United States Ex Rel. Barko v. Halliburton Co.
241 F. Supp. 3d 37
| D.D.C. | 2017Background
- Relator Harry Barko, a former KBR subcontract administrator in Iraq (2004–2005), sued KBR under the False Claims Act (FCA) alleging kickbacks, bid‑rigging, double billing, inflated subcontract costs, and deficient performance by KBR’s subcontractor Daoud & Partners (D&P) on LOGCAP III subcontracts.
- LOGCAP III was a cost‑reimbursement (CPAF) umbrella prime contract: KBR was reimbursed for allowable costs via public vouchers (SF‑1034); reimbursement depended on allowability/reasonableness determinations by DCAA/DCMA.
- Barko’s allegations focused on four subcontract categories: B6 man‑camp construction, laundries (facilities/labor/supplies), water‑well drilling, and labor contracts. He relied on COBC tip reports, employee declarations, and internal documents.
- Central legal theories: (1) FCA claims based on express or implied false certifications on payment vouchers; (2) fraudulent inducement/tainting of claims where subcontracts were procured by fraud (bid‑rigging/kickbacks); (3) double billing/backcharges.
- Extensive discovery disputes over COBC internal investigation materials reached the D.C. Circuit, which ultimately held KBR’s COBC reports privilege protected; much of Barko’s requested discovery was withheld as privileged or found overbroad.
- District court granted KBR summary judgment: Barko failed to produce admissible evidence of kickbacks, to show falsity or materiality of payment claims, to establish fraudulent inducement of the LOGCAP III contract/Task Orders, or to show scienter for double‑billing; Rule 56(d) discovery request denied for lack of diligence or because sought material was privileged.
Issues
| Issue | Barko’s Argument | KBR’s Argument | Held |
|---|---|---|---|
| Existence of kickbacks/bribes between KBR employees and D&P | Barko: COBC tips, employee statements, and declarations show kickbacks that tainted subcontract awards. | KBR: COBC reports privileged or mere allegations; proffered evidence is hearsay, speculation, or inadmissible; no direct link to false claims. | Court: No admissible evidence of kickbacks sufficient to create genuine dispute; summary judgment for KBR. |
| Anticompetitive bidding / fraudulent inducement of government payments | Barko: Rigged subcontracts and suppressed competition made claims false or fraudulently induced government payments. | KBR: Public vouchers contain no certifications about competitive bidding or cost reasonableness; no evidence government was induced to award LOGCAP III or Task Orders. | Court: Bidding irregularities do not show express or implied false certifications on SF‑1034s nor fraudulent inducement of the prime contract/Task Orders; summary judgment for KBR. |
| Performance defects as FCA basis | Barko: Substandard performance (man camp, wells, laundries) made claims false or inflated. | KBR: Performance disputes sound in breach of contract, not FCA; government continued to pay and had audit processes. | Court: Performance defects do not convert to FCA claims absent falsity/materiality; summary judgment for KBR. |
| Double billing / failure to backcharge (laundry facilities, labor, supplies) | Barko: KBR purchased facilities again, failed to backcharge for KBR‑supplied labor/supplies, causing duplicate charges to government. | KBR: Contract ambiguous on title; when KBR took title it assumed costs; backcharges were taken for B1 and B3; no proof of knowledge of wrongful double billing. | Court: Contract ambiguity and lack of scienter defeat FCA claim; actual backcharges shown for B1/B3; no genuine dispute for remaining alleged double billing; summary judgment for KBR. |
| Rule 56(d) discovery request | Barko: Needs more discovery (168 witness interviews, depositions, COBC underlying facts) to oppose summary judgment. | KBR: Barko had names/titles long before opposition, delayed diligently pursuing discovery, much sought is privileged or overbroad. | Court: Denied Rule 56(d). Requested underlying COBC facts privileged or overbroad; Barko lacked diligence and failed to show inability to produce facts earlier. |
Key Cases Cited
- Universal Health Servs., Inc. v. United States ex rel. Escobar, 136 S. Ct. 1989 (2016) (materiality standard for implied false certification under FCA)
- Celotex Corp. v. Catrett, 477 U.S. 317 (1986) (summary judgment standard when nonmoving party cannot establish essential element)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (genuine dispute and reasonable jury standard on summary judgment)
- Scott v. Harris, 550 U.S. 372 (2007) (court need not adopt a version of facts blatantly contradicted by the record)
- U.S. ex rel. Bettis v. Odebrecht Contractors of Cal., Inc., 393 F.3d 1321 (D.C. Cir. 2005) (fraud‑in‑the‑inducement theory under the FCA)
- Upjohn Co. v. United States, 449 U.S. 383 (1981) (corporate attorney‑client privilege principles)
- U.S. ex rel. Marcus v. Hess, 317 U.S. 537 (1943) (bid‑rigging as a basis for FCA liability)
- Sci. Applications Int’l Corp. v. United States, 626 F.3d 1257 (D.C. Cir. 2010) (distinguishing factual and legal falsity; implied certification discussion)