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About POGO's Federal Contractor Misconduct Database (FCMD)
The government awards contracts to companies with histories of misconduct such as contract fraud and environmental, ethics, and labor violations. In the absence of a centralized federal database listing instances of misconduct, the Project On Government Oversight (POGO) is providing such data. We believe that it will lead to improved contracting decisions and public access to information about how the government spends hundreds of billions of taxpayer money each year on goods and services. Report an instance of misconduct »
KBR
Kellogg Brown & Root (KBR) is an engineering and construction company. KBR supports the energy, hydrocarbons, government services, and civil infrastructure sectors on six continents with a workforce of more than 50,000 employees. Until 2007, KBR was a subsidiary of Halliburton. (**See below for link to Halliburton profile in FCMD.)
Federal Contract $: $2277.0m
Total Number of Instances: 30
Total Misconduct dollar amount: $ 213.7m
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- --Halliburton (FCMD)--
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Instances of Misconduct
1. Government Fraud Counterclaims in LOGCAP Dispute
In response to a lawsuit filed by KBR seeking approximately $41 million the government ordered KBR to return under the Logistics Civil Augmentation Program (“LOGCAP”) III contract, the Department of Justice filed counterclaims alleging KBR managers received kickbacks from dining facility (“DFAC”) subcontractor Tamimi Global Company in violation of the False Claims Act and the Anti-Kickback Act. The government claimed that from late 2002 through 2003, KBR regional food services manager Terry Hall and his deputy, Luther Holmes, received more than $45,000 in kickbacks from Mohammad Shabbir Khan, vice president of Tamimi, in return for awarding the company more than $400 million in subcontracts. The Department of Justice alleged that the “taint” of the kickbacks should cause KBR to forfeit its claims against the government. In 2006, Khan was sentenced to 51 months in prison for paying kickbacks to KBR employee Stephen Lowell Seamans, who was sentenced to 12 months in prison for accepting the kickbacks in return for helping Tamimi win two DFAC subcontracts in Iraq and Kuwait worth $21.8 million (see KBR instance, “KBR Employee Sentenced for Accepting Kickbacks”). In September 2011, Tamimi paid $13 million and entered a deferred prosecution agreement to settle U.S. criminal and civil charges. After a trial, in April 2012 the U.S. Court of Federal Claims awarded KBR $11,792,505 plus interest accrued since July 2008. However, the court awarded the government $38,000 in civil penalties on its Anti-Kickback Act counterclaim, holding KBR strictly liable for the kickbacks taken by Hall and Holmes.... more»
2. Overcharging the Government
“Brown & Root Services, now operating as Kellogg Brown & Root, has been a defendant in civil litigation pending in federal court in Sacramento, California. The lawsuit alleges that Brown & Root Services violated provisions of the False Claims Act while performing work for the United States Army at Fort Ord in California. This lawsuit was filed by a former employee in 1997. On February 8, 2002, this lawsuit and a related grand jury investigation were settled. Kellogg Brown & Root made a $2 million payment to the United States government and paid the former employee’s legal expenses. Kellogg Brown & Root denied wrongdoing and did not admit liability. The United States agreed to suspend further investigation and forgo any further sanctions with regard to the Ft. Ord contract. Kellogg Brown & Root’s ability to perform further work for the United States government has not been impaired.”... more»
3. Violation of Anti-Kickback Act
“KBR has voluntarily disclosed a possible violation of the Anti-Kickback Act 18 USC §874 et. seq. by two of its employees. KBR has already reimbursed the Government for the estimated impact of $6.3 million, but has failed to provide data necessary for DCAA to verify the accuracy of that amount.”... more»
4. Excessive Subcontract Costs
The DCAA (Defense Contract Audit Agency) “has identified issues related to the reasonableness of negotiated subcontract costs for DFACs (Dining Facilities). KBR has been unable to support the reasonableness of subcontract prices or the appropriate billing methodology intended in its subcontracts.” Billed headcount numbers [at these facilities] exceeded the actual meals served by at least 19 percent according to KBR’s own studies and could be as high as 36 percent based on on-going DCAA analysis. Initially, DCAA and KBR agreed on a withholding of $176.5 million until additional supporting data could be provided by KBR…[however] the DCAA has currently increased its suspended DFAC costs to $186 million.” As reported in its 2005 10-K, the government eventually agreed to withhold $55 million.... more»
5. Fraud and Accepting Kickbacks
On August 19, 2005, Glenn Allen Powell, 40, of Texas, a former employee of Kellogg, Brown & Root (KBR), entered a plea of guilty to charges he defrauded the United States and accepted kickbacks of more than $100,000 from an Iraqi subcontractor. Powell admitted accepting approximately $110,300 in kickbacks related to the award of a subcontract to an Iraqi company for renovation of buildings in Iraq. From October 2003 to January 6, 2005, Powell, a U.S. citizen, was employed by KBR as a subcontracts administrator in Iraq. On November 18, 2005, Powell was sentenced to 15 months in prison and was made to pay $90,974 in restitution and a $200 assessment. According to the Excluded Parties List System, he was debarred on February 16, 2006.... more»
6. KBR Employee Sentenced for Accepting Kickbacks
Former KBR employee, Stephen Lowell Seamans, was sentenced to 12 months in prison for his role in a kickback scheme with Tamimi Global Company, a Saudi Arabian company. Seamans was also ordered to pay $380,130 in restitution and a $200 assessment. The scheme resulted in Mohammad Shabbir Khan, a Tamimi executive, paying $133,000 in kickbacks to Seamans who was responsible for negotiation, execution and administration of subcontracts on KBR's behalf under the U.S. Army's prime contract known as LOGCAP III. Khan paid Seamans the kickbacks to secure two subcontracts for Tamimi Global Company for military dining facilities: a $14.4 million dollar subcontract at Camp Arifjan, Kuwait, and a subcontract of $7.4 million dollars at a palace in Baghdad, Iraq. According to the Excluded Parties List System, Seamans was debarred on June 27, 2007.... more»
7. United States v. Mazon, et. al. (Fraud)
On March 17, 2005, Jeff Alex Mazon, a former employee of Kellogg, Brown & Root (KBR), and Ali Hijazi, the managing partner of Kuwaiti company LaNouvelle General Trading and Contracting Company, were indicted on charges of devising a scheme to defraud the United States of more than $3.5 million related to the awarding of a subcontract to LaNouvelle to supply fuel tankers for military operations in Kuwait. The indictment alleged that on or about February 2, 2003, Mazon, a negotiator for subcontractors, solicited bids by e-mail from potential subcontractors. The cost of the subcontract was estimated by KBR at $685,080. The indictment alleged that Mazon inflated the bid he received from Hijazi to ensure that LaNouvelle would be overpaid. In March 2009, after two trials ended with deadlocked juries, the U.S. Justice Department withdrew all fraud charges against Mazon and instead accepted a misdemeanor plea agreement under which Mazon pleaded guilty to one misdemeanor count of making a false written statement.... more»
8. Exposing Troops to Hazardous Water Conditions
In April 2006, the Senate Democratic Policy Committee held a hearing on allegations that Halliburton and its former subsidiary, KBR, knowingly exposed thousands of U.S. troops in Iraq to hazardous levels of unhealthy non-drinking water from the Euphrates River. This water was mainly used by the troops to shower, wash their hands and faces, brush their teeth, wash their clothes, and sometimes to make coffee. The allegations were made by current and former Halliburton/KBR water quality maintenance employees who claimed they alerted the company, but it took no action. The matter was referred to the Department of Defense Office of Inspector General, which, in March 2008, released a report that found U.S. soldiers at Camp Q-West, located about 180 miles north of Baghdad, were provided with treated but untested wastewater for nearly two years by KBR and may have suffered health problems as a result. The report also found that at several other bases, both KBR and the military failed to perform required water-quality checks, thereby exposing troops to potentially unsafe water for washing, bathing, shaving and cleaning. KBR provides water to U.S. bases in Iraq under its LOGCAP contract.... more»
9. Bribery to Win International Government Contracts
KBR pleaded guilty to violating the Foreign Corrupt Practices Act (FCPA) between 1995 and 2004 by paying millions of dollars in bribes to officials in Nigeria in exchange for engineering and construction contracts on a natural gas liquefaction plant. KBR agreed to pay $20 million and retain a corporate monitor for a period of three years.... more»
10. U.S. v. Chodan (Nigeria LNG Contracts Bribery)
United Kingdom citizen Wojciech Chodan was charged for his alleged participation in a scheme to bribe Nigerian government officials to obtain engineering, procurement and construction contracts to build liquefied natural gas (LNG) facilities in Nigeria. The government alleged that Chodan, a former salesperson and consultant of M. W. Kellogg Ltd., a UK subsidiary of KBR, took part in discussions about paying bribes to Nigerian government officials in order to steer contracts to a four-company joint venture that included KBR. Chodan was charged with one count of conspiracy to violate the Foreign Corrupt Practices Act (FCPA) and ten counts of violating the FCPA. In December 2010, Chodan pleaded guilty to one count of conspiracy to violate the FCPA. In February 2012, he was sentenced to one year of unsupervised probation and a $20,000 fine. Chodan previously was ordered to forfeit $726,885.... more»
11. Overpricing Fuel
In December 2003, the Defense Contract Audit Agency (DCAA) announced that Halliburton's Kellogg, Brown and Root subsidiary may have overpriced fuel imported to Iraq from Kuwait by as much as $61 million. Defense Department officials, however, granted Halliburton a waiver eliminating their responsibility to provide any cost and pricing data from its Kuwaiti subcontractor and declared the gasoline prices “fair and reasonable.” By early 2006, the DCAA had found $279 million in questioned or unsupported costs under the Restore Iraqi Oil (RIO) contract, but, according to news accounts at that time, the Army chose to reimburse Halliburton for all but $10.1 million of those contested costs.... more»
12. April 2004 Iraq Convoy Driver Lawsuits
Lawsuits alleging negligence and fraud were filed by or on behalf of KBR truck drivers who were injured or killed while driving convoy assignments in Iraq in April 2004. In December 2011, Halliburton and KBR settled with plaintiff Reginald Cecil Lane for an undisclosed amount. The remaining lawsuits were dismissed on appeal in January 2012.... more»
13. Kuwait Company for Process Plan Construction & Contracting v. Halliburton (Breach of Contract)
The Kuwait Company for Process Plan Construction & Contracting and the Morris Corporation accused Halliburton subsidiary Kellogg, Brown & Root of breaching an agreement to pay for food service operations provided near Tikrit, Iraq in 2003. In February 2005, the parties reached an undisclosed settlement and agreed to dismiss the case.... more»
14. Navy Hurricane Relief Contract Overcharges
An audit report by the Department of Defense Inspector General found that KBR overcharged the U.S. Navy on contracts to provide support services in the aftermath of Hurricanes Ivan and Katrina. According to the audit, the Navy paid approximately $4.1 million for meals and services that should have cost $1.7 million and inappropriately paid a markup on material and equipment totaling $7.2 million. The report recommended the Navy seek a refund from KBR for the inappropriate payments.... more»
15. LOGCAP IV Disqualification
KBR was disqualified from participation on two task order competitions under the Logistics Civil Augmentation Program (LOGCAP) IV contract because a KBR employee improperly accessed source selection sensitive and proprietary information, and KBR refused to take proper corrective action. In September 2008, an Army contracting officer mistakenly sent to KBR’s contracts manager and program manager an email containing source selection sensitive and proprietary information of KBR, Fluor, and DynCorp. Despite being instructed by the contracting officer to not open and to immediately delete and destroy the email, the KBR program manager opened and looked at the content of the email. KBR also refused the Army’s request to isolate the program manager from the LOGCAP IV program for which the data contained in the email had been prepared.... more»
16. USA v. Lewis (Afghanistan Fuel Delivery)
Raschad L. “Sean” Lewis, a former fuel section employee of KBR assigned to Bagram Airfield in Afghanistan, was found guilty by a federal jury of conspiracy, false writing, bribery of a public official, and false claims stemming from a fuel diversion scheme. Between May and September 2006, Lewis and other KBR employees conspired to accept payments from drivers delivering jet fuel who, in fact, were selling their fuel to parties outside the airfield. Pursuant to the conspiracy, more than 48 truckloads of fuel valued at more than $800,000 were diverted for sale outside the airfield. Two other former KBR employees, Wallace A. Ward and James N. Sellman, were convicted for their roles in the scheme. In August 2009, Lewis was sentenced to 84 months in prison, three years of supervised release, and ordered to pay $891,000 in restitution. See related KBR instance, “Conspiracy to Defraud the Government While Overseeing Fuel Deliveries in Afghanistan."... more»
17. U.S. v. Breda (Sexual Assault)
David Charles Breda, Jr. was charged with sexually assaulting a woman in October 2008 at Al Asad Air Base in Iraq, where he was employed by Services Employees International Inc., a subsidiary of KBR. In October 2009, Breda pleaded guilty to abusive sexual contact. In January 2010 he was sentenced to two years in prison and a lifetime term of supervised release, and he was ordered to register as a sex offender.... more»
18. Nigeria LNG Contracts Bribery (UK Prosecution)
In its 2009 SEC Form 10-K, Halliburton reported that M.W. Kellogg Ltd. (MWKL), a British joint venture in which KBR owns 55 percent interest, is seeking plea negotiations with the UK’s Serious Fraud Office (SFO) to settle its investigation into a Nigerian bribe scheme in which KBR and Halliburton pleaded guilty in 2009 to U.S. charges that, as part of a multinational consortium, they paid bribes to Nigerian officials from 1994 to 2004 to win contracts to build the Bonny Island liquefied natural gas (LNG) facility. Halliburton, which agreed to indemnify KBR and its subsidiaries for some past liabilities when the two companies split in 2007, reported that it will indemnify MWKL for 55 percent of any penalties. In February 2011, MWKL reached a £7,028,077 (approx. US$11.3 million) settlement with the SFO.... more»
19. Withholding 2008 LOGCAP Award Fees
KBR reported that the U.S. Army's LOGCAP Program Award Fee Government Determining Official notified the company that it will not receive any award fees for Task Orders 139 (dining facilities, laundry and other support services) and 151 (support services at Chief of Mission sites and U.S. Embassy-Iraq) for the period January 1, 2008 through April 30, 2008. KBR estimated it had accrued approximately $20 million in award fees during that period. According to the Associated Press, which received a statement about the matter from the Army Sustainment Command, KBR “failed to meet a level deserving of an award fee payment for work it did during the first four months of 2008.”... more»
20. U.S v. Bennett (LOGCAP Freight Forwarding Kickbacks)
Robert Peter Bennett, a former supervisor for KBR’s transportation department, pleaded guilty to accepting "perks" valued at $6,000 from employees of EGL, Inc., for favorable treatment related to military freight forwarding subcontracts in violation of the Anti-Kickback Act. Bennett admitted that from March 1, 2003 through April 29, 2005, while based in Houston, he accepted gratuities, including meals, drinks, golf outings and other gifts and entertainment, from EGL supervisor Kevin Andre Smoot and others on at least 40 different occasions. At the time, Bennett was KBR’s Corporate Traffic Supervisor for the LOGCAP III contract with responsibility for supervising EGL on its subcontract with KBR to transport military goods to Iraq, Afghanistan and Kuwait. Bennett was sentenced to one year of probation (60 days in home confinement), a $100 assessment and $6,000 in restitution. In May 2010, the U.S. Army announced it would continue KBR's LOGCAP III contract to provide life support services to U.S. forces in Iraq until the withdrawal of those forces, scheduled to be completed by December 2011. See related pending KBR instance, "Vavra v. KBR (False Claims on LOGCAP Contracts in the Balkans and Iraq)."... more»
21. Exposure to Sodium Dichromate at Iraqi Water Treatment Plant (Oregon National Guard Suit)
Members of the Oregon Army National Guard sued KBR alleging health problems caused by exposure to sodium dichromate/hexavalent chromium at the Qarmat Ali water treatment plant in southern Iraq in 2003. KBR was in charge of restoring the plant; the National Guardsmen were assigned to protect the civilian workers at the plant. In November 2012, a federal jury found KBR negligent and awarded each of 12 plaintiffs $850,000 in non-economic damages (e.g. pain and suffering) and $6,250,000 in punitive damages, for a total amount of $85.2 million. The court subsequently reduced the non-economic damages award to $500,000.... more»
22. Overcharging and Other Procurement Irregularities (Balkans)
Kellogg Brown and Root (KBR) agreed to pay $8 million to settle allegations of overcharging and other procurement irregularities in its Army logistical support (LOGCAP) contract in the Balkans during 1999 and 2000.... more»
23. LOGCAP Task Order 130 Audit (June 2007)
In June 2007, the Office of the Special Inspector General for Iraq Reconstruction released the results of its audit of the Army’s Logistics Civil Augmentation Program (LOGCAP) Task Order 130, which was awarded to Kellogg, Brown & Root Services (KBR) in April 2006 to provide various services in Iraq. The special inspector general found significant flaws in KBR’s fuel receiving and distributing processes, waste in KBR’s provision of food and billeting services, and flaws in the government’s oversight of the LOGCAP contract.... more»
24. Guilty Plea in Iraq Kickback Scheme
Anthony J. Martin, an American who worked for Halliburton’s former subsidiary Kellogg Brown & Root, pleaded guilty to violating the Anti-Kickback Act in awarding nearly $13 million in contracts to a Kuwaiti company in 2003 to supply the American military with semi-tractors and trailers in Iraq and Kuwait. (Subsequent court documents identified the company as First Kuwaiti General Trading & Contracting.) Martin, whose duties included soliciting and awarding subcontracts on KBR’s behalf under its LOGCAP III (Logistics Civil Augmentation Program) contract, pleaded guilty in federal court in Illinois to awarding two contracts in exchange for what would have totaled over $200,000 in kickbacks. In June 2008, Martin was sentended to 12 months and one day in prison and ordered to pay $200,505 in restitution.... more»
25. World Bank Debarment of Australian Subsidiary
The World Bank Group debarred Kellogg Brown & Root Pty Ltd (KBR Pty) for a period of two years with conditional release following an investigation by the Bank’s Integrity Vice Presidency (INT) into violations of the Consultant’s Guidelines under a Bank-financed water supply project in Vietnam. KBR Pty, an Australian subsidiary of KBR, Inc., misrepresented the availability of key consultants during contract negotiation and execution, which resulted in KBR Pty being awarded the contract and led to delays in contract execution. Under the terms of the agreement KBR Inc. will also implement remedial measures to its corporate compliance program to comply with the World Bank Compliance standards. KBR Pty cannot be awarded a contract or otherwise participate in new activities under World Bank Group-financed or executed projects during the debarment period.... more»
26. U.S. v. Montes (Afghanistan Trucking Services Bribery and False Claims)
Diyana Montes pleaded guilty to one count of bribery for her role in a scheme to fraudulently bill the U.S. Army for trucking services in Afghanistan. According to the government, Montes worked for KBR at Bagram Airfield, Afghanistan, in 2008 where she worked with local Afghan contractors to transport U.S. military equipment, fuel, and other supplies throughout Afghanistan. The government alleged that Montes submitted false invoices on behalf of trucking company Afghanistan Trade Transportation (ATT), in return for which ATT paid Montes approximately $50,000.... more»
27. Conspiracy to Defraud the Government While Overseeing Fuel Deliveries in Afghanistan
A federal grand jury in Virginia indicted James N. Sellman and Wallace A. Ward, former Kellogg Brown and Root, Inc. (KBR) Fuel Section employees, charging them with conspiracy, making a false writing, bribery, and making a false claim to the Department of Defense. Sellman and Ward were assigned to oversee fuel deliveries to Bagram Airfield in Afghanistan under the Logistics Civil Augmentation Program ("LOGCAP") support contract. The indictment alleges that, between May and September 2006, Sellman and Ward conspired to accept bribes from truck drivers employed by British company Red Star Enterprises Limited in return for falsifying government documents indicating receipt of the fuel and then diverting fuel for sale outside the airfield. According to the indictment, the conspiracy involved over 784,000 gallons of fuel worth more than $2.1 million. On January 25, 2008, Ward pleaded guilty to conspiracy to receive bribes, making false statements and filing false claims. He admitted to joining the conspiracy in August 2006 and receiving bribes from several drivers. In April 2008, Ward was sentenced to 26 months in prison and three years of supervised release. Ward was also ordered to pay $216,000 in restitution to the Defense Energy Support Center headquartered at Fort Belvoir. In May 2008, Sellman was sentenced to 26 months in prison, three years of supervised released, and was ordered to pay $675,000 in restitution to the Defense Energy Support Center.... more»
28. Barker v. KBR (Sexual Harassment and Retaliation)
Tracy Barker worked for Halliburton’s former subsidiary Kellogg Brown & Root (KBR) in Iraq from July 2004 to September 2005. She claimed that while working there she was harassed, sexually harassed and assaulted, and retaliated against when she complained. In August 2007, the Equal Employment Opportunity Commission determined that Barker had been forced to endure a sexually hostile work environment and that KBR retaliated against her in violation of Title VII of the Civil Rights Act of 1964. Barker filed a lawsuit in federal court, which was dismissed and sent to arbitration. In November 2009, the arbitrator awarded Barker $2.9 million.... more»
29. SEC v. Stanley (Nigeria LNG Contracts Bribery)
The Securities and Exchange Commission charged former KBR executive Albert Jackson Stanley with violating the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA) and related provisions of the federal securities laws. The SEC alleges that over a 10-year period, Stanley and other members of a four-company joint venture participated in a scheme to bribe Nigerian government officials in order to obtain construction contracts worth more than $6 billion to build liquefied natural gas facilities in Bonny Island, Nigeria. Without admitting or denying the SEC’s allegations, Stanley consented to the entry of a final judgment that permanently enjoins him from violating the anti-bribery, record-keeping and internal control provisions of Securities Exchange Act of 1934 and also agreed to cooperate with the SEC’s ongoing investigation. See related Halliburton instance, “U.S. v. Stanley (Nigeria LNG Contracts Bribery)” and pending instance, “Bribery to Win International Government Contracts.”... more»
30. U.S. v. Stanley (Nigeria LNG Contracts Bribery)
Former KBR executive Albert Jackson Stanley pleaded guilty to one count of conspiring to violate the Foreign Corrupt Practices Act (FCPA) and one count of conspiring to commit mail and wire fraud. The FCPA charge stemmed from an alleged 10-year scheme involving the payment of bribes to Nigerian government officials to obtain engineering, procurement and construction contracts to build liquefied natural gas (LNG) facilities in Bonny Island, Nigeria. Stanley admitted in his plea agreement that a four-company joint venture which included KBR paid about $182 million to consulting companies that funneled part of the money to Nigerian officials. The mail and wire fraud count involved a separate incident in which Stanley admitted to receiving approximately $10.8 million in kickbacks from a consultant whom he caused his former employer and its predecessor company to hire in connection with LNG projects around the world. In February 2012, Stanley was sentenced to 30 months in prison on the FCPA charge. On the mail and wire fraud charge, Stanley was ordered to serve three years of supervised release following the prison term and to pay $10.8 million in restitution to KBR, the victim of the kickback scheme. See related Halliburton instances “SEC v. Stanley (Nigeria LNG Contracts Bribery)” and “Bribery to Win International Government Contracts.”... more»
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