FAR 35.013—Insurance.
Plain-English Summary
FAR 35.013 addresses a narrow but important insurance issue in research and other cost-reimbursement contracting with nonprofit, educational, and State institutions. It explains that these organizations often do not carry commercial insurance because they may claim immunity from tort liability or, in the case of State institutions, may be legally barred from spending funds on insurance. The section does not itself prescribe a standalone insurance clause; instead, it directs the reader to FAR 28.311 for the appropriate clause coverage when these circumstances exist. In practice, this means the contracting officer must recognize that standard insurance assumptions may not fit these performers and must ensure the contract includes the right liability and insurance-related terms. The section is significant because it helps avoid inserting inappropriate insurance requirements that the contractor cannot lawfully or practically meet, while still protecting the Government through the correct contractual clause structure.
Key Rules
Applies to certain institutions
This guidance is aimed at nonprofit, educational, and State institutions performing cost-reimbursement contracts. It recognizes that these entities may operate under different legal and financial constraints than commercial contractors.
Insurance may be absent
These institutions often do not carry insurance. The reason may be tort immunity, or, for State institutions, a legal prohibition on using funds to buy insurance.
Use FAR 28.311
When the institution does not carry insurance for these reasons, the contracting officer should look to FAR 28.311 for the appropriate clause coverage. This section is a cross-reference, not a complete insurance rule by itself.
Match clauses to legal reality
The contract should reflect the institution’s actual ability to obtain or pay for insurance. Requiring insurance where it is unavailable or prohibited can create an unenforceable or impractical contract term.
Responsibilities
Contracting Officer
Identify whether the performer is a nonprofit, educational, or State institution on a cost-reimbursement contract and determine whether insurance is absent because of immunity or legal restrictions. If so, use the clause coverage directed by FAR 28.311 rather than assuming standard commercial insurance requirements apply.
Nonprofit/Educational/State Institution
Inform the contracting officer if it does not carry insurance because of tort immunity or a State-law restriction on using funds for insurance. Provide enough information for the contracting officer to select the proper clause coverage.
Agency
Ensure acquisition personnel understand that these institutions may require special clause treatment and that insurance requirements must be aligned with applicable law and the institution’s status.
Practical Implications
Do not assume every cost-reimbursement contractor must carry insurance; for these institutions, the answer may be no for legal reasons.
The main drafting risk is inserting a standard insurance requirement that the institution cannot lawfully satisfy, which can lead to disputes or noncompliance issues.
Contracting officers should verify the contractor’s status early, especially in research and educational awards where these entities are common.
FAR 35.013 is a pointer section, so the real implementation work happens in the clause selection and contract drafting under FAR 28.311.
If the institution relies on immunity or a statutory prohibition, the file should document that basis so the clause choice is supportable.
Official Regulatory Text
Nonprofit, educational, or State institutions performing cost-reimbursement contracts often do not carry insurance. They may claim immunity from liability for torts, or, as State institutions, they may be prohibited by State law from expending funds for insurance. When this is the case, see 28.311 for appropriate clause coverage.