Contractors Can't Duck Head-Count Fraud Claim

     (CN) - Kellogg, Brown & Root and Halliburton must face claims that they bilked the government by inflating the number of soldiers who used their Iraq facilities in order to boost fees, a federal judge ruled Tuesday.
     A former KBR coordinator stationed in Iraq from November 2004 to March 2005 filed a whistleblower lawsuit in April 2005 against Halliburton, KBR, Service Employees International, KBR Services Inc. (KBRSI) and KBR Technical Services.
     The contractors had been hired to provide logistical and life-support services for the U.S. military in Iraq under a contract called LOGCAP III. They provided troops with camp construction, power generation, dining facilities, water services, laundry, fire protection and recreational facilities, among other things.
     KBRSI was the only defendant to bill the government under that contract, according to court documents.
     As the coordinator for KBR's recreational facilities (known as Morale, Welfare and Recreation or MWR facilities), McBride was responsible for keeping a head count of the soldiers who used the company's facilities in Camp Fallujah.
     The first MWR building was a fitness center with five rooms: a weight room, a video game room, an abdominal weight-training room and a theater. The second building housed the Internet cafe, which had 40 computers, 10 phones and a library.
     McBride says the head counts were used to determine how many staffers to hire and how much to bill the government.
     She claims KBR instructed her to inflate the head count by having soldiers sign in when they entered one of the facilities, and then taking an hourly count of people using each room. These hourly totals were allegedly added to the head count, resulting in many military members being counted multiple times.
     McBride says they sometimes even included equipment in the head count, such as the number of ping pong sets, towels or water bottles checked out by the troops.
     She claims she was fired for reporting the fraud, though her employment claims were severed and stayed pending arbitration, which she never sought.
     In July 2007, U.S. District Judge Henry Kennedy Jr. whittled many of McBride's fraud claims but allowed her to pursue her accusation that the contractors fraudulently inflated MWR head counts and siphoned some of the government's property for their own use, including food, drinks, weight machines and a "big screen TV."
     The contractors urged U.S. District Judge Frederick Scullin Jr. to dismiss the remaining allegations, but the judge allowed McBride to pursue her claims over the allegedly inflated head counts.
     "[B]ased on the record before us ... the court cannot conclude, as a matter of law, that these alleged false MWR head counts were not capable of influencing the amount that the government ultimately paid to defendants for the MWR services that they performed in Camps B-3 and B-4 for the period between July 1, 2004 and March 4, 2005," Scullin wrote.
     However, Sculling said McBride failed to rebut the contractors' claim that their personnel were permitted to use the government items she claims they siphoned.
     "Even if this allegation is true, McBride does not rebut defendants' assertion that such expenses were allowable under the LOGCAP III contract; nor has she come forward with any evidence to demonstrate that these were not legitimate costs or that defendants submitted any false claims or any false statements regarding these items or that their personnel used these items," Scullin wrote. "Thus, there is nothing in the record to indicate that the requisitioning of these items for defendants' employees' use was a false claim within the meaning of the [False Claims Act]."
     KBR faced a similar whistleblower complaint in 2007, and this January federal prosecutors accused the contractor of filing false claims under the LOGCAP III contract.