The settlement resolves allegations of KBR employees entering kickback arrangements with La Nouvelle and First Kuwaiti officials. Credit: Patrick Feller/Flickr (Creative Commons).

Defence contractor KBR has agreed to pay $13.67m to the US to settle the allegations of a breach of contract, false claims, and kickbacks. 

Kellogg Brown & Root Services, Kellogg Brown & Root Inc, Kellogg Brown & Root LLC, and Overseas Administration Services Ltd (collectively KBR) are the four defendants involved in the lawsuit concerning the US Army Logistics Civil Augmentation Program (LOGCAP) III contract.

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As part of the settlement, the companies have agreed to pay $12m. The agreement also includes $1.67m that KBR has already paid to the US in connection with the subcontracts. 

In 2001, KBR secured the US Army’s LOGCAP III contract to support the Department of Defense’s (DoD) global mission.   

Under the contract, KBR awarded subcontracts to two local companies. Subcontracts 11 and 39 were awarded to La Nouvelle Trading & Contracting Co, and 167 and 190 were given to First Kuwaiti Trading & Contracting Co.

The lawsuit claimed that some KBR employees rigged the bidding process in exchange for kickbacks from La Nouvelle and First Kuwaiti.

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KBR also allegedly inflated the prices of the subcontracts and extended the term of the contracts illegally.

It sought repayment of the inflated costs via vouchers submitted to the Army. 

All these acts accounted for the violation of the False Claims Act (FCA) and the Anti-Kickback Act, along with a breach of the LOGCAP III contract.

Justice Department Civil Division head and principal deputy assistant attorney general Brian Boynton said: “Those who do business with the government have a responsibility to ensure that they are properly performing and billing under their government contracts.

“This matter reflects the department’s commitment to hold accountable contractors that knowingly overcharge the government for inflated costs and that fail to take appropriate action to prevent their employees from enriching themselves at the public’s expense.”

The latest settlement clears several pending claims of the US under the FCA and kickbacks.