Limited Discovery in USA v. KBR Case

WASHINGTON (CN) - Kellogg Brown & Root can force Uncle Sam to produce records on the Army's alleged failure to provide force protection for KBR logistical services workers in Iraq, a federal judge ruled.

KBR could face civil penalties of more than $300 million, on the United States' claims that it billed the federal government more than $100 million for private security contractors it hired.

The government says its LOGCAP III contracts with KBR prohibited the use of such contractors.

U.S. Chief Judge Royce Lamberth ruled on Aug. 31 that he would allow discovery, after dismissing, in April, the contractor's argument that the federal government failed to provide adequate security.

KBR also asked the government to identify which KBR claims it believes are false, by releasing the invoices, and it sought documents relating to government contracts with other contractors in Iraq, and their relations with private security firms.

Lamberth ruled that the government already has released information relating to the specific claims in question, and that the government's relationship with other contractors is not KBR's business.

"The court is inclined to grant, with limitations, KBR's motion to compel the production of evidence relating to the United States' force protection obligations to KBR and its subsidiaries under LOGCAP III," Lamberth wrote. "Although this court has dismissed KBR's counterclaim, the United States' compliance (or lack thereof) with its force protection obligations under LOGCAP III may be relevant to whether it was reasonable for KBR to charge for [private security contractors]. However, such discovery would need to be limited to the United States' obligations under LOGCAP III, and may not extend to any obligations the United States had to KBR under other contracts, or its obligations to other contractors under different contracts."

Lamberth told KBR to "weigh the costs and burdens that this request would place on the United States."

Kellogg Brown & Root Services faces up to $300 million in civil penalties and treble damages on charges that it overbilled the government for private security contractors in Iraq.

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. The contract excluded payment for armed contractors that provide security for KBR and its subcontractors.

In its 2010 complaint, the government says KBR hired Triple Canopy, Omega Risk Solutions and Al Dhahir to provide security for its executives in Iraq and passed on to the government the more than $100 million it spent on such protection.

KBR unsuccessfully argued that the government failed to provide enough security.

Lamberth ordered the parties to meet and confer within seven days to discuss the proper scope and timeline for discovery on the force protection issue, and inform the court within 30 days of their progress.

"Hopefully, the parties will inform the court of their compromise and submit a joint order to schedule the remaining discovery," Lamberth wrote. "However, if the parties cannot reach an agreement within 30 days, the court will either direct the parties to continue their negotiations or enter its own discovery order."

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