June 14, 2022

KBR pays over $13 million to settle False Claims Act allegations

On June 14, 2022, the US Department of Justice announced a settlement with four associated entities, Kellogg Brown & Root Services Inc., Kellogg Brown & Root Inc., Kellogg Brown & Root LLC, and Overseas Administration Services Ltd. (referred to collectively as KBR), resolving allegations that the companies violated the False Claims Act and the Anti-Kickback Act, and breached their contract with the United States military during the period from November 2002 to January 2005.  The action began as a qui tam complaint filed by an individual in 2006.  The US intervened in that action in May 2013, and filed an amended complaint on January 6, 2014.

According to the settlement agreement, KBR contracted to perform the Logistics Civil Augmentation Program (LOGCAP) III contract, an indefinite delivery, indefinite quantity contract for the provision of logistics support for US military operations overseas.  Elements of the contract were fulfilled through the award of individual task orders.  Most of the task orders for LOGCAP III were “cost-plus-award-fee” orders, pursuant to which KBR would submit vouchers to the United States for the costs it incurred in performing the tasks required by the order.  As alleged, KBR employees in Kuwait and Iraq rigged bidding processes so that certain LOGCAP III subcontracts would be awarded to specific companies; the companies in turn would pay kickbacks to the KBR employees, and the kickback amounts would be included in the LOGCAP III contract charges to the United States.  Another alleged scheme involved monthly truck leasing payments to contractors long after the trucks had been returned; these lease payments were then justified with false documentation and charged to the United States under LOGCAP III.

The terms of the settlement include payment by KBR of $13,677,621, which includes $4.253.174 in restitution, and a joint stipulation of dismissal of the civil action.  KBR previously remitted $1,677,621 to the United States in connection with the conduct of one of its employees; this amount will be credited to KBR, leaving $12 million to pay under the terms of the settlement agreement.

In 2021, a judgment had been entered against KBR in a proceeding before the Armed Services Board of Contract Appeals involving overpayments by KBR to one of the same companies – First Kuwaiti Trading Co. — involved in the misconduct covered by the current settlement.  The 2021 proceeding resulted in a $51 million judgment.

DOJ press releaseSettlement Agreement