provide insurance for liability to third persons (e.g., workers' compensation, employer's liability, comprehensive general liability) and such other insurance as the Contracting Officer may require under the contract. However, the government does not require such insurance of contractors if the contractor is immune from tort liability. State law in North Carolina does not permit any state agency to purchase special liability insurance as described above. Therefore the university must ensure that the C.O. is aware of its immunity status, and a representation to that effect should appear in its offer/proposal.
Where the university is a subcontractor from a non-immune prime contractor, it is especially important that the university's status is made clear at an early stage prior to the award of the contract so that valuable time is not lost in negotiating the subcontract after the award is made.
Where the university is the prime contractor and the subcontractor also has immunity from liability, the university should recognize that immunity by flowing down the immunity provisions of its own contract. If the subcontractor is not immune, then the university should use the federal contract clause applicable to non-immune parties.,
Non-federal: If no federal money is involved, the university may not promise to protect a sponsor or subcontractor from liability in any way (e.g., indemnifying, holding harmless, purchasing any type of liability insurance, etc.). Furthermore, the university should get a promise from the sponsor that the sponsor will indemnify and hold the university harmless from any liability arising out of the sponsor's use of the results of the project, unless the sponsor is immune from liability, in which case such immunity should be recognized. If the university is subcontracting with a non-exempt entity, a comprehensive indemnity/hold harmless agreement should be part of the contract.