U.S. Sues Kellogg, Brown & Root for Alleged False Claims Act Violations Over Improper Costs for Private Security in Iraq

April 3, 2010 - WASHINGTON—The United States has filed a lawsuit against Kellogg Brown & Root Services (KBR) alleging that the defense contractor violated the False Claims Act, the Justice Department announced today. The suit, filed in U.S. District Court in Washington, alleges that KBR knowingly included impermissible costs for private armed security in billings to the Army under the Logistics Civil Augmentation Program (LOGCAP) III contract. The LOGCAP III contract provides for civilian contractor logistical support, such as food services, transportation, laundry, and mail, for military operations in Iraq.

The government’s lawsuit alleges that some 33 KBR subcontractors, as well as the company itself, used private armed security at various times during the 2003-2006 time period. KBR allegedly violated the LOGCAP III contract by failing to obtain Army authorization for arming subcontractors and by allowing the use of private security contractors who were not registered with the Iraqi Ministry of the Interior. The subcontractors using private security are alleged to have also violated subcontract terms requiring travel only in military convoys. The government’s lawsuit further alleges that at the time, KBR managers considered the use of private security unacceptable and were concerned that the Army would disallow any costs for such services. KBR nonetheless charged the United States for the costs of the unauthorized services.

“Defense contractors cannot ignore their contractual obligations to the military and pass along improper charges to the United States,” said Tony West, Assistant Attorney General for the Civil Division of the Department of Justice. “We are committed to ensuring that the Department of Defense’s rules are enforced and that funds so vital to the war effort are not misused.”

This case is being brought as part of a National Procurement Fraud Initiative. In October 2006, the Deputy Attorney General announced the formation of a National Procurement Fraud Task Force designed to promote the early detection, identification, prevention, and prosecution of procurement fraud associated with the increase in government contracting activity for national security and other government programs. The Procurement Fraud Task Force is chaired by the Assistant Attorney General for the Criminal Division and includes the Civil Division, U.S. Attorneys’ Offices, the FBI, the U.S. Inspectors General community, and a number of other federal law enforcement agencies.

Along with the Justice Department’s Civil Division, the Defense Criminal Investigative Service, Army Criminal Investigation Division, and FBI participated in the investigation of this matter. This case, as well as others brought by members of the task force, demonstrates the Department of Justice’s commitment to helping ensure the integrity of the government procurement process.