KBR, a former subsidiary of Halliburton and the U.S. Army’s largest contractor in Iraq, is coming under increasing scrutiny from the U.S. Department of Justice, which announced in May that it’s joining a whistle-blower lawsuit against the company. The suit alleges that KBR accepted kickbacks, including meals, drinks, events tickets and golf outings.
Two employees of freight-forwarding company EGL brought the suit pursuant to the False Claims Act. David Vavra and Jerry Hyatt have made similar claims that EGL overcharged the government on military contracts in the past, leading to settlements in excess of $5 million.
Meanwhile, KBR has been the subject of complaints since at least 2005 for receiving no-bid contracts from the U.S. military at what Congress considers inflated costs. Congress has demanded that competitive bidding be used to award military contracts.
Yet the very day that the attorney general announced the government’s joining of the whistle-blower suit, the U.S. Army awarded a $568 million no-bid contract to KBR at the recommendation of U.S. commanders serving in Iraq. With the Iraq war effort shutting down, Gen. Ray Odierno opposed “changing horses in midstream,” citing his need to move 3 million pieces of equipment, close 100 bases and relocate 80,000 people.
In April the US government sued KBR in an unrelated matter, charging that the company improperly billed the United States for private security services not authorized in its contract.
In 2009, nine separate class-action lawsuits were filed against KBR on behalf of former service members alleging exposure to toxic materials from open burn pits in Iraq and Afghanistan. The open-air burning allegedly resulted in serious illnesses including lymphoma and leukemia. KBR denies responsibility for the burn-pit operation and resulting illnesses.
