Request DENIED: Army Refuses Legal Indemnification for KBR
From the Project On Government Oversight
By NEIL GORDON
POGO has obtained a document that sheds new light on the ongoing litigation between defense contractor KBR and National Guardsmen who claim the company exposed them to a deadly chemical at the Qarmat Ali water treatment plant in Iraq. The document could help the Guardsmen in their nearly four-year fight for justice and will come as good news to taxpayers, who stand to save potentially hundreds of millions of dollars.
POGO’s occasional blog posts about the Qarmat Ali lawsuits have focused on a formerly classified provision in KBR’s contract that obligates the government to indemnify KBR for all legal damages and expenses. With taxpayers ultimately footing the bill, we worry the indemnification provision gives KBR an incentive to perform the contract recklessly. Others, such as U.S. Senator Ron Wyden (D–Ore.), claim the provision is encouraging KBR to drag out the Qarmat Ali lawsuits while running up excessive legal expenses.
However, our concerns were alleviated when we received this letter through the Freedom of Information Act (FOIA). In the November 18, 2011 letter, U.S. Army contracting officer John Rogers informed KBR contracts manager Michael Morrow that the government will not indemnify KBR for the Qarmat Ali litigation.
As POGO blogged last month, KBR must meet certain conditions for indemnification, the most crucial of which is that the damages must result from an “unusually hazardous” risk. According to Rogers, the indemnification clause does not extend to the Qarmat Ali lawsuits because “[t]here appears to be nothing about the repair of a water injection facility which presents any such unusually hazardous risks.”
Whether he intended to or not, Rogers also helped bolster the plaintiffs’ case with this assessment of KBR’s contractual responsibilities:
KBR, as the subject matter expert in oil field issues, was responsible for assessing conditions at each site to which it was sent and taking appropriate action to prevent exposure of any personnel at the site to industrial and environmental hazards….KBR obviously understood this, as they moved out with corrective action without receiving prior consent from the contracting officer once they identified the hazards presented by the sodium dichromate at Qarmat Ali.
The Qarmat Ali litigation resumed last week with both sides in Oregon federal court fighting over expert witnesses. Trial in the Oregon lawsuit is scheduled to begin in October, a month after the scheduled start of trial in the Texas lawsuit.
Neil Gordon is a POGO investigator
Image from Flickr user nathangibbs
The Project On Government Oversight is a nonpartisan independent watchdog that champions good government reforms. POGO’s investigations into corruption, misconduct, and conflicts of interest achieve a more effective, accountable, open, and ethical federal government. Founded in 1981, POGO (which was then known as Project on Military Procurement) originally worked to expose outrageously overpriced military spending on items such as a $7,600 coffee maker and a $436 hammer. In 1990, after many successes reforming military spending, including a Pentagon spending freeze at the height of the Cold War, POGO decided to expand its mandate and investigate waste, fraud, and abuse throughout the federal government.
Throughout its history, POGO’s work has been applauded by Members of Congress from both sides of the aisle, federal workers and whistleblowers, other nonprofits, and the media.
Read more at Project On Government Oversight
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