KELLOGG BROWN & ROOT SERVICES, INC. v. United States
1:09-cv-00428
Fed. Cl.Sep 27, 2012Background
- LOGCAP III contract; KBR provided DFAC logistics in Iraq under cost-plus-award-fee structure.
- Subcontracts SK465 (H4) and SK466 (H2) priced with headcount bands; contest over price reasonableness.
- June 2004 LOTDs expanded capacity to 6,200+ and shifted DFAC design to concrete facility; CO1 for ABC issued 2004.
- DCAA questioned pricing; KBR and ABC engaged in greensheet review and prices based on PNM and ICE analyses.
- DCAA Form 1 revisions disapproved substantial costs; KBR sought damages/recoveries for incurred, questioned costs.
- Court trial concluded with focus on reasonableness under FAR 31.201-3 and related standards; judgment guidance issued for final amounts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Reasonableness of CO 1 pricing for SK465 | Check found CO1 reasonable vs SK465 prices | CO1 prices unreasonably inflated | Partially valid; some CO1 costs not proven reasonable |
| Greensheet approval adequacy | Greensheet analyzed prices, not rubber-stamp | Greensheet was an administrative review | Insufficient to prove overall reasonableness |
| Reasonableness of SK466/CO7 pricing | Headcount bands fair to reimburse surge costs | CO7 overpaid for non-SOW headcount | Costs largely reasonable; some adjustments allowed |
| Base fee recoverability | Base fee recoverable regardless of cost reasonableness | Base fee contingent on allowable costs | Base fee partly recoverable per order; certain amounts set aside |
| Headcount-band interpretation (MAD vs SOW headcount) | ABC entitled to SOW-based payments | MAD-based payments govern for non-SOW items | Court adopted mixed approach; certain headcount terms upheld |
Key Cases Cited
- Bradley Construction Co. v. United States, 324 F.2d 516 (Ct. Cl. 1963) (presumption of reasonableness existed prior to 1987 FAR amendment)
- Lisbon Contractors, Inc. v. United States, 828 F.2d 759 (Fed. Cir. 1987) (burden-shifting framework for contract costs under FAR 31.201-3)
- Thermalon Indus., Ltd. v. United States, 51 Fed. Cl. 464 (2002) (reasonableness analysis under FAR 31.201-3 in cost-reimbursement)