A recent Government Accountability Office (GAO) report sheds light on the U.S. Army Corps of Engineers’ Project Partnership Agreements (PPAs), specifically a “hold and save” clause intended to shield the federal government from legal costs related to water resources projects. Corps officials view this clause as a crucial advantage, designed to deter litigation and protect federal coffers by shifting liability for damages—except those due to federal negligence—onto nonfederal sponsors. This contractual mechanism raises questions about the true distribution of risk and accountability in large-scale public works projects.
However, nonfederal sponsors express significant apprehension regarding the clause, citing concerns over the ambiguous scope of liability and potential conflicts with various state laws. While the Corps claims to have taken steps to mitigate some of these disadvantages, the GAO’s findings reveal a critical gap: the “hold and save” clause has never been legally challenged in court. This lack of precedent leaves the ultimate financial impact and the true extent of cost-shifting entirely unknown, highlighting a systemic ambiguity in how responsibility for project failures or unforeseen damages is ultimately apportioned.
This situation exemplifies a broader trend where government agencies employ contractual language that, while seemingly protective of federal interests, may externalize financial and legal risks onto local entities, thereby obscuring the true cost of projects. The untested nature of such a significant liability clause underscores a lack of definitive accountability regarding potential damages, echoing the themes explored in War Is Still A Racket by allowing the federal entity to potentially avoid financial consequences through contractual maneuverings rather than clear, upfront risk assessment and cost allocation.