Legal News

The KBR, U.S. Government Relationship Grows Chillier

By Ashby Jones

The government and KBR, a former subsidiary of Halliburton Co., have a strange love/hate relationship, it seems.

Shortly after 9/11, the government gave KBR a pretty sizable contract when the U.S. invaded Afghanistan, and later Iraq. The company could provide a lot of what the nation’s military didn’t have ready, logistical and other support in faraway war zones.

But since then, the relationship has been, at times, a rocky one, beset with accusations and lawsuits against the company. The latest: The Justice Department on Thursday filed a civil suit against KBR, alleging that the firm charged the government for the unauthorized use of private security guards in Iraq. Click here for the Washington Post story; here for the complaint, filed in Washington, D.C., federal district court.

In the suit, the Justice Department alleged KBR should not have charged the Army for security services under the terms of its contract but repeatedly did so anyway.

From 2003 to 2006, KBR awarded subcontracts to several private companies to provide armed security details for KBR executives, the suit alleges. It also states that one subcontractor “routinely” hired armed guards “to shuttle managers, personnel and payroll around Iraq” rather than traveling in military convoys. According to the suit, these costs were not authorized.

In a statement, KBR said the Army was aware of the private security costs. “Nothing in KBR’s contract with the Army prohibits KBR or its subcontractors from using private security to fulfill its mission to support America’s troops,” the company said.

One interesting question posed by the Washington Post: why did the government file a civil suit rather than seek a criminal indictment? After all, reports the WaPo, last November, Public Warehousing Co. of Kuwait was indicted for overcharging the Army. Reads the WaPo:

As a result of the indictment, Public Warehousing and its related companies were prohibited from bidding on any new government contracts. No such step has been taken against KBR.

Full post as published by Law Blog - WSJ.com on April 02, 2010 (boomark / email).