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U.S. Lawsuit Accuses KBR of Overcharges In War

Posted by Jane Akre
Friday, April 02, 2010 12:03 AM EST
Category: In The Workplace
Tags: KBR, Army, Military, Motley Rice, Burn Pits, Cancer, Respiratory Illness, Parkinson's disease, Halliburton, Cheney

KBR sued by the Department of Justice for cost overruns charged to taxpayers.



Cost of Private Security

The Justice Department has filed a civil lawsuit against KBR (formerly Kellogg, Brown & Root Inc.) for overcharging taxpayers for private security guards in Iraq.

Under its contract with the federal government, the lawsuit says KBR was prohibited from charging the military for the cost of private security companies to guard their own KBR executives as they traveled Iraq, unless they had Army authorization.

The complaint filed Thursday in federal court in Washington, D.C., says during 2003 to 2006, KBR used more than 30 subcontractor companies which provided their own private security guards and those costs were then charged to the Army improperly.

The military is the only security force that is supposed to use weapons, accuses the suit.

There is no dollar amount on the alleged overcharges.

The Wall Street Journal reports "Defense contractors cannot ignore their contractual obligations to the military and pass along improper charges to the United States," Assistant Attorney General Tony West said in a statement.

The company said that since 2001, its subcontractors and employees have worked to support American troops serving in Iraq.

“KBR believes the costs incurred and actions taken by the company and its subcontractors to provide support and to protect its employees and subcontractors were reasonable, necessary and appropriate under the contractual arrangement between KBR and the Army.”

KBR disputes the Justice Department claim that the contract does not allow the use of private security and the company said it had to hire private security because the military was not protecting its employees, reports Reuters.

KBR is suing the Army for failure to pay and believes the Justice Department lawsuit is an attempt to avoid paying what it owes the company.

The Justice Department claims that security services were to be provided by the U.S. military. At one time the Congressional Budget Office reports there were at least 190,000 contractors in Iraq. In 2008 that meant one contractor for every service member.

About 20 percent of taxpayer funding has gone to contractors, according to the CBO.

Procurement Fraud

This is not the first time KRB, the military’s largest private contractor in Iraq and Afghanistan has been on the hot seat. Last year, KBR pled guilty to charges it bribed foreign officials. The military contractor paid $579 million to settle.

KBR operates under a $35 billion contract with the federal government to provide food and shelter for U.S. soldiers in Iraq and Afghanistan.

IB News recently reported on the controversy surrounding burn pits in Iraq and Afghanistan. They are large areas cleared out by KBR to burn garbage and waste generated at bases in Iraq and Afghanistan. Hundreds of soldiers living downwind are coming forward with a myriad of cancers, neurological, and respiratory illnesses, claiming the burn pits also incinerated plastics, gasoline, pesticides, medical waste, amid all of the trash generated at the base.

Motley Rice (IB Partner) filed a Complaint on behalf of 300 service men and women from 43 states in December, 2009 in the KBR, Inc., Burn Pit MDL (multidistrict litigation) before Maryland District Judge Roger W. Titus.

Plaintiffs allege that private contractors exposed military personnel to toxic smoke, ash and fumes which caused chronic illness and death. The lawsuit’s collective claims include those for battery, breach of contract, breach of duty to warn, future medical expenses, intentional infliction of emotional distress, medical monitoring, negligence and wrongful death.

Estimates are 100,000 may have been exposed to toxic smoke from burn pits.

Named in the suit are defendants Texas-based contractors KBR, Inc.; Kellogg, Brown & Root Services, Inc.; Kellogg, Brown & Root LLC and Halliburton Company and Turkish-based ERKA Ltd.

Halliburton spun off the KBR subsidiary in 2006. #

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