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False Claims Act Statistics, News & Analysis

Ding, Dong, the Case is Dead – Which Old Case, the Barko Case

This spring’s winter blast may dampen this year’s cherry blossoms but didn’t dim the spirits of your friends at LLB, especially those who represented KBR in the long-running Barko qui tam case. Huddled indoors on Tuesday, we received an unexpected, but welcome glimmer of sunshine. Over three years after the motion was filed, the district court issued a more than 60-page decision granting summary judgment for KBR. United States ex rel. Barko v. Halliburton Co., et al., No. 05-cv-1276. Judge Royce Lamberth, who penned the decision, is the third district judge to sit on this case since its inception a dozen years ago, having inherited the case (and then-pending summary judgment motion) from Judge James Gwin, who had in turn taken over the case from Judge Emmet Sullivan at the motion to dismiss stage. This non-intervened case, filed under seal in 2005, alleged that KBR violated the FCA in a number of ways, including by accepting kickbacks, rigging subcontractor bids, and billing the government for duplicative or poorly performed work under the LOGCAP cost reimbursement contract under which KBR provided logistical support to the U.S. military during the conflicts in Iraq and Afghanistan.

This case is one of several that KBR has defended related to the LOGCAP contract that have generated significant FCA precedents, including the Carter case in the Supreme Court. Barko too has been fertile ground for judicial law-making, having landed twice in the D.C. Circuit on mandamus proceedings springing from privilege battles over KBR’s internal investigation files.

Tuesday’s opinion at long last reached the merits of the underlying case itself, resulting in the district court finding that Barko had not produced sufficient evidence for a jury to find in his favor on any of the multiple FCA theories that he advanced.

The complaint centered primarily around an allegation that a KBR procurement employee took kickbacks from a subcontractor in return for purported favorable treatment, including awarding subcontracts with insufficient competition, allowing double-billing for goods and services (without backcharging the subcontractor), concealing poor performance, and other alleged wrongdoing.

After a painstaking review of the evidence and the law, the court found the allegations were either not supported by admissible evidence or did not actually relate to FCA elements, or both. The case is worth the reading (even for those who did not battle in the Barko trenches) because of its extensive discussions relating to the connection between putative kickbacks and an FCA violation that alleged anticompetitive bidding does not in itself violate the FCA, and that public vouchers (i.e., the claims to the government) on cost reimbursement contracts do not themselves make any representation as to the reasonableness of the underlying costs. Consistent with other courts, Judge Lamberth held that the public vouchers do not certify compliance with any law, regulation, or contract or say anything about the underlying competitive bidding of subcontracts. Id. at 28.  As a legal matter, the court held that “because KBR was not required to certify that the cost was reasonable, the relator’s claims that the cost was unreasonable did not state a claim for an FCA violation.” Id. at 29-30. The court acknowledged that compliance with anti-kickback laws or contractual provisions may be material such that withholding information about noncompliance could give rise to liability under implied certification. Id. at 31. However, in this case, Barko had failed to present evidence of kickbacks (aside from unsupported rumor and speculation) and had failed to identify any regulation or contract provision violated by the alleged bid-rigging other than the FAR clause prohibiting kickbacks. Id. at 32.

The court also held unequivocally that “allegations regarding poor performance sound in breach of contract” and therefore “cannot form the basis of an FCA claim.” Id. at 37. The Barko decision thus joins a long line of cases to affirm this bedrock proposition. The opinion also includes a lengthy discussion as to why the court did not permit additional discovery to try to beat back summary judgment, given the relator did not take advantage of the discovery opportunities that were presented.

Although we fully expect this case to face a third appeal to the D.C. Circuit, for now we at LLB are pleased not to be watching for unexpected decisions to fall from the sky.



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Authors

Craig D. Margolis

Craig D. Margolis Partner

Tirzah S. Lollar

Tirzah S. Lollar Partner

Kathleen C. Cooperstein

Kathleen C. Cooperstein Senior Associate