Government Sues Contracting Giant KBR

The federal government filed a lawsuit this afternoon against Kellogg Brown and Root (KBR), one of the U.S. military's largest contractors, alleging the company wrongfully billed the U.S. government for private security.

According to the complaint, KBR and "some 33" of its subcontractors billed the U.S. Army for private armed security it used in Iraq between 2003 and 2006 that Army officials did not approve.

The suit also claims that KBR was aware the U.S. government did not approve of its use of private security, and "knowingly" included the "impermissible costs" in an overheard account.

Although security is a necessity for many contractors in Iraq, the government claims the U.S. Army already provided security for KBR and a private security firm was unnecessary.

In a statement the company responded to the lawsuit saying the costs incurred to "protect its employees and subcontractors were reasonable, necessary and appropriate." The company says there is nothing in the contract that forbids the hiring of private security.

KBR also says that although the Army was supposed to provide security, they charge the Army failed to provide "necessary force protection" and frequently left company employees unprotected.

Today's lawsuit is just the latest in a series of accounting problems that continue to plague the contracting giant. During a hearing earlier this week, members of the Commission on Wartime Contracting accused KBR of extensively wasting government money while contracting in Iraq.

Yet despite its criticism, the government continues to give the contractor business: At the beginning of last month KBR won a new $571 million government contract in Iraq. In total the company has been awarded over $32 billion in military contracts since 2001.