Military Contractors Were Granted Legal Indemnity for Hazardous Substances (including anthrax vaccine)/ NY Times

The manufacturer of the only licensed anthrax vaccine (Emergent Biosolutions, a.k.a. Bioport) purchased the company from the state of Michigan in September 1998 immediately after the Army promised to indemnify the company (provide a free insurance policy) against claims for side effects, lack of efficacy and other potential problems.

The language in the contract was questioned at the time, as the vaccine manufacturer received indemnification protection as if it were doing far more hazardous work than simply making a vaccine.  And it was the taxpayer that would foot any bills.

Now we find that the taxpayer did pay:

Several high-profile military contractors pushed for and won legal indemnity from the Pentagon before starting projects that involved exposure to chemical weapons and other highly hazardous substances, according to documents released yesterday by Rep. Earl Blumenauer (D-Ore.).

The data uncovered by Blumenauer shows that the Pentagon paid legal bills for at least one firm that invoked its indemnity provisions. Emergent BioDefense Operations Lansing Inc., manufacturer of an anthrax vaccine widely used by the military, was reimbursed for nearly $650,000 after billing the Army for more than $1.5 million in 2008.
The original Pentagon memo granting indemnity to Emergent described, as did the KBR contracts that prompted the National Guardsmen's lawsuits, the nature of the "unusually hazardous" risks facing the biotechnology company.
"Production and testing of [the anthrax vaccine] require interaction with one of the most lethal biological agents known to man," the November 2000 memo stated, providing for an indemnity claim by Emergent in case of the "release (or alleged release) of an infectious agent or toxic chemical into the environment in connection with" work required by the contract...

UPDATE May 26, 2011:  From the Oregonian, snippets:

Oregonians on Wednesday successfully amended the House Defense Authorization bill to spotlight who pays when a defense contractor causes harm.

The amendment requires the Pentagon to report when it enters or changes immunity agreements with contractors. It is the latest strategy by U.S. Reps. Earl Blumenauer and Kurt Schrader to boost the transparency into defense contracts... 

Blumenauer sought to get a copy of the indemnification clause in the KBR contract, which remains classified. But Blumenauer was able to make public 124 contracts with similar immunity provisions from the Pentagon. The list indicated the government legally covers dozens of military contractors doing dangerous jobs, such as making anthrax vaccine or disposing of mustard gas...