The Justice Department has filed a False Claims Act lawsuit against Kellogg, Brown & Root Services Inc. (KBR) and First Kuwaiti Trading Company for submitting inflated claims for the delivery and installation of trailers to house troops in Iraq. KBR is headquartered in Houston. First Kuwaiti, a KBR subcontractor, is based in Kuwait. KBR is the Army’s primary contractor for logistical support in Iraq. Civil Division chief Stuart F. Delery had this to say:
We depend on companies like KBR to provide valuable noncombat services to our military such as housing and feeding our troops. We will ensure that contractors live up to their promises, and are not permitted to profit at the expense of the taxpayers at home who are supporting our men and women in uniform.
On December 14, 2001, the Army awarded KBR the LOGCAP III contract, the third generation of contracts under the Army’s Logistics Civil Augmentation Program (LOGCAP) since the program’s inception in the 1980s. LOGCAP III required KBR to provide logistical support in the military theater whenever and wherever it was needed. Support included services such as transportation, dining services, facilities management, maintenance and living accommodations for United States and coalition forces.
LOGCAP III was originally awarded to Brown and Root Services, a division of KBR. The United States has paid KBR tens of billions of dollars for logistical support services since awarding the contract. The government’s complaint arises from the Bed Down Mission, a push to replace the tents used to house soldiers during the early days of the war with trailers, also called living containers. KBR performed many of the services required under LOGCAP III, including the Bed Down Mission, through foreign and domestic subcontractors.
Federal officials alleged that KBR awarded a subcontract to First Kuwaiti on October 16, 2003, to supply, transport and install 2,252 living containers at Camp Anaconda in Iraq for about $80 million. First Kuwaiti was required to complete delivery and installation of the trailers at Camp Anaconda by December 15, 2003. In July 2004, First Kuwaiti presented two claims to KBR contending that government-caused delays in providing military escorts for convoys into Iraq entitled the company to an increase in the contract price to cover its increased costs.
KBR agreed to pay First Kuwaiti an additional $48.8 million and passed that cost on to the United States. Federal officials alleged that First Kuwaiti knowingly inflated its crane, truck and driver costs, among other items, and misrepresented the cause of its delays and that KBR charged these costs to the United States knowing they were improper.
Source: Corporate Crime Reporter
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