The Army Must Pay KBR $30 Million for Legal Fees
Have you ever wanted to pay KBR $30 million to cover legal expenses? Well, it's your lucky month: the Armed Services Board of Contract Appeals on August 13 ordered the Army — i.e., taxpayers — to reimburse the company for the cost of defending lawsuits over an allegedly toxic water injection facility in Iraq.
According to POGO (The Project on Government Oversight), the Armed Services Board "ruled that an indemnification provision in KBR's Restore Iraqi Oil contract requires the government to cover KBR's legal expenses arising from property damage, injury, or death at KBR worksites in Iraq."
The hefty bill stems from lawsuits filed in Texas and Oregon by ex-Army and National Guard personnel (among others) who provided security for KBR contractors working at the Qarmat Ali facility, which was contaminated with an anticorrosive called sodium dichromate. The chemical contained a carcinogenic called hexavalent chromium.
As we wrote in 2012:
According to the lawsuits, filed in Oregon and Houston, KBR health and safety workers knew about the sodium dichromate in April or May of 2003, but did not notify the U.S. Army Corps of Engineers until mid-August, allowing the troops to be exposed to the potentially deadly chemical for months. During that time, according to the lawsuits, KBR personnel deceived the troops by first concealing the chemical's presence, then downplaying its danger. They told soldiers that their bloody noses and breathing problems were due to sand, or too many protein drinks, or pre-existing conditions.
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The Oregon case went to trial first, and a jury awarded the plaintiffs $85 million, but the 9th Circuit Court of Appeals overturned the verdict in May.
POGO states that
Three years ago, the Project On Government Oversight highlighted some of KBR’s expenses: fees for a battalion of lawyers billing up to $750 per hour; expenses for first-class airfare, transportation, hotels, and meals; and at least $500,000 for expert witnesses, including one who billed KBR for the time she spent napping at a deposition. Fortunately, the government has some wiggle room. The indemnification provision requires that the costs must not be covered by insurance and—more importantly—must be “just and reasonable.” The government could also ask the ASBCA to reconsider its decision or appeal it to the United States Court of Appeals for the Federal Circuit.
We're not exactly sure how or why the federal government was able to enter into a contract that essentially absolves a company of liability, even if that liability results in the grave illness and deaths — three so far — of its own military personnel.
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