No Company is Bullet-Proof Against Federal Contractor Risks

Implications: Product liability exposure of new materials makers can be severe, especially with fatal consequences of failures Internal memos re product problems can shoot company in the foot; prudent firms have a plan for controlling open-ended speculative memos in an instant-message environment Major PR and govt. contract risk of "getting it wrong" with new materials under expected stressful conditions makes this a good warning to upstream materials suppliers.

Analysis: Federal suits against suppliers for poor quality have deep roots in U.S. history but this one's quite unusual. A supplier of a new material in a high-risk use that fails when subjected to stressful conditions can be exposed to substantial liability. Valuing the case verdict or settlement amount would be premature, but follow-on lawsuits by widows of soldiers and police officers can be predicted as the press covers this litigation.

Ordinary "wear and tear" and useful life issues for bulletproof vests were explored in a national student competition for products liability that I supervised in 2007, before news of the Honeywell problem became widespread. Here, the consequence for a vendor of materials to a maker of goods for federal use is that the federal agencies accuse that vendor of knowing that problems will occur. Since this is a wartime supply project there may be extensive negative press and large numbers of suits for the "design defect" alleged to exist. Honeywell has many more federal contracts and may be the settlement amount will be affected by desires to retain good defense contract relationships. For non-government contract settings, the case reminds vendors of new materials to "know your end user's purpose" before agreeing to be the future target of a liability action.