KBR November Litigation Round-Up

By NEIL GORDON

November has been a very bad month for defense contractor KBR.

KBR
is the federal government’s primary logistics support contractor in Iraq,
receiving tens of billions of dollars in business from the Department of
Defense over the last decade, much of that under the U.S. Army’s monopolistic Logistics
Civil Augmentation Program (LOGCAP) III contract.

In early November, an Oregon federal jury returned an $85.2
million verdict against KBR for exposing military personnel to toxic
chemicals at an Iraqi water treatment facility in 2003. The jury found that KBR
had “acted with reckless and outrageous indifference to a highly unreasonable
risk of harm and conscious indifference to the health, safety, and welfare” of
the plaintiffs. A case
raising similar claims is pending in KBR’s hometown of Houston, Texas, and will
soon go to trial.

KBR will
probably appeal the Oregon verdict. The company is also seeking to enforce
a provision in its contract that requires the government to indemnify KBR’s legal
costs and damages. As POGO blog readers may remember,
the U.S. Army Corps of Engineers (USACE) turned down KBR’s request for
indemnification in the toxic exposure lawsuits. KBR filed a breach of
contract lawsuit claiming that the USACE directed KBR to begin working at
the site without first conducting a safety assessment and should therefore reimburse
KBR for the $85.2 million damage award plus the more than $15 million it claims
to have incurred in legal fees and expenses (including, we presume, its fees
for a napping
expert witness).

Then last week, just days after the federal government voluntarily
dismissed one False Claims Act lawsuit alleging fraud by KBR in Iraq (which
the government has the option of re-filing), the government filed another
Iraq contract fraud lawsuit against the company. According to thecomplaint,
KBR and a subcontractor, construction firm First Kuwaiti General Trading &
Contracting, overbilled the government more than $48 million for trailers used
to house U.S. troops.

First Kuwaiti is a name that keeps popping up in the news. The
company gained notoriety several years ago for its shoddy work and shady
labor practices while building the U.S. Embassy in Baghdad. It was also at the
center of a kickback scandal which resulted in the 2007 conviction of KBR
employee Anthony J. Martin. The government alleges that KBR was aware of this
kickback scheme at the time First Kuwaiti was performing the troop trailer
subcontract. The government also accuses KBR of knowing as long ago as
July 2004 that First Kuwaiti’s billing practices were, in the words of internal
company emails, “absolute highway robbery.” Yet for six more years, according
to the lawsuit, KBR continued to pass along First Kuwaiti’s invoices to the
government for payment without verifying their accuracy.

Despite a seemingly endless parade of legal troubles for KBR—civil
lawsuits, criminal investigations, administrative enforcement actions, investigative
audits, and congressional hearings—the company remains a favored supplier of
services to the federal government. Every
once in a while, we at POGO stop and shake our heads in amazement at how
this can be.

Neil Gordon is an investigator with the Project On Government Oversight.

Follow @NEGordon

2012-11-27 05:09:38

Source: http://pogoblog.typepad.com/pogo/2012/11/kbr-november-litigation-round-up.html