It’s been more than two years since the U.S. withdrew almost all military forces from Iraq, but the multibillion-dollar logistics contract to support American troops there will likely go on for the better part of another decade, records show.
Known as LOGCAP III (Logistics Civil Augmentation Program), the contract provided housing, food, transportation, fuel and a host of other services. It was awarded to contractor KBR, which remains entangled in dozens of lawsuits over its performance and faces what company lawyers characterize as an unprecedented level of Pentagon audit scrutiny.
In the latest development, U.S. senators last month pressed the Pentagon about how much the company has billed in legal costs for defending itself in a lawsuit filed by soldiers who accused KBR of exposing them to carcinogens at an Iraqi water treatment plant.
“Senior attorneys on the company’s legal team have flown first class to hearings and depositions, and have billed at more than $700 an hour,” Sens. Ron Wyden and Jeff Merkley, both Oregon Democrats, wrote in their letter to Defense Secretary Chuck Hagel.
The company had no immediate response Tuesday.
The unresolved lawsuits are one reason why KBR’s contract can’t be closed out, company lawyers said in a filing in a case in federal claims court. The lawsuits also make it difficult to come up with a firm fixed price, the lawyers said, since the costs of fighting the legal disputes “are recoverable under the LOGCAP III contract,” the lawyers wrote.
The Defense Contract Audit Agency is also still auditing KBR invoices and could take five more years to complete them, KBR lawyers said. Even then, “experience shows that, even after audits are complete, it may take three to five years after the last audit to resolve all disputed costs,” the lawyers said in court papers.
Mike Doyle, a Houston-based attorney who represented soldiers in an $85 million lawsuit against the company in 2012, said the legal indemnification provision made the contractor less inclined to settle.
“The government hasn’t agreed so far that they’re on the hook so there is a dispute going on, but I think KBR has worked on the assumption that no matter what they spend, no matter what stone they leave not unturned, they’re going to get it back,” he said.
Meanwhile, in another Federal Claims Court case, a judge dismissed on procedural grounds a separate lawsuit by KBR arguing taxpayers should pay for more than $20 million in legal bills it incurred defending itself in lawsuits accusing the company of wrongdoing, including the Oregon case.
The “Restore Iraqi Oil” contract required KBR personnel to work in Iraq as soon as the U.S. invasion began in March 2003, but officials said the company couldn’t get adequate insurance coverage and so the Secretary of the Army “approved the inclusion of an indemnification provision” in the oil contract,” KBR officials explained in a recent Securities and Exchange Commission filing.
The company said in the same SEC filing that it has since filed an appeal with the Armed Services Board of Contract Appeals.