WASHINGTON (CN) – Kellogg Brown & Root Services cannot dismiss the bulk of a whistle-blower lawsuit accusing the contracting giant overbilling the government for private security contractors in Iraq, a federal judge ruled.
The Army hired KBR to provide logistical services, such as transportation, maintenance, facilities management and dining facilities, for U.S. military operations around the world. But the contract excluded payment for armed contractors, like Triple Canopy, Omega Risk Solutions and Al Dhahir, which provide security for KBR and its subcontractors. The government says it intended for U.S. military to provide such services.
“Ultimately, the government identified more than $100 million in payments related to private security that it deemed improper,” U.S. District Chief Judge Royce Lamberth wrote.
KBR challenged the denial of payments under the Contract Disputes Act, claiming that the contract terms allowed it to hire private security outfits and that the Army had knowingly paid previous claims for such services.
The government fired back, alleging False Claims Act violations and claiming that more than 30 of KBR’s subcontractors used private armed security in Iraq without authorization. The government also alleged breach of contract, unjust enrichment and payment by mistake.
KBR moved to dismiss, arguing that the government failed to plead with particularity the circumstances constituting fraud and that it failed to state a claim.
Lamberth found Wednesday that the government’s False Claims Act arguments against KBR hold up along with the breach-of-contract claim. He agreed, however, to dismiss the government’s claims of unjust enrichment and payment by mistake.
Lamberth will allow the False Claims Act allegations to move to discovery where the contract will be clarified. If successful, the government could recover civil penalties and treble damages up to $300 million – three times the amount KBR allegedly falsely claimed.