The Justice Department recently filed a False Claims Act action against engineering and construction firm KBR, Inc., the prime contractor on the Army’s Logistics Civil Augmentation Program III contract. As the prime contractor, KBR provided logistics support services to US troops stationed in Iraq. Prior to the filing of the False Claims Act action, the Army had disallowed $103 million in costs incurred by KBR, stating that the costs were related to KBR and its subcontractors hiring personal security personnel, which is prohibited under the government contract. KBR appealed the decision, and shortly thereafter, was slapped with the False Claims Act action by the Justice Department.
Though the security needs of the contractors were to be provided by the Army, KBR allegedly hired three personal security guards and armed a limited number of its own personnel. The Justice Department claims KBR did so without the necessary authorization and then knowingly charged the Army for the cost of the private security, despite it being prohibited by their contract. The case is sure to be contentious, as KBR has already filed a Motion to Dismiss and the Justice Department has countered with a Motion for Partial Summary Judgment.