United States Ex Rel. Barko v. Halliburton Co.

241 F. Supp. 3d 37, 2017 WL 1018309, 2017 U.S. Dist. LEXIS 36249
CourtDistrict Court, District of Columbia
DecidedMarch 14, 2017
DocketCivil Action No. 2005-1276
StatusPublished
Cited by13 cases

This text of 241 F. Supp. 3d 37 (United States Ex Rel. Barko v. Halliburton Co.) is published on Counsel Stack Legal Research, covering District Court, District of Columbia primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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United States Ex Rel. Barko v. Halliburton Co., 241 F. Supp. 3d 37, 2017 WL 1018309, 2017 U.S. Dist. LEXIS 36249 (D.D.C. 2017).

Opinion

MEMORANDUM OPINION

Royce C. Lamberth, United States District Judge

I. INTRODUCTION

In the early 2000s, the United States engaged in a war in Iraq, which persisted for several years. To support the military on the ground, the United States government contracted with civilian companies to provide a wide variety of services. Defendant Kellogg, Brown & Root (“KBR”) received one of these contracts. This dispute revolves around KBR’s contracting practices while in Iraq, specifically, KBR’s subcontracts with defendant Daoud & Partners (“D&P”). 1 Relator Harry Barko filed an amended complaint in 2007 alleging numerous violations of the False Claims Act [ECF No. 12]. KBR has moved for summary judgment [ECF No. 136]. 2 The Court will grant KBR’s motiop and will award summary judgment to KBR on the entirety of Mr. Barko’s Amended Complaint. It will not allow additional time for discovery.

II. BACKGROUND

In 2007, Mr. Barko, a former subcontract administrator for KBR in Iraq from July 2004 through- June 2005, brought claims under the False Claims Act, 31 U.S.C. § 3729 et al, against KBR and D&P, a KBR subcontractor. KBR is a government contractor who provided services and materials to the United States government during the war in Iraq under the.U.S. Army’s Logistics Civil Augmentation Program (“LOGCAP”). In 2001, the government awarded the LOGCAP III contract to KBR, a prime contractor. KBR *44 then selected subcontractors, such as D&P, to provide labor, laundry services, construction, and well-drilling at the “B Sites” in Western Iraq. Mr. Barko paints a picture of a contracting environment rife with fraud, collusion, and other anticom-petitive activity, claiming that KBR submitted false claims to the government by accepting kickbacks, rigging bids, inflating costs, and otherwise engaging in improper procurement practices. The Court will first discuss the LOGCAP III contract, then will summarize the four subcontract areas at issue as well as Mr. Barko’s allegations with regard to each of them, and finally will address the procedural history of this case.

A. LOGCAP III

In order to analyze Mr. Barko’s claims and the propriety of summary judgment, the Court finds it prudent to first summarize the fairly complicated contracting scheme at issue here. LOGCAP “was established in 1985 to facilitate civilian contractor logistical support for United States military forces deployed overseas, principally in countries with which the United States does not have treaties or agreements that would enable the host country to provide such support.” United States ex rel. Watkins v. KBR, Inc., 106 F.Supp.3d 946, 951 (C.D. Ill. 2015). Under LOGCAP, the government awards contracts to a single company — a prime contractor — to provide various services in support of the military, such as laundry, construction, and food. The government awarded KBR the LOGCAP III contract on December 14, 2001 to provide logistical services to the military in Iraq and other countries.- Under the LOGCAP III contract, KBR solicited bids for certain services and awarded subcontracts to various bidders for those services. At times, KBR and subcontractors negotiated change orders that modified the terms of the subcontract.

Although the Court will quQte from an exhibit submitted by KBR — the declaration of Global Director of Procurement and Materials for KBR Cheryl Riton-dale — the Court finds that there are no genuine disputes of material facts regarding the following information. The LOGCAP III contract was “an Indefinite Delivery/Indefinite Quantity umbrella contract, pursuant to which the Army Sus-tainment Command (“ASC”) issue[d] Task Orders to KBR to perform certain services. Cost Plus Award Fee (“CPAF”) Task Orders were issued to [KBR] against the LOGCAP III contract for particular types of services in particular locations.” KBR Ex. 3, Ritondale Deck ¶5, ECF No. 136-2. A cost plus award fee contract is “a cost-reimbursement contract that provides for a fee consisting of (a) a base amount (which may be zero) fixed at inception of the contract and (b) an award amount, based upon a judgmental evaluation by the Government, sufficient to provide motivation for excellence in contract perform-anee.” 48 C.F.R. 16.405-2. LOGCAP III and the Task Orders issued under it are governed by the Federal Acquisition Regulation (“FAR”), codified at Title 48 of the Code of Federal Regulations.

After the government issued Task Orders, KBR and the government engaged in the process of definitization, meaning “the agreement on, or determination of, contract terms, specifications, and price, which converts the undefinitized contract action to a definitive contract.” 48 C.F.R. 217.7401(b). During this process, KBR evaluated the statement of- work (“SOW”) accompanying a Task Order and prepared an estimate of its cost to perform those services. Ritondale Decl. ¶ 7. KBR and the government then negotiated the SOW and KBR’s cost estimates before agreeing on a “negotiated estimated cost” for the services. Id. KBR was reimbursed for the *45 costs it incurred in performing the services, including subcontractor costs. Id. It was not reimbursed for delivering particular results, but rather was “obligated to use its best efforts to achieve the scope of work specified in each Task Order,” and was then “entitled to be reimbursed its allowable direct and indirect costs incurred in performing the contract.” Ritondale Deck ¶ 6-7.

After incurring costs for each Task Order, KBR submitted invoices for reimbursement to the government on public vouchers — Standard Form 1034. Id. ¶ 9. KBR extracted from its accounting system all direct and indirect allowable costs incurred on the Task Orders, including subcontractor costs, and submitted them on these forms. Id. These invoices were then reviewed by the Defense Contract Audit Agency (“DCAA”), Id. ¶10. The DCAA determined whether to allow the claimed costs based on reasonableness, allocability, Cost Accounting Standards Board standards or other general accounting principles and practices, the contract terms, and certain regulatory limitations. Id.; 48 C.F.R. 31.201-2. “A cost is reasonable if, in its nature and amount, it does not exceed that which would be incurred by a prudent person in the conduct of competitive business,” which depends on “a variety of considerations and circumstances.” 48 C.F.R. 31.2Ó1-3. A cost is generally allocable “if it is assignable or chargeable to one or more cost objectives on the basis of relative benefits received or other equitable relationship.” 48 C.F.R. 31.201-4.

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241 F. Supp. 3d 37, 2017 WL 1018309, 2017 U.S. Dist. LEXIS 36249, Counsel Stack Legal Research, https://law.counselstack.com/opinion/united-states-ex-rel-barko-v-halliburton-co-dcd-2017.