Contributed by Husch Blackwell Associate Thomas J. Rath

It makes sense to require contractors seeking reimbursement of costs they incur in the performance of a government contract to show that the costs were reasonable. According to the latest decision addressing KBR’s effort to recoup costs incurred to support the United States military in Iraq, the rule is no different for work performed in a warzone. Without additional proof of reasonableness, the Court of Federal Claims concluded that $37 million may be too much for a dining facility needed to feed and protect 6,000 American soldiers. See Kellogg Brown & Root Services, Inc. v. United States, Nos. 09-428C & 09-578C (Fed. Cl. Sept. 27, 2012).

The decision arises from KBR’s claims for costs incurred to construct and operate a reinforced concrete dining facility needed to feed and protect 6,000 soldiers in Mosul, Iraq. Though KBR’s contract was awarded on a cost-reimbursement basis, KBR awarded a fixed-price subcontract for the work to ABC International Group. Army representatives urged KBR to begin work on the new facility quickly, citing the need for “force protection.” Responding to this pressure, KBR accepted a proposal from ABC that doubled the expected monthly cost of labor without seeking competing bids. KBR concluded the increase was reasonable because the work would be conducted amid “violence and the beheading of hostages by terrorists [which] caused a drastic increase in the cost of labor and a severe shortage of available staff.” By the end of the contract, the government asserted that KBR had paid over $12 million more to ABC for labor than it should have.Continue Reading $37 million may be too much for a warzone cafeteria

Many of the new contracting policies imposed by the National Defense Authorization Act for Fiscal Year 2012 [pdf] are geared towards increasing oversight of defense contractors and reducing the federal government’s outlay of cash. Here are a few of the highlights.
Continue Reading More contractor oversight in the 2012 National Defense Authorization Act

Contractors bidding on federal contracts must take the leap of faith that they have accounted for all of the various elements that will affect the cost of their performance. But there’s no need to do so completely blind. Asking key questions of the procuring agency can help shed light on ambiguities in the contract documents.Continue Reading When pre-bid Q&A raises more questions than answers

Unless Congress takes action by March 4, 2011, most federal agencies will be required to cease operations, presenting significant challenges for contractors. Whether you’re optimistic or pessimistic about the prospects of a political solution that would avoid the looming government shutdown, preparing for it is a necessity. News reports on the issue are interesting, but they don’t do much in the way of developing a strategy for handling a shutdown. Here is a look at some of the key questions presented, with answers based on decisions that came out of the now infamous 1995 government shutdown.
Continue Reading Surviving a Government Shutdown