Recently, with the shift in administration in the U.S., the fiscal policy of government has taken a new turn. The new policy encompasses restructuring the modes of delivery of federal programs by reducing spending in total, buying domestically and seeking private-sector solutions. This is a big opportunity for contractors dealing with defense, commercial technologies and infrastructure, but it also presents new risks, specifically those operations carried on outside the U.S.
In this environment, Defense Base Act (DBA) coverage is critical. The DBA is a federal law that extends U.S. workers' compensation protections to civilian employees working on government contracts overseas. First enacted in 1941, the DBA now broadly applies to U.S.-funded projects abroad, including construction, logistics, IT and service contracts. The DBA provides work-related injury, medical treatment, disability benefits for temporary or permanent impairment and death benefits to the families of employees killed on the job. It applies without regard to nationality, covering U.S., local hires, or third-country nationals.
DBA insurance is mandatory. Under various Federal Acquisition Regulation (FAR) clauses, such as FAR 52.228-3, both contractors and subcontractors must take out DBA coverage before starting work overseas. Failure to comply results in fines, contract termination and full legal liability. Employers who do not have DBA insurance forfeit common law defenses and become fully liable in federal court regarding any injury claims. Most solicitations require evidence of DBA insurance upfront; thus, contractors should budget for it early in the proposal process.
The One Big Beautiful Bill Act, signed into law in July 2025, significantly reshaped government contracting and federal spending priorities. It injected $500 million into defense, border security, infrastructure, energy, cyber and national security, presenting vast new opportunities for contractors across sectors like shipbuilding, IT, surveillance and facility maintenance. Procurement reforms enacted alongside the bill accelerated federal contracting processes, emphasizing strategic sourcing, category management and enhanced small-business participation. Additionally, the legislation shifted federal grant and loan funding toward the Department of Defense (DoD) — allocating over $200 billion in new mechanisms such as loans, grants and other transaction authority — significantly expanding DoD contracting pipelines.
As companies explore these government-backed contracts, DBA compliance remains integral. Requirements for the contract can be ambiguous in some cases, but failure to secure DBA coverage exposes contractors to full liability for injuries, loss of legal defenses, fines, penalties, contract loss and even potential criminal exposure.
Willis’ suite of specialty insurance solutions — Client Edge, Gemini and Stable — is designed to help government contracting clients navigate today’s volatile risk landscape with precision, flexibility and confidence. These offerings go beyond traditional insurance by integrating data-driven insights, structured risk sharing and market-leading innovation to deliver measurable value and strategic advantage. Engage with our government contracting experts to advise and procure DBA coverages, work with you on insurance requirements and provide loss control and claim advocacy for your risk management program.
WTW hopes you found the general information provided here informative and helpful. The information contained herein is not intended to constitute legal or other professional advice and should not be relied upon in lieu of consultation with your own legal advisors. In the event you would like more information regarding your insurance coverage, please do not hesitate to reach out to us. In North America, WTW offers insurance products through licensed entities, including Willis Towers Watson Northeast, Inc. (in the United States) and Willis Canada Inc. (in Canada).
