Federal Procurement Liability Reform Act of 1987

Federal Procurement Liability Reform Act of 1987 - Requires the United States to hold harmless and indemnify a contractor against any liability (for damages arising from personal injury, illness, or death or from damage to, or loss of use of, property) resulting from goods or services supplied pursuant to a Government contract to the extent such liability exceeds the amount of commercial insurance or qualified self-insurance protection the contractor is required to carry under the contract. Prohibits such indemnification of a contractor: (1) if the goods or services supplied under the contract are also sold by the contractor to nongovernmental purchasers for similar application or for nongovernmental use; and (2) for liability caused by the gross negligence, intentional misconduct, or lack of good faith of the director, officer, or managing official of the contractor.

Requires a contractor to secure and maintain commercial insurance or self-insurance of such type and in such amounts as: (1) agreed upon with the United States at the time of contracting; or (2) is reasonable under the circumstances, in the absence of an agreement.

Requires a contractor to notify the United States within a reasonable period of time of any claim or action against the contractor which the contractor reasonably expects to give rise to a claim for indemnification. Permits the United States to control or assist in the settlement or defense of any such claim or action.

Requires a contractor seeking indemnification to present a claim to the contracting agency. Allows a contractor aggrieved by the agency's determination to appeal such determination under the Contract Disputes Act of 1978.

Permits the United States to discharge its indemnification obligation by making direct payments from specified funds to the contractor involved or to third persons to whom the contractor may be liable.

Directs the Administrator for Federal Procurement Policy to establish guidelines for determining whether certain limitations on indemnification apply and whether the amount of insurance maintained by a contractor is reasonable.

Provides that the provisions of this Act shall not apply with respect to any risks against which indemnification may be obtained under the Atomic Energy Act of 1954.

Authorizes a permanent judgment appropriation to pay indemnification claims.

Requires the court, in any civil action alleging liability of a contractor arising from injury to or death of an officer or employee of the United States, to determine the proportion of fault of the United States in causing the injury or death. Requires the court to reduce the liability of the contractor by the proportion of fault of the United States. Sets forth factors for determining the proportion of fault. Provides for reducing any reimbursements to the United States by the proportion of fault of the United States in causing the injury or death.

Requires a contractor who seeks a reduction in judgment to notify the Attorney General of such civil action. Authorizes the Attorney General to intervene as a party in any such action.

Declares that provisions of this Act that relate to the reduction of liability supersede any State law to the extent such law is inconsistent.

Declares that nothing in this Act shall be construed to create any liability of the Government to any person other than to contractors for indemnification.