What is the purpose of including an indemnification clause in procurement contracts?

The purpose of including an indemnification clause in procurement contracts is primarily to protect the public entity from legal liabilities. This clause serves as a means of allocating risk between the parties involved in the contract. By indemnifying the public entity, the vendor agrees to assume responsibility for any losses, damages, or legal issues that may arise from their actions or negligence during the performance of the contract. This is essential in ensuring that the public entity is shielded from potential financial burdens that might occur as a result of claims or lawsuits initiated by third parties.

Including such a clause is crucial because it can prevent the public entity from incurring substantial costs related to legal defense, settlements, or damages, thus safeguarding taxpayer money and maintaining public trust. This aspect is particularly important in procurement scenarios where the public entity needs assurance that vendors uphold their responsibilities in a manner that does not expose the entity to unnecessary risks.