ARMED SERVICES BOARD OF CONTRACTAPPEALS Appeals of

-- ) ) Kellogg Brown & Root Services, Inc. ) ) ) Under Contract No. DAAA09-02-D-0007 ) APPEARANCES FORTHE APPELLANT:

APPEARANCES FORTHE GOVERNMENT: ASBCA Nos. 56358, 57151 57327,58559

Jason N. Workmaster, Esq. Herbert L. Fenster, Esq. Raymond B. Biagini, Esq. Daniel L. Russell, Jr., Esq. Alejandro L. Sarria, Esq. John W. Sorrenti, Esq.

McKenna Long & Aldridge LLP Washington, DC Raymond M. Saunders, Esq.

Army ChiefTrial Attorney Stephanie B. Magnell, Esq. MAJ Samuel E. Gregory, JA

Trial Attorneys OPINION BYADMINISTRATIVE JUDGE FREEMAN In ASBCA Nos. 56358, 57151and57327, Kellogg Brown & Root Services, Inc., (KBRS) appeals the deemed denial ofits claims under the Contract Disputes Act of 1978 (CDA), 41 U.S.C. §§ 7101-7109, for funds totaling $44,059,024.49 withheldby the government from KBRS' invoices under the captioned cost-reimbursement contract (hereinafter "Contract 0007"). The government's reason for the withholding was that the funds at issue had been previously paid to KBRS for costs ofprivate security companies (PSCs) which the government has subsequently alleged were unallowable underthe terms ofthe contract. In ASBCANo. 58559, KBRS appeals a final decision ofthe contracting officer asserting a government claim against KBRS under the CDA for the allegedly unallowable PSC costs in the total amount of$55,620,591.55. The appeals were consolidated for hearing. A hearing was held for 24 days, with 24 witnesses and more than 3 7,000 pages ofdocuments admitted in evidence. We sustain the appeals in ASBCA Nos. 56358, 57151and57327 in the total amount claimedplus CDA interest. We dismiss the appeal in ASBCANo. 58559 for lack of jurisdiction.FINDINGS OF FACT 1. We assume familiarity with our decision in KelloggBrown & RootServices, Inc., ASBCANo. 56358,**12-1BCA~35,001.** 2. On 14 December 2001, the Army Operations Support Command, Rock Island, Illinois, awarded Contract 0007 to "BROWN & ROOT SERVICES, DIV OF KELLOGG, BROWN & ROOT, INC" (R4, 1tab 1at 1 ). After award the contractor changed its name to Kellogg Brown & Root Services, Inc., and the procuring agency had several name changes. In this decision, we referto the contractor at all times as KBRS and to the procuring agency as "Rock Island." PertinentTerms and Conditions ofContract 0007 and Task Orders Issued Thereunder 3. Contract 0007 was a cost-plus-award-fee, indefinite quantity, indefinite delivery contract with a base period ofone year and nine one-year optionperiods thereafter (R4, tab 1at 5-26). Contract 0007 was part ofthe U.S. Army's Logistics Civil Augmentation Program (LOGCAP) and is also referred to as the LOGCAP III contract. LOGCAP was a program for civilian contractors to "provide the Army with an additional means to adequately supportthe current and programmed force by performing selected services in wartime and other operations" (id. at 56). 4. Contract 0007 included among other general provisions, the FAR 52.211-15, DEFENSE PRIORITY AND ALLOCATION REQUIREMENTS (SEP 1990) clause (hereinafter "the DPA clause"); and the FAR 52.216-7, ALLOWABLE COST AND PAYMENT (MAR2000) clause (hereinafter "theAllowable Cost clause") (R4, tab 1at 37). 5. The DPA clause stated: "This is a rated order certified for national defense use, and the Contractor shall follow all the requirements ofthe Defense Priorities and Allocations Systems regulation (15 CFR700)." The citedregulation stated inpertinent part: 

### § 700.3 Priority ratings and rated orders. (a) Rated orders are identified by a priority rating

....Rated orders take preference over all unrated orders as necessary to meet delivery dates

.... (b) Persons receiving rated orders must give them preferential treatment as required by this regulation. This

1We cite to the Rule 4 file in ASBCANo. 56358, unless otherwise noted. 2means a person must accept and fill a rated order for items that the person normally supplies

.... (c) All rated orders mustbe scheduledto the extent possible to ensure delivery by the required delivery date.



### § 700.7 Compliance (a) Compliance with the provisions ofthis regulation

...is required by the Defense Production Act

.... Violators are subjectto criminal penalties. 6. The Allowable Cost clause ofContract 0007 stated in pertinent part: (a)Invoicing. The Government shall make payments to the Contractorwhen requested as workprogresses...in amounts determined to be allowable by the Contracting Officer in accordance with Subpart 31.2 ofthe Federal Acquisition Regulation (FAR) in effect onthe date ofthis contract and the terms ofthis contract. 7. FAR31.201-2, Determining allowability, in effect on 14 December2001 stated in pertinent part: (a) The factors to be considered in determining whether a cost is allowable include the following: (I) Reasonableness. (2) Allocability. (3) Standards promulgatedbythe CAS Board, if applicable; otherwise, generally accepted accounting principles andpractices appropriate to theparticular circumstances. (4) Terms ofthe contract. (5) Any limitations set forth in this subpart.

38. FAR 31.201-3 Determining reasonableness, in effect on 14 December 2001 stated in pertinentpart: (a) A cost is reasonable if, in its nature and amount, it does not exceedthat which would be incurred by aprudent person in the conduct ofcompetitive business

.... (b) What is reasonable depends upon a variety of considerations and circumstances, including

- (1) Whether it is the type ofcost generally recognized as ordinary and necessary for the conduct ofthe contractor's business orthe contract performance; (2) Generally accepted sound business practices, arm's-length bargaining, and Federal and State laws and regulations; (3) The contractor's responsibilities to the Government, other customers, the owners ofthe business, employees, and the public at large; and (4) Any significant deviations from the contractor's established practices. 9. Contract 0007 also included a "Section H, Special Contract Requirements

- continued" that stated in pertinentpart: Special Provisions for Peacetime Contracts This general guidance addresses the deployment ofcontractor personnel into a theater ofoperations in support ofa contingency or exercise. The general guidance provided by this provision is not all-inclusive nor are all items required for all situations. Each contingency will evolve differently depending upon theatre commander's guidance impacting on the deployment. The Contracting Officer may tailor these provisions as appropriate for individual task orders.

4In the event that the contractor deploys individuals into the area ofoperations in support ofa contingency or exercise, the following conditions may apply: H-13 Management

• The contractor shall ensure that all personnel hired by or for the contractor will comply with all guidance, instructions, and general orders applicable to the U.S. Armed Forces and DoD civilians as issuedby the Theater Commander or his/her representative. This will include any and all guidance and instructions issued based upon the need to ensure mission accomplishment, force protection, and safety, unless directed otherwise in the task order 

## sow.

• The contracting officer is the only authorized official who shall increase, decrease, or alterthe scope ofworkto be performed

....

• The contractor shall comply, and ensure that all deployed employees, subcontractors, subcontractors employees, invitees and agents comply with pertinent Service and Department ofDefense directives, policies, and procedures, as well as federal statutes,judicial interpretations and international agreements

....Host Nation laws

....may take precedence over contract requirements.

H-16 Force Protection

• While performing duties [in accordance with] the terms and conditions ofthe contract, the Service Theater Commanderwill provide force protectionto contractor employees commensurate with that given to Service/Agency (e.g. Army, Navy, AirForce, Marine, DLA) civilians in the operations area unless otherwise stated in each task order.

5H-21 Weapons and Training

• Whether contractorpersonnel will be permitted to carry a government furnished weapon for self-defensepurposes in the Area ofOperations (AO) is at the discretion ofthe Theater Commander. However, Contractorpersonnel will not possess personally owned firearms in the AO. The government may at its discretion issue weapons and ammunition (M9 Pistols) for self-defense to the contractor employees

....Ifaccepted the contractor will maintain a listing ofemployees possessing a government firearm and provide notification to the Contracting Officer

.... Also when accepted, only military issued ammunition may be used in the weapon.

• Priorto issuing any weapons to contractor employees, the government at its discretion may provide the contractor employees with weapons familiarization training commensurate to training providedto Department of Defense civilian employees.

• The contractor shall ensure that its employees adhere to all guidance and orders issued by the Theater Commander or his/her representative regarding possession, use, safety, and accountability ofweapons and ammunition.

• Upon redeployment or notification by the government, the contractor shall ensure that all government issued weapons and ammunition are returned to government control.

• Contractors will screen employees, and subcontractors, to ensure that employees may be issued a weapon in accordance with U.S. or applicable host nation laws. Evidence ofscreening will be presented to the contracting officer. (R4, tab 1at 96-98, 101-02) 10. Section 1.3.l ofthe Contract 0007 Statement ofWork (SOW) stated in pertinentpartthat: "All work to be performed shall be awarded by individual task orders" (R4, tab 1at 56). Section 7.1 ofthe Contract 0007 SOW stated in pertinentpart:

67.1 General. The Contractor is obligated to follow and adhere to the Governing directives and applicable documents as listed in the contract and the SOW. Supplements or amendments to those documents shall be considered to be in full force and effect upon receiptby the Contractor, except when such document is deemed to cause an increase or decrease in the cost ofcontractperformance. In such event, the Contractor shall inform the Contracting Officer in writing priorto implementation ofsuch supplement or change. If applicable, a negotiated change in contract price shall be made to the mutual satisfaction ofboth the Contractor and Government priorto implementation ofthe change. (R4, tab 1at 79) 11. Following the invasion and occupation ofIraq in March 2003, Rock Island issued a number oftask orders under Contract 0007 for logistic and life-support services for the coalition combat forces at designated sites in Iraq. The life-support services included, among otherthings, billeting and food service operations. (R4, tab 3 at 14-49) Task Order (TO) 59, effective 24 June 2003, with an initial total ceilingprice of $802,065,733 and its successor TO 89 effective 1May 2005, with an initial total ceiling price of$4,972,882,216, were the largest cost-plus-award-fee task orders by dollar amount for these services in Iraq during the years 2003-2006 (R4, tab 3 at 1-2, tab 5 at 1-2). 12. From September2004 to May 2010 Mr. James Loehrl, a senior executive at Rock Island, was responsible for the Contract 0007 task orderprocurements (tr. 10/7). At hearing he described the scope ofTO 59 as follows: Task Order 59 to the best ofmy recollection encompassed all ofthe support, logistics support, in Iraq minus some ofthe theater transportation mission

....That was under task order44. Also there was someperformance that was specific to the State Department in the Green Zone that it didn't cover. Andthere were some task orders in support of

...the Intel folks that were based at Camp Victorythat were on a separate

7(Tr. 10/57) task order. Basically, all ofthe baseline support in Iraq minus those things is what it covered.

13. Paragraph 1.10 in Change 5to the TO 59 SOW, effective 27 August 2003, stated: "ContractorForce Protection. The governmentwill provide for the security of contractorpersonnel in convoys and on site, commensurate with the threat, and [in accordance with] the applicable TheaterAnti-Terrorism/Force Protection guidelines." (R4, tab 3 at 99) Paragraph 1.7 ofthe TO 89 SOW issued on 1May 2005 stated: "ContractorForce Protection. The Government will provide for the force protection and security ofcontractorpersonnel in convoys and on site, commensurate with the threat, and [in accordance with] the applicable TheaterAnti-Terrorism/Force Protection guidelines." (R4, tab 5 at 1, 16) The Need for PSCs to Supplement GovernmentForce Protection for Government Contractors and Subcontractors in Iraq 14. On 27 June 2003, a KBRS employee was shot and injured while traveling in a motor vehicle convoy in southern Iraq. By email ofthe same date, the KBRS contracts manager (Ms. Mary Wade) told the lead Rock Islandprocurement contracting officer (PCO) for Contract 0007 (Ms. Mary Beth Watkins)2 that: This incidentunderscores the threat to U.S. personnel identified in the

...classified message that informed cleared KBRpersonnel that movement along the MSR [Main Supply Route] in IRAQ, particularly during the next 72 hrs, poses a significant risk to bothpersonnel and materiel for all US personnel. As a result ofthis incident as well as the threat conditions identified in the message, safety and security considerations mandate that movement ofKBR and subcontractorvehicle convoys be delayed until such time as the U.S. Government provides force protection assets adequate to the threat level. KBR is acutely aware thattime is ofthe essence in providing food service support to V Corps, however, failure ofthe U.S. Governmentto provide adequate Force Protection in

2 Ms. Watkins was the Rock Island leadPCO for Contract 0007 from the date ofaward (R4, tab 1at 1) to October 2004 (tr. 5/142). During thatperiod, she was never in Iraq (tr. 4/170). 8(Ex. A-23) accordance [with] the LOGCAP III Contract is impacting our ability to perform.

15. On 28 June 2003, a KBRS subcontractor's convoy was attacked with two drivers killed, four missing and six trucks destroyed. This incident was reported on 1July 2003 by KBRS to the Rock Island PCO in an email chain which included the information that: 2. Military has decided to escort convoys but it appears it will take a little time to lash up the movement requirement, the convoys, and escort. 3. Some subcontractors have security, others do not. Main reason for no security is the inabilityto getpermits to arm their securitypersonnel. (Ex. A-24 at 1, 2) 16. The Coalition Forces Land Component Command (CFLCC) was the military command responsible for the movement oflogistical supplies from Kuwait into Iraq. The Deputy Commanding General ofCFLCC from June 2003 to July 2004 was, Major General (MG) Stephen Speakes. At hearing, MG Speakes described the contractor convoy security situation in Iraq in June 2003 as follows: Ihad arrived in late June. Itwas obvious to me very quickly that we were taking new levels ofthreat to our supply and reliefformations across Iraq, some situations more serious than others, and that we had to be verythoughtful about how we organized and supported convoys. And so early on what I asked ourtheaterto do is to give a thoughtful examination to options. And the options that I outlined ranged the spectrum ofcapability. Most desirable, frankly, wouldbe more combat support capability units be dedicated to the mission

.... The otherthing I wantedto do is look at expanding our capability by missioning [sic] more units to provide the capability. And the otherthing that I early on had said is let's

9look at the potential for some form ofthe hired contractual capability. (Tr. 8/8, 49-50) 17. On 3 July 2003, the KBRS contract manager (Ms. Wade) notified the Rock Island PCO (Ms. Watkins) that over 1,000 trucks were awaiting convoy support into Iraq at the NAVISTAR staging area in Kuwait. The message described the materials being transported and concludedthat ifnot delivered, "the other missions that are dependent on the Truck Driverproviding the transportation will come to a screeching halt and the Client as well as KBR, will be injeopardy ofmission failure." (Ex. A-27) 18. The Rock Island PCO referred this message to the Rock Island operations personnel with the commentthat: "The lack ofrequired force protecting [sic] is having direct mission impact and needs resolution soonest. The contractor will have grounds for government caused delay, but more importantly the mission needs ofthe warfighter are in jeopardy ofnot being met. Request theater assistance to resolve." At hearing, Ms. Watkins testified that up until the time she left the contract as PCO in the fall of 2004, "there were continued force protection issues." (Ex. A-27; tr. 41199-201, 204) 19. On 9 July 2003, KBRS met with MG Speakes and reported that the personnel and equipment casualties from attacks on its convoys and those ofits subcontractors from mid-May to date were 7 killed, 7wounded, 4 missing and 10 trucks missing. MG Speakes noted, among otherthings that: "Tomorrowthe government will provide convoy protection for 46% ofthe convoys waiting to travel north. This level ofsupport must increase, butpresently the government is short convoy escort vehicles and shooters (shotgun riders)." The parties discussed KBRS contracting for private security, and agreed that "LOGCAP Planners will develop a revised statement ofworkrequesting contracted security." (Ex. A-29 at 1, 3) 20. On 19 September 2003, MG Speakes sentthe following message and formal request to the Rock Island Commanderwith copies to, among others, the Deputy Commanding General and senior logistics staffofficer ofCJTF-7 :3 Subject: CFLCC Request for Help with LOGCAP Contractor Convoy Security.

3 Combined Joint Task Force-7 (CJTF-7) was the initial designation ofthe coalition military forces in Iraq (tr. 5/188-89). On 15 May 2004, the designation was changedto Multi National Force-Iraq (MNF-I) (ex. G-173). CJTF-7 and MNF-I reported to the Theater Commander, CENTCOM (tr. 8/17). 10[I]n message below we request your help in solving one of our most vexing problems, specifically convoy security for contracted operations in Iraq

....[W]e see no other optoin [sic] but to ask that the current contractprovisoins [sic] be amended to support operations in Iraq. We appreciate your support and hope that this is arequest that is supportable

....

MEMORANDUM FOR Commander, Army Field Support Command. Rock Island, Il 61299 SUBJECT: Adequate Force Protection for the Logistics Civil Augmentation Program (LOGCAP) Convoys in Kuwaitand Iraq 1. Request Army Field Support Command (AFSC) review the basic LOGCAP contract and provide a contractual recommendation allowing Kellogg Brown & Root (KBR) the authorization to pursue a civilian transport and transportation security company to conduct convoy escorts missions for the execution ofconvoys in Iraq during the movement of government materiel ontheater supply routes. The current force protection posture, pending reductions in force structure, present and future demands for military police forces, all supportthe need to explore options otherthan military escorts in orderto conduct secure and unhindered convoy operations. 2. The LOGCAP Basic contract and Statements ofWork (SOW) needs to be modified to allow for KBRto provide contract security for their convoys moving government materiel on theater supply routes in Kuwait and Iraq. This change to authorization and utilization ofcontracted security should be in compliance with US Federal and Military Regulations that established the current base contract. 3. The contract should be administered by KBR or its subcontractor, with standards and operating procedures in accordance with the senior military police organization in theater. The scope ofoperations ortask execution plan will be developed by KBR and accepted through the appropriate contracting and command channels.

114. We understand that there will be legal andperception concerns in the use ofcontracted security, butwith pending reductions in force structure, present and future demands on contractor support, we must ensure unimpeded flow of supplies. We believe this is a viable course ofaction. (Ex. A-41 at 3-5) 21. MG Speakes expected thatRock Island wouldprepare a proposal for contract modification that he could submit for approval by the CJTF-7 combat commander in Iraq and the Theater Commander at CENTCOM. However, he testified: "Despitemy repeated efforts, to my knowledge I never got a formal proposal back, and I never was able to take anything and formally bring it up to a higher staffto ask for theirhelp." (Tr. 8/55-56) 22. On 26 September 2003, CJTF-7 Fragmentary Operations Order (FRAGO) 889 described the current convoy security situation in pertinentpart as follows: BA'ATH PARTY SECURITYFORCE ELEMENTS, RELIGIOUS EXTREMISTS/FOREIGNTERRORISTS, AND CRIMINAL ELEMENTS CONTINUE TO ATT ACK INDIVIDUAL OR SQUAD-SIZED UNITS WITH SMALL ARMS, RPGS, OR SNIPERFIRE AGAINST CONVOYS AND CRITICAL NODES INTHE CJTF-7 AOR. THERE CONTINUES TO BENUMEROUS ATTACKS ALONG MSRTAMP A BETWEEN CSC NAVISTARAND LSA ANACONDA

.... IT IS ASSESSED THATTHESE SMALL GROUPS

...OF ARMED INDIVIDUALS WILL CONTINUE TO EMERGE. ATTACKS WILL CONTINUE DUETO THEACCESSIBILITY OF WEAPONS AND ABSENCE OF MILITARYPRESENCE IN THE SMALLER OUTLYING TOWNS. (Ex. A-44 at 1) 23. On 24 November 2003, the commander ofthe Defense ContractManagement Agency (DCMA) activity in Kuwait, CDR Kent Caldwell, USN, sent a message to the CFLCC 143rd Transportation Command. The message cited the conflicting standards in operation orders (OPORDS) issued by CFLCC and CJTF-7 for convoyprotection, and further stated in pertinentpart:

12As convoy security is contractually required to beprovided by the government and be consistentwith the standards set for all DOD civilians, I believe the government is faced with an unexecutable task. As I understand it, they are no longer resourced to comply with either standard, especiallywhen you considerthat contractors cannot carry weapons. Their need for external security is greater [than] that ofarmed soldiers moving in military convoys for which the majority of the guidance found in both OPORD's applies.

While I understand and appreciate the resource restrictions on both soldiers and government equipmentto perform the missions assumed by KBRunderthe LOGCAP III contract, the Army has entered into a contractwith KBR and is apparently unable to provide the requisite security and protection requirements established by either CFLCC or CJTF-7. Ifuncorrectedthis will significantly impactthe fuel, line haul, mail, and Class 1transportation mission areas supported underthis contract. (Ex. A-56 at 2) 24. On 19 December2003, CJTF-7 FRAGO 1242, (KBR Convoy Security Procedures) stated in relevantpart: ATTACKS AGAINST KELLOGG, BROWNAND ROOT (KBR) CONVOYS HAVE DRAMATICALLY INCREASED DURING THE MONTHS OF OCTOBER AND NOVEMBER. BASED UPON INTELLIGENCE ESTIMATES, THE THREAT OF FUTUREATTACKS AGAINST KBR CONVOYS IS PROJECTED TO INCREASE DURING THE MONTHS OF DECEMBER 2003 THROUGH APRIL 2004

....SINCE THE BEGINNING OF OCTOBER, TH[E] MAJORITY OF ATTACKS AGAINST KBRCONVOYS HA VE BEENTHE RESULT OF IEDS AND SMALL ARMS FIRE. NINETYPERCENT OF ALL ATTACKS DIRECTED SPECIFICALLY AGAINST KBR CONVOYS HA VE OCCURRED ONMSR TAMPA. HOWEVER, SEGMENTS OF ASRJACKSON, MSRMICHIGAN, MSRMILTON AND MSRMOBILE REMAIN EXTREMELYDANGEROUS TO KBR

13CONVOYS. KBR CONVOYS REMAIN EXTREMELY VULNERABLE TO ATTACKS ATREST STOPS, REFUEL POINTS, TRAFFIC CHOKE POINTS, LOCATIONS OF VEHICLE BREAKDOWNS, HAND-OFF POINTS FOR CONVOY SECURITYESCORTS, MSC BOUNDARY LINES

...AND MOVEMENT UNDER OVERHEAD PASSES. (Ex. A-64 at 2) 25. On 31 December 2003, the Coalition Provisional Authority (CPA), the civil government ofIraq from 8 May 2003 to 30 June 2004,4 recognized the need for and authorized the presence ofprivate security companies in Iraq in its OrderNumber 3 (Revised) entitled "WEAPONS CONTROL." Section 3 ofthe order distinguished possession offirearms by "Private security firms" from possession offirearms by other "Groups" and "individuals"where it stated in pertinent part: Authorized Possession and Use ofFirearms and MilitaryWeapons 1) The following individuals are authorized to possess and use issued Firearms and Military Weapons

... a) Coalition Forces, b) Iraqi security forces, and c) Groups and individuals who have been authorized to carry weapons in the course oftheir duties by the CPA or Commander, Coalition Forces or their duly authorized delegates. 2) Private security firms may be licensed by the Ministry of the Interiorto possess and use licensed Firearms and Military Weapons

...in the course oftheir duties, including in publicplaces. 3) Individuals may be authorized to possess Firearms for personal use by obtaining authorization from the

4 See United Nations Security Council Document S/2003/538 and Security Council Resolutions 1483 (2003) and 1546 (2004). 14(Bd. ex. 2 at 2-3) Ministry ofInterior, as described in Section 5 ofthis Order,

26. Lieutenant Colonel (LTC) Damon Walsh was the DCMA Northern Iraq Commander from August 2003 to January 2004 (tr. 13/106). By letter dated 14 December 2003, LTC Walsh told KBRS that CJTF-7 was considering options "for enhancing the protection ofconvoys and commercial traffic throughout Iraq" and requested KBRS to provide an outline ofthe conditions and procedures that should be in place for the government to issue weapons and ammunition to KBRS employees (ex. A-65 at 2). 27. By letter dated 26 January 2004 addressed to the Rock Island PCO (Ms. Watkins), KBRS replied to the 14 December2003 request. The substance ofthe reply was that: KBR has made the decision that the arming oftruck drivers as a means ofselfdefense to mitigate the dangers facing these personnel as they travel the roads ofIraq, is not a viable option. However, we do offer an alternative for convoy escort security that would free up the military assets currently utilized in this mission and enable them to focus on their core mission ofproviding route security. With the issuance ofindemnification for KBR, and acceptance ofthe concept ofoperations (att. a) KBR stands ready to subcontract outthe armed convoy escort for those trucks underKBR LOGCAP responsibility andcontrol across the Major Supply Routes ofIraq. (Ex. A-74 at 8241) 28. At hearing Ms. Watkins could not recall sending a written reply to the KBRS 26 January 2004 proposal, buttestified that "We discussed and verbally it was communicated back to KBRthat we were not inclinedto indemnify" (tr. 4/213-14). 29. Athearing, LTC Walsh testified that he interpretedthe contract as requiring the government to provide the force protection and that KBRS "could not charge the government for armed security as the contract stood at thattime." However, he also testified that: "There was nothing [in the contract ortask orders] that specifically said thou shalt not use private security companies." (Tr. 13/114) Moreover, when asked whether he thought the use ofPSCs should have been allowed, he testified:

15A. Yeah, absolutely. Q. Why? A. Because it was a dangerous place, and I mean I was pretty unequivocal from the word go, that I thought a better approach to providing security would have been for the contractorto be able to either acquire protectionthrough one ofthe, you know, we had an army ofprivate contractors running around Iraq

.... [Q.] Private security contractors? [A.] Yes

.... A. You couldn't swing a dead cat without knocking down halfa dozen guys walking around with M4s

....[T]o answer your question, yes, absolutely Ithought that KBR should have been able to do that. (Tr. 13/175-76) 30. On 22 February 2004, the KBRS Deputy AreaManager for V Corps North sent the following message to the troop unit that was responsible for force protection in that area: Foryour information the military has failed to comply with providing escort requirements. Time and time again we have sent emails after emails and made phone calls afterphone calls to getthis escort requirement taken care of. As you know last week a convoy was arranged for four (4) trucks and they were abandoned while in route because ofthe speed of travel. I would like to point out this same subcontractor had employees shot in a drive by shooting yesterday around B3, so they are a marked target. Itwas also briefed on the last [meeting with the government] that [the government] would prefer to have at least nine (9) to ten (10) trucks in a convoy. We consulted with our subcontractor and they hired additional trucks for a total of ten (I0) trucks which are loaded and ready to go, when request for convoy was acquired today, KBRwas told [the

16government] was not able to provide the escorts due to lack of assets and would not have the assets for two to three weeks if then. This has directly affected our ability to carry out our tasked assigned to KBRby CJTF7, plus is causing the subcontractorto occur [sic] unexpected costs. (Ex. A-80 at 2) 31. The government answer to KBRS' 22 February 2004 message was that: (i) "these combat units were sent here to fight the war, not do escorts for KBR ONLY"; (ii) the tasking placed on the troop unit responsible for providing the force protection was "enormous"; and (iii) when the troop unit was ready to resume escort duty, "I will let you...know" (ex. A-80 at 1). 32. On 12 April 2004, CJTF-7 FRAGO 622 described the current convoy security situation as follows: THE ENEMY IS PROSECUTING A DELIBERATE OPERATION TO INTERDICT OURLINES OF COMMUNICATION (LOC). WITH THE SIMULTANEOUS ATTACKS ON SIX OVERPASSES ON 10-12 APRIL 04, IT IS APPARENTTHE ENEMY HAS TAKEN HIS CAMPAIGN BEYONDHARASSMENT THROUGH DIRECT ACTION TO A DELIBERATE EFFORT FOCUSED ONTHEATERLOC INTERDICTION. CURRENT SITUATION. ALONG MSRS LEADING INTO AND OUT OF BAGHDAD THERE HAVE BEEN 66 ATTACKS IN THE LAST WEEK, 49 ATTACKS ONE WEEK AGO, AND 50 TWO WEEKS AGO. THERE HAVE BEEN 3 COMPLEX ATTACKS/ AMBUSHES IN LAST THREE DAYS RESULTING IN THE DESTRUCTION OF A REFUELING CONVOY

...DESTRUCTION OF 4 OVERPASSES

...AND THE AMBUSH OF A CONVOY

....THE MSRS BETWEEN 1) BAGHDADAND BALLAD, 2) BAGHDAD AND KARBALA, AND 3) BAGHDAD AND FALLUJAH AREEXTREMELY DANGEROUS AND CONTINUE TO BEHIGHLY SUSCEPTIBLE TO THREAT ACTIVITY RANGING FROM IEDS TO SMALL ARMS AND RPG ATTACKS/AMBUSHES. CURRENTASSESSMENT: ATTACKS AREMUCH HIGHER THIS WEEK AND UPWARD TREND IS LIKELY TO CONTINUE AS A RESULT OF THE CONTINUED

17SADR/MAHDI MILITIA UNREST, AND OPERATIONS AGAINST THREAT FORCES IN WESTERN IRAQ. (Ex. A-96 at 2) 33. On 14 April 2004, the DCMA administrative contracting officer (ACO) for TO 59 (MAJ Hills) reported to the Commander, DCMA Northern Iraq (LTC Blaine) the following: All indications are that the governmenthas failed to live up to its contractual obligation to provide Force Protection (FP) to the TTM convoys (T00059). Given that, KBR is currently not required to run most (ifany) convoy routes. They did run three convoys to Anacondatoday. Only one made it. The othertwo got lost. They are now at an FOB. KBRmay not run any convoys tomorrow ifthe government does not improve its track record on FP. The same MP escorts that got them lost are to bring the two convoys in to Anaconda tomorrow. The best I can tell at this time is that they have neverran the route they are about to set out on. Based on my discussions with TTM's PM

...Iwent over and talked to the 13th COSCOM CC

...I told him ofKBR's concerns. I feel contractually the government is not living up to its contractual obligations. [The COSCOM Commander] statedthat COSCOMwas doing theirpart by providing a soldier for every third truck. He said it was the 15th MP'sthat were providing the escortnot COSCOM and that the issue of getting lostwas...not a FP issue "

...they are all safe aren't they." Ijustwant to go on record that absent any new information from the government, I concur with KBR in that the government is not providing FP commensurate withthe threat. Ifthey choose not to run tomorrow I would be hard pressed to disagree with them. Oh by the way, one ofthe trucks in one ofthe lost convoys got destroyed by an IED. (Ex. A-98 at 2-3) 34. On 26 June 2004, CPAMemorandum Number 17 entitled "REGISTRATION REQUIREMENTS FORPRIVATE SECURITY COMPANIES (PSC)" was issued to "establish a mechanism whereby all PSC will be registered, regulated and vetted and to update Iraqi law as itrelates to PSC." The memorandum set forth detailed requirements and procedures for licensing, use offorce, code ofconduct, etc. (Ex. G-189) As of

1825 November 2006, more than 100 PSCs were registered or in the process ofbeing registered withthe Iraq Ministry ofInterior (MOI) (ex. A-154). 35. Lieutenant General (LTG) Ricardo Sanchezwas the commanding general of CJTF-7 and its successor MNF-I from 14 June 2003 to 4 July 2004 (tr. 5/163, 203). When asked at hearing ifhe had any comment on reports in the press that the Army Chief ofStaff(General Shinseki) had advised Congress and the Presidentthat it would take 200,000 men to occupy Iraq, LTG Sancheztestified: He was aboutright. And as you'11 see from the end ofmy description here, it was, as a nation, America did not have sufficient capacity to accomplish the tasks that were assigned to the force thatwas on the ground during that time frame. (Tr. 5/175-76) When asked whetherhe had the resources to provide the same level of force protection to KBRS as was provided to the civilians in the CPA he replied: "clearly not, clearly not" (tr. 6/40). 36. When asked whetherthere were any areas in Iraq where it would have been acceptable to travel without armed escorts, LTG Sancheztestified: [F]rom the very beginning we established arequirement that there was an absolute minimum

...standard offorce protection. We never wavered from that. There was never any segment ofthe country where we saidthis is benign enough, or it's peace time, completely peace time and there is not [sic] threat ofattack. No, we never did that. (Tr. 6/102-03) 37. With respect to the origin ofthe need for PSCs in the occupation ofIraq, LTG Sancheztestified: [T]he key factor is that DOD [Department ofDefense] does not have the military capacity to secure all ofthe missions AmbassadorBremerhasY1 It's a massive requirement, and

...the numbers offorces that wehave on the ground and the tremendous challenge that the country has to sustain that requirement overtime. It'sjustnot there.

5 Ambassador Bremer was the Administrator ofthe CPA. 19(Tr. 6/22, 67) ...[B]ecause ofthe analysis that we have done in the

...fall and early winter of2003, wevery clearly established, unequivocally establishedwithin the command that the capacity ofthe force, the quantity ofthe force, and the demands ofthe mission both from a war fighting perspective and the growing requirementthat we foresaw coming from the reconstruction mission, that we were not going to be able to continue to supportthat withoutprivate security. And then that discussion really got started in earnest to integrate private security companies under government/military contracts

....

38. LTG Sanchez estimated that there were at least 10 andpossibly 20 PSCs operating in Iraq in March 2004 (tr. 6/25). Moreover, theirpresence in the battle space was not merely tolerated, it was welcomed by the combat troop commanders. LTG Sancheztestified: We allowthemto come in, and we encourage them to come in at the different levels ofcommand to get situational awareness briefings, to briefthem on what is available for them in the eventthatthey get into a situation thatthey can't handle. We have quick reaction forces that are in every sectorthat can respond to an incident on the majorroutes that they're operating in

.

...[I]fa private security entity or a contractor came to a battalion commander or a brigade commander and asked to move with private security, I'm absolutely sure that that young commander would have said be my guest. You know, that's necessary to accomplish yourmission offeeding my fellow battalion across the street, go ahead and do it. We were not concernedwith

...and commanders at that level were definitely not concerned with going up tothe next higherheadquarters to brigade or division and say hey, can I move this? Whatthey were trying to do was actually getthe mission done, and the reality ofthe complexity and the

20density, and the demand that was on the ground at that time was basically for them to get the mission done. And this was notjustin moving a box oftomatoes, it was across the board

....[T]he demands that we were placing on these young commanders was massive. We were asking them to fight, we were asking them to set up local governments, local schools. The last thing that they wantto be doing was diverting their combatpowerto those kinds of missions, so ifthey sawthe opportunity they- clearly, in my mind, they would have taken it. And I would not have objected to that ifthat had happened, and not had been told about it. (Tr. 6/24-25, 35-36) 39. On 30 June 2004 the CPA was terminated and the Interim Iraq Government (IIG) was established as the civil government ofIraq (ex. A-113). On 4 July 2004 CENTCOM issued a Warning Order (WARNORD) entitled "CONTRACTORRISK MITIGATION" which stated in pertinentpart: THIS IS AW ARNING ORDER (WARNORD). REQUEST COMMANDER, MNF-1, IN COORDINATION WITH CHIEF OF MISSION (COM) AND INTERIM IRAQ GOVERNMENT (IIG), DEVELOP COMMANDERS ESTIMATE AND COURSES OF ACTION (COAS) FOR USG CONTRACTORRISK MITIGATION IN IRAQ. PROVIDE ESTIMATE WITH COAS TO CENTCOM NLT 13 JULY 2004

....SITUATION. 1.A. A MAJORUSG CONTRACTOR IN IRAQ IS CONSIDERING SUSPENDING OPERATIONS DUE TO CONCERNS OVER THE SECURITYENVIRONMENT IN IRAQ. THE SUCCESS OF US EFFORTS IN IRAQ DEPENDS IN PART ON THE ABILITY TO RETAIN AND MANAGE CONTRACTORS FOR SERVICES, PROTECTION AND CONSTRUCTION. TO DATE, COMMNF-1 HAS NOT PROVIDED PROTECTION FORCONTRACTORS, AS CONTRACTOR SECURITY IS NOT A SPECIFIED MILITARY MISSION. CONTRACTORS ARE PRIMARILYRESPONSIBLE FORTHEIR OWN SECURITY, AND CONTRACTOR SELF-PROTECTION WAS ASSUMED TO CONTINUE BEYOND THE 30 JUNE TRANSFEROF POWER. UNSCR 1546 AND THE

21(Id.) ANNEXED LETTERBYIRAQ PRIMEMINISTER ALLAWI GIVE THE MULTI-NATIONAL FORCES THE MANDATE TO CONTRIBUTE TO THE MAINTENANCE OF A SECURE AND STABLE ENVIRONMENT IN IRAQ. THIS INCLUDES THE AUTHORITYTODEFEND USG CONTRACTORS. l.B. GIVEN THE CURRENT SECURITYENVIRONMENT IN IRAQ, ALL USG AGENCIES MUST COORDINATEPROTECTION OF USG CONTRACTORS THROUGHA COMBINATION OF COALITIONMILITARYFORCES, IRAQ SECURITY FORCES AND PRIVATE SECURITYCOMPANIES. CONTRACTORS CONTINUE TO HA VE THEIRRIGHT OF SELF DEFENSEAND MAY, IN SOME CIRCUMSTANCES, ARRANGE FORCONTRACTOR SECURITY THROUGHA SUBCONTRACTWITHA PRIVATE SECURITY COMPANY.

40. From 14 March to 21 September 2004, there were 15 reported attacks on KBRS subcontractor employees and vehicles at LOGCAP headquarters in Baghdad and 5 ofthe "B"worksites. In these attacks, 5 employees were killed, 1beaten, and 25 were missing or held captive. (Ex. G-232 at 5-9) 41. From June through November 2004, LTC Sean O'Daywas Commander, DCMA Northern Iraq, responsible for overseeing KBRS' performance ofTO 59 in northern and western Iraq (tr. 12/8). On 29 August 2004, KBRS notifiedLTC O'Day and others that a subcontractor convoy escorted by an Iraqi private security company had been ambushed and three trucks were missing. LTC O'Day answered the notification with the following remark: "The question may comebackwhywere these guys using a private security detail instead ofmilitary escorts." (Ex. A-126 at 2, 4) Athearing, LTC O'Day testified: Security was always a big issue

....

...It was that security thing that always heldthem [KBRS] up on bringing stuffin

....

[T]here weren't enough military forces in Iraq to do everything thathadto be done and convoy security for contractors as well as security for somebody like me to get

22around because I didn'thave a combat force that was at my beckon [sic] call to take me around Iraq. (Tr. 12/32-33) 42. On 31 December 2004, the Multi National Corps-Iraq (MNC-I), the tactical troop command under the MNF-I, issued a FRAGO, "SUBJECT: TACTICS, TECHNIQUES AND PROCEDURES (TTP) TO REDUCE VEHICLE MOVEMENT FRATRICIDE." Paragraph I.A. ofthis order recognizedthe presence and usefulness of the PSCs in accomplishing the coalition mission in Iraq as follows: THERE ARE APPROXIMATELY 30,000 PRIVATE SECURITY CONTRACTORS (PSCS) IN ADDITION TO MILITARYAND DOD PERSONNEL IN IRAQ PERFORMING SECURITY DUTIES IN SUPPORT OF MNFI, DEPARTMENT OF STATE (DOS), INTERNATIONAL DIPLOMATIC MISSIONS, AND OTHER OPERATIONS VITAL TO THE FUTURE OF IRAQ. THEIRMISSIONS INCLUDE SECURING KEY COALITION PERSONNEL AND CRITICAL MATERIALS. (Ex. A-139 at 1) 43. On 22 April 2005 the award fee determining official issued his determination ofthe award fee for KBRS' performance ofTO 59 from 13 June 2003 to 31 January 2005. The overall performance rating was excellent. The determining official noted the arduous circumstances underwhich the task order was performed, including among others, "the attacks on and hijacking ofyour convoys" and "alack offorce protection to escort convoys with needed materials." (Ex. A-144 at 1-3) 44. LTC Scott Sheridan succeeded LTC O'Day as Commander DCMANorth from November 2004 to May 2005 (tr. 12/121-22, 124). At a KBRS briefing in December 2004, LTC Sheridan was told that 64 KBRS direct hires and subcontractor employees had been killed in hostile action (tr. 12/164). 45. On 23 April 2005, LTC Sheridan presented a briefing on the award fee determination decision for KBRS' performance ofTO 59 for the period 1February to 30 April 2005. The briefing slides included one for "Special Considerations" with two major bulletpoints-"Operating in a non-permissive environment" and "Availability of escorts." Two ofthe sub-bullets under non-permissive environment were "Loss of material-Hijacked, destroyed," and "Loss ofemployees, due to death/fear oflosing life." (Ex. G-276 at 5) Athearing, when asked whether at any time during his tour of

23duty in Iraq convoys were not attacked for some prolongedperiod oftime, LTC Sheridan answered "I don'tbelieve that everhappened while I was there" (tr. 12/167). KBRS Prime Contractor Use ofPSCs on Contract 0007 46. From late January 2004 to I April 2005, Mr. Craig Peterson was the KBRS Program General Manager for Contract 0007 activities in the CENTCOM area which encompassed 23 different countries. For the first four months in 2004, he stationed himselfin Iraq. (Tr. 6/123, 125, 129) At hearing, Mr. Petersontestifiedthat his policy in Iraq was not to use private security on Contract 0007 "becausethe Army was supposed to provide ourprotection. And ifwe went willy-nilly offand decided to do our own, then, I probably wouldn't have

...a good leg to stand on when arguing with the Army to provide the force protection." Mr. Peterson's view was based on the fact that the contract said that force protection would be provided by the Army and not because he thoughtthe contract prohibited the use ofPSCs. (Tr. 6/185-87) 47. After Mr. Peterson left Iraq, the seniorpersonnel he hired to manage the KBRS activities in Iraq did use PSCs for their movements, and this was known by both the DCMA Commander Iraq and the Rock Island PCO in 2004. Colonel (COL) Ainsworth Mills, the DCMA Commander Iraq from April through October2004, testified that: Yes, I knew that there was a private security guard contract to use for the seniormanagers that were in Iraq to move around. And it was done because they felt that they needed to have that flexibility to move. And that time and time again we talked about that. Itwas that that was not an allowable cost under the LOGCAP contract and that that would have to be something that LOGCAP wouldpay for. I'm sorry. That would be something that KBRwould have to pay for, but that LOGCAP would not pay for that. And I had discussions with Mary Beth Watkins the PCO, about that. And the people who worked for me also we had several discussions about that that was not an allowable cost ofthe LOGCAP contract. And I did relay thatto Mary Wade, Reno Butler and to Paul Cerjan [ofKBRS]. (Tr. 11/88, 131) 48. In its post-hearing brief, the government states that "HadMs. Watkins been advised ofKBRS' noncompliance, there is no question that she would have stopped it" (gov'tbr. at 128). COL Mills' testimony is that she was so advised (see finding 47).

24The parties have notpointedto anything in the record and we have found none indicating that Ms. Watkins did anything to stop the alleged noncompliance when so advised by COL Mills. SubcontractorUse ofPSCs on Contract 0007-ESS 49. Althoughthe KBRS manager Mr. Petersontestified that he did notuse private security for himselfwhile he was in Iraq, he knew that KBRS subcontractors on Contract 0007 were using PSCs andhe did not objectto theiruse. His testimony on this point was as follows: 

### Q

....[D]id youknowthat KBR's subcontractors were usingprivate security contractors underLOGCAP at the time you were there? A. Well, I'd say yes. I meant, they hadto. I mean, they were dying offlike flies. We had a hard time keeping subcontractors. Q. I mean, any specific knowledge ofKBR's subcontractors using PSCs, or is itjust an inference? A

....We were given some very untenable missions and untenable timing

....Ifthey were notusing PSCs, I have no idea howthey did theirjob. None whatsoever. Becausethey couldn'thave gone anywhere.

So I can'tpointto me talking to a sub and say "Tell me about your subcontract with a PSC." That didn't happen

....ButI knew in my own mind thatthey had to be using them, orthey couldn'thaveperformed. (Tr. 6/193-94) 50. As to the availability ofmilitary convoys for subcontractortravel between sites within Iraq, Mr. Petersontestified: I myself, as the head [ofLOGCAP] and a retired general officer, would be on an installation and askthe young lieutenant orcaptain whohas got a convoy going to Arifjan or somewhere ifI couldpile in. They said, "I don't do

25contractors." I said, "I'mCraig Peterson. I'm in charge of LOGCAP." They said, "I don't do contractors." Q. They didn't say, "Who?" A. No

....So, I mean, it

-- ifI gotkicked out of convoys, thenthere is no doubt in my mind that subs did. (Tr. 6/194-95) 51. The principal KBRS subcontractor on Contract 0007 involved in these appeals was ESS Support Services Worldwide (ESS). The ESS subcontracts under Contract 0007 were for the installation and operation oftroop dining facilities (DFACs) at specified sites in Iraq (app. supp. R4, tab 2). ESS had the largest PSC costs ($19,234,932) ofthe 21 subcontractors whose estimated PSC billings for the period 2003 through 2006 are in evidence (R4, tab 58 at 5-6, 8-9). ESS concluded its subcontract operations in Iraq on 30 June 2006 (tr. 8/159). 52. The ESS operations manager in Iraq from June 2003 through June 2006 was Mr. Steven Murray (tr. 8/94, 159). Mr. Murray testifiedthatESS used PSCs for the entire period ofits engagement in Iraq because the government force protection did not cover all ofits security requirements. This testimony in pertinentpart was as follows: [W]epretty consistently used, from early '03 and all the way through our departure in '06, PSD [private security detachment] teams to move people and money and equipment in and out ofthe country, because again, even in '05 and '06, the [government] convoy system would not let ourNTVs [non-tactical vehicles] in the convoy. Ifyou disclosed you're carrying cash, you're not getting in the convoywith cash, and it was a total cash economy the wholetime we were there

.

...It became extremely difficult to move things between sites. We'd approach- wetried to use some military force protection onthe site, and I personally talked to two or three commanders aboutthis. We were toldpretty consistently that the military is not there to babysit contractors.

26I had some people

...stuck on a southern site, and I needed to move them to a northern site. [They were included in a government convoy but] halfway through Baghdad, they stopped ourvehicle

...[S]aid they got a call to go on a mission and they took offin another direction

....[W]e dispatched, enormous cost,

...a PSD team to go and pickthem up.

.. .

Another occasion happened whereby we were moving equipment

...we had two orthree large 500 kV generators

...at one site; we had to move them across Baghdad to another site. They [the government] agreed to move us.

. . .

Halfway there, they told ourtruck to pull over and wait. They had to leave, and they left. Never saw my truck again. Itwasjustgone. The driver,

...! don'tknow what happened to him. The truck was gone. We learned our lesson very quick. We did ask, from time to time, and most times it was "We'renot doing that. We can't do that. We'rewarfighters. Take care of yourselves." It's extremely difficult to move between sites, and it was a pretty regular need ofours to do that.

... Money, people, sometimes food

.... [We] only carried two orthree days' worth offood [at each dining facility site]. So ifyou don'thave a delivery coming in every third day, you're in trouble. You can't feed soldiers. That was unacceptable to us, as a caterer, and to our client, KBR. We could not fail. So we had to move food, and the military would not touch it from intra-theater. They had biggerthings to do than to move contractors. Q: Didthere ever come a time when you simply gave up on seeking force protection? A. Honestly, no. Itwas in our interest. I mean this is a business, and ifI didn'thave to pay a PSD team, which were not cheap, and I could get it in a convoy, I'drather use a convoy. It didn't always fit with ourbusiness unfortunately.

27Eitheryou didn't have the time to do it, orthey wouldn'tdo it. But always, even up until middle ofJune of 2006, when we were leaving, we triedto use convoys as much as we could. It's a cost saver for us. So butthe answer 1s yes. We never gave up trying to do that. (Tr. 81152, 154-58) 53. In January 2006, ESS began demobilization activities for the conclusion ofits Iraq contracts in June 2006. The extent ofthe government force protection and ESS' use ofPSCs during this periodwas described by Mr. Murray as follows: We started demobilizing contracts in January of2006. We dropped a few ofthe Charlie sites in January, and all ofthe rest ofour sites, seven or eight ofthem thatwere left, came to full term in June 2006. A couple ofthings happened in '06 when we ended our contracts. In some instances, theFOB [Forward Operating Base] was closing, going away, and we'd haveto relocate. KBRwouldtell us move all ofthis stufffrom this FOB to th[i]s FOB. There was no force protection for that. The military was leaving. They were either gone or ontheir way, and thatbrings up a point about static security as well. Inthose situations, two orthree instances where the static securitywent away. The gates were gone. There's now an open installation, and we hadpeople and assets onthe ground. So we would putPSDteams onthe ground, to keep us safe, and to move whatever it is thatwe hadto move from A to B, either excess food orreefers.

Q. Did you get any force protection for any ofthat demob operation? A. Unfortunately, we asked several times. Onthe demobing again, these military units were now departing. They were leaving, eithergoing to anotherFOB or retrograding backto Kuwait orbackto the U.S. We had no

28force protection. There were times whentheperimeter came down, the gates were open. All the military were leaving, and we hadto put, at our cost again, these PSDteams on site, one to protect our little compound. Ofcourse, we shrunkthe perimeter down to protecting ourtent, and then as we tookthings down, loaded them up and transported them across the country to other sites,

...there was no security for us there at all. No force protection, no kind ofwar structure. We used our own, our own guns to move those things across country. (Tr. 81158-60) 54. Forreasons ofexpediency in meeting the logistical requirements ofthe troops, most ifnot all ofthe KBRS subcontracts at issue in these appeals, includingthe ESS subcontract, were awarded on a negotiated fixed-price basis (tr. 15/83-84). Asked at hearing ifESS "made or lost money on your use ofPSCs,"Mr. Murraytestified: Ouruse ofprivate security, unequivocably [sic] was a losing proposition for us. We incurred more costs than we charged

...KBRfor

....[W]e hadto estimate ourusage when we're putting in a firm fixed price contract. We estimate what we're going to use. Youknow, the world changed on us, and we didn't have the ability to go back and change ourprice. Aside from the escalation ofuse, the escalation ofthe cost increased as well. The PSD team, instead of750 now was $4,000 [per mission]. (Tr. 81168-69) 55. The government states in its post-hearing reply briefthat "Mr. Murray is not a credible witness

....Mr. Murray's sworn testimony is that the military did not move food

...(Tr. 8/111). Yet the right-hand columns ofthe NAVISTARconvoy matrices prove that the military moved food every day, provingMr. Murrayto be a liar."(Gov't reply br. at 18-19) We have carefully examined government counsel's accusation of perjury regarding the movement offood, and find it entirelywithout merit. There is no testimony by the witness onthe cited transcriptpage that "the military did not move food." To the contrary, the witness's testimony onthe two precedingpages regarding the military's daily priorities for NAVISTAR convoys from Kuwait into Iraq was that "Some


### 29days we could move construction materials, or Class 1, which is food. We could move food most times. That was what we did." (Tr. 8/109-10) Mr. Murray's testimony regarding the military not moving food was in the context ofmovements offood by ESS between the dining facilities within Iraq when a dining facility had a shortage offood (tr. 8/157). The "NAVISTARconvoy matrices" cited by the government show only the movement offood on convoys from NAVISTAR on the Iraq/Kuwait border into Iraq. They do not show and do notpurport to show the movement offood originating at one base in Iraq and delivered to another base in Iraq. (Exs. A-85, -115) 56. The overall performance ofthe task order food service requirement by KBRS and its food service subcontractors was succinctly summarizedby the testimony oftwo government witnesses. MG Speakes, the Deputy Commanding General ofCFLCC from June 2003 to July 2004 testified that he made unannounced visits and ate atthe KBRS subcontractorDFACs "all the time" and found the meals "extraordinary

....Great. Fantastic" (tr. 8/8, 86). LTC O'Day, the DCMA Northern Iraq Commander from June through November 2004 testified that he ate "Every day, three times a day" at an ESS DFAC and the food was: "Outstanding. Over the board." (Tr. 12/8, 115-16) 57. The KBRS coordinator for all subcontractor movements ofmaterials and equipment by truck from Kuwait into Iraq from mid-July 2003 until "sometime" in 2005 at the U.S. Army NAVISTAR facility was Ms. Leslie Smith (tr. 7110-11). Ms. Smith testified that throughout that period all movements across the borderhad to be submitted to and approved by the U.S. Army Movement Control Battalion (MCB). The primary method ofmovement was in a military escorted convoy. However, ifaplace in a military escorted convoy was not available, or ifthe subcontractor otherwise requested to move with its own security, the MCB routinely granted the request. When a subcontractor was planning to move trucks with its own security, it was expressly so stated on the KBRS MP Escort Allocation Request submitted daily to the MCB. (Tr. 7111, 34-40, 42-53; ex. A-85 at 2, exs. A-86, -115) 58. On 24 March 2004, Ms. Smith sent a memorandum onborder crossings into Iraq to MAJ Grady Sessoms, her designated point ofcontact at the MCB. The memorandum stated among other things that "Private Security is allowed. Iraqi security escorts wait in Iraq to hook up with their convoy." (Ex. A-86) Athearing Ms. Smith testified that she received no response from MAJ Sessoms then or at any othertime telling her that use ofprivate security for convoys into Iraq was not allowed (tr. 7 /46-49). 59. LTG Jack Stultz was deployed in Kuwait and Iraq as Commander ofthe 143rd Transportation Command from October 2002 to August 2004 (tr. 14/8). He was at the third command level above the Movement Control Team (MCT) that was stationed at the NAVISTAR border crossing into Iraq (tr. 14/44). At hearing he testified that he had no knowledge ofthe use ofPSCs at the border crossing describedby Ms. Smith (tr. 14/48-49). However, we find the testimony ofMs. Smith and the contemporaneous

30documentation in exhibits A-85, A-86 and A-115 persuasive as to the actual practice at the NAVISTARborder crossing. Moreover, we find thather 24 March2004 memorandum sent to MAJ Sessoms (ex. A-86) was sufficientto putthe government on notice that KBRS subcontractors were using PSCs for convoy protection after crossing the border into Iraq when government military escorts were not available. 60. The governmentwas also on notice ofthe use ofPSCs by KBRS subcontractors under Contract 0007 when on 10 June 2005, an ACO consented to the award ofa food services subcontract with an express pricingjustification in the consent documents stating that maintenance personnel wouldbe moved by "Airtransportation instead ofland transportation

...[and] then using the services ofa professional security company to transport them to their respective sites" (app. supp. R4, tab 7 at 13307, 13312). Contract Modification No. P00012 61. Effective 27 November 2005, the parties entered into bilateral Modification No. POOO 12 to Contract 0007 (R4, tab 1 at 131). Among otherthings, this modification added the DFARS 252.225-7040, CONTRACTORPERSONNEL SUPPORTING AFORCE DEPLOYED OUTSIDE THEUNITED STATES (JUN 2005)clause (hereinafter "theDFARS 7040 (JUN 2005) clause") to the contract (id. at 134). Section G)( 1) ofthe clause stated: 

## G) Weapons. (1) Ifthe Contractorrequests that its personnel performing in the theater ofoperations be authorized to carry weapons, the request shall be made through the Contracting Officerto the Combatant Commander. The Combatant Commanderwill determine whetherto authorize in-theater contractorpersonnel to carry weapons and whatweapons will be allowed. (R4, tab 1at 137-39) 62. The government contends that section G)(l) ofthe DFARS 7040 clause required KBRS to obtain Theater Commander authorization for use ofPSCs in performing Contract 0007 (gov'tbr. at 110-11). We find no reference to PSCs or contracts for security services in the DFARS 7040 (JUN 2005) clause thatwas added to Contract 0007 by ModificationNo. P00012. The DFARS 252.225-7040, CONTRACTOR PERSONNEL AUTHORIZED TO ACCOMPANY U.S. ARMED FORCES DEPLOYED OUTSIDE THE UNITED STA TES (JUN 2006) clause at section G)( 1) does distinguish between arming contractorpersonnel and armingpersonnel under a contract or subcontract for security from a professional PSC and expressly applies the authorization requirementto both.

31There is no evidence, however, that the 2006 version ofthe DFARS 7040 clause was incorporated by modification into Contract 0007 orthe task orders thereunder at any time relevant to these appeals. CENTCOM General Orders 63. Special Provision H-13 ofContract 0007 required among otherthings that "all personnel hired by or for the contractorwill comply with all guidance, instructions and general orders

...issued by the Theater Commander orhis/herrepresentative" (see finding 8). CENTCOM General OrderNo. IA (GO-IA) dated I 9 December 2000 was entitled: "Prohibited Activities for U.S. Department ofDefense Personnel Present Within the United States Central Command (USCENTCOM) AOR." The statedpurpose ofthe order was: "To identify conduct that is prejudicial to the maintenance ofgood order and discipline ofall forces in the USCENTCOM AOR." Amongthe prohibitions in the order was paragraph 2.a. which stated: "Purchase, possession, use or sale ofprivately owned firearms, ammunition, explosives, orthe introduction ofthese items into the USCENTCOM AOR." The order concluded with a waiverprovision stating: "Authority to waive or modify the prohibitions ofParagraph 2 ofthis General Order is delegatedto the Deputy Commander in Chief, USCENTCOM." (Bd. ex. 3) 64. From July 2003 to July 2007, Commander (CDR) Brian O'Donnell, USN, was the legal staffofficer at CENTCOM responsible for reviewing applications for waiver ofparagraph 2.a. in GO-IA. Athearing, CDR O'Donnell testifiedthat there was nothing in GO-IA about contracted security (tr. 9/II5). He further testified that, in August 2003, there were no theater written policies orprocedures regarding contractors carrying arms and that: "In other words, there is no rule and therefore people are doing what they want" (tr. 9/53-55). 65. On 23 December 2005, CENTCOM issued for the first time a statement of policy, expressly stated to be considered a lawful general order, mandating CENTCOM authorization, on a case-by-case basis, for contractor use ofPSCs in Iraq and Afghanistan. This policy/general orderwas addressed to about 60 Department of Defense and other government agencies, including the DCMA, but not to KBRS. The policy/general order stated in pertinentpart: 2.c CONTRACT SECURITYARMING AND USE OF PRIVATE SECURITY COMPANIES (PSC) IN IRAQ AND AFGHANISTAN. 2.c.I. THE DECISION TO ARMDOD CIVILIAN PERSONNEL, DOD CONTRACTOREMPLOYEES OR AUTHORIZE THE USE OF CONTRACT SECURITY/PSC WITHIN IRAQ ORAFGHANISTAN TO PERFORM

32SECURITY SERVICES SHALL BEDECIDED ON A CASE-BY-CASE BASIS PERTHE POLICYPROVIDED HEREIN. ALL REQUESTS SHALL BE SUBMITTED TO THE COGNIZANT US COMMANDERPERPARA 2.D., AND SHALL COMPLY WITH PARAGRAPH 3.F. BELOW. A REQUIREMENT TO COMPLYWITH THIS PROCEDURE SHALL BE INCLUDED IN ALL EXISTING CONTRACTS (WITHIN 90 DAYS OF THE EFFECTIVE DATE OF THIS POLICY ORAS SOON AS PRACTICABLE)

....

11. THIS POLICY IS EFFECTIVE IMMEDIATELYAND SHALL BE CONSIDERED A LAWFUL GENERAL ORDER. VIOLATION OF THIS GENERAL ORDERMAY SUBJECT AN OFFENDERTO ADMINISTRATIVE ORDISCIPLINARY ACTION UNDERTHE UCMJ, CIVILIAN PERSONNEL REGULATIONS, CONTRACT TERMS ORCRIMINAL PROSECUTION UNDERUS ORHOST-NATION LAW. (Ex. G-328 at 1, 2, 6, 7; tr. 22/22) 66. KBRS had no notice ofthe 23 December 2005 CENTCOM Policy Statement/General Orderuntil it received a Rock Island PCO letter dated 28 December 2006 attaching a modification ofthat order. The government did not initiate a modification to incorporate the policy/general order into Contract 0007 within 90 days as required by the order, and the contractwas never so modified. (Ex. A-159; tr. 9/143-44, 22/20-25) 67. On 13 March 2006, CENTCOM issued General Order No. IB (GO-IB) entitled "Prohibited Activities for U.S. Department ofDefense Personnel Present within the United States Central Command (USCENTCOM) Area ofResponsibility (AOR)." GO-IB expressly superseded GO-IA and further stated that "all waivers granted pursuant to GO-IA, are hereby rescinded and superseded." However, GO-IB retained the same paragraph 2.a. as in GO-IA, and did not in any manner address the use ofPSCs to supplement government force protection. (Ex. G-5 at 13-I8) 68. From Septemberthrough December 2006, the Special Inspector General for Iraq Reconstruction conducted a survey ofthe security costs being incurred at that time by the contractors performing the reconstruction work. The total Iraq Reliefand Reconstruction Funds (IRRF) spent on security costs as a percentage oftotal contract costs for each ofthe nine contractors responding to the survey ranged from a low of7.6%

33to a high of 16.7%. The average for all responding contractors was 12.5%. (Ex. A-161 at 2-3) The Government's Withholdings and the Contractor's Claims 69. Ms. Kristan Mendoza was the Rock Island lead PCO for Contract 0007 for the period February-June 2006 and from October 2006 to the present (Testimonial Deposition, 18 Oct. 2012 at 14, 18). In response to Congressional inquiries about the use ofPSCs by KBRS and its subcontractors on Contract 0007, Ms. Mendoza on 31 January 2007 obtained documentation from ESS that in March 2005, "Security" was 12.55% of "our labor pricing in our subcontracts" (R4, tab 50 at 1, 14). From this data a Rock Island price analyst estimated that "Security" was eight (8)% ofthe total ESS subcontract billings. 6 With KBRS mark-ups, Rock Island alleged total cost billed to the government for ESS private security was $19,652,815.28. (R4, tab 60 at 16) 70. By letter dated 6 February 2007 and DCAA Form 1, No. 127 ofthe same date, the PCO and DCAA notified KBRS that they were respectively "adjustingpayments" (PCO) and "suspending" costs (DCAA) in the amount of$19,652,815 associated with ESS' use ofPSCs in performing its subcontracts under Contact 0007 (R4, tab 60 at 1-4). 71. On 29 August 2007, DCAA issued a "Report on Evaluation of[KBRS] Disclosure ofCosts ofArmed Private Force Protection Services Associated with [Contract 0007]." The report stated that subcontractorbillings to KBRS for private security on Contract 0007 for the years 2003 to 2006 were $79,306,895.7 The report also stated that the KBRS billings to the governmentunder Contract 0007 in those years also included $20,371,798 ofindirect allocations ofprivate security costs incurred by the KBRS Middle East Regional Office (MERO). The total amount ofthe allegedly unallowable private security costs in the 29 August 2007 DCAAreport was $99,678,695. (R4, tab 58 at 1, 5, 7-11)

6 The "Estimated amount ofsecurity labor within [ESS] subcontracts" at Attachment 4 to the DCAA Form 1, No. 127, dated 6 February 2007 shows total payments for PSCs of $18,551,279.04 and total subcontractprices of$231,444,266.18 (R4, tab 60 at 16). 7 The DCAA calculation ofthe subcontractor PSC costs was based on the estimated PSC costs provided by 21 subcontractors which amounted to 1.7 8percent oftheir total subcontract billings to KBRS. However, this estimatedpercentage ofthe PSC costs of21 subcontractors was also applied by DCAAto the total billings of another 44 subcontractors who had notprovided any estimates oftheir PSC costs. The result ofthis added calculation raised the government claim for the subcontractorPSC costs by $35,317,266. (R4, tab 58 at 7-10) 3472. On 22 October 2007, KBRS submitted a certified claimto the Rock Island PCO underthe ContractDisputes Act of 1978 (CDA), 4I U.S.C. §§ 7I01-7109, for payment ofthe $I9,652,8I5 withheldby the government in the PCO's letter of 6 February 2007 andthe DCAA's Form I, No. I27, ofthe same date (R4, tab 59). The PCO did not respond as required by the CDAwith either a decision within 60 days of receipt ofthe claim orwith a date by which a decision would be issued. On 24 March 2008, KBRS appealed the deemed denial. The appeal was docketed as ASBCA No. 56358. 73. On 3 August 2009, the DCAA issued a Form I, No. I27 Revision-I, replacing the 6 February 2007 Form I, No. I27, in its entirety and disapproving $I03,397,086 for alleged costs ofPSCs charged to Contract 0007. The amount in theForm I,No. I27 Revision-I, was the total estimated direct and indirectprivate armed security costs in the 29 August 2007 DCAA Report ($99,678,695) for the years 2003 through 2006 plus $3,7I8,39I in KBRS mark-ups on those costs for thatperiod. (ASBCANos. 57I5I, 57327, R4, tab 72 at 3-9) 74. The total PSC security cost alleged in the DCAAForm I, No. I27 Revision-I, ($I03,397,086) was 2.32% ofthe related subcontractortotal billings ($4,449,I52,680). As a percentage oftotal billings, the PSC security costs ofKBRS and its subcontractors as alleged in the DCAAForm I, No. 127 Revision-I, (2.32%) were substantially lower than the PSC security costs ofthe Iraq Reconstruction contractors (I2.5%)that were performing in substantially the same security situation at the same period oftime (see finding 68). On this evidence, we find that the alleged PSC security costs ofKBRS and its subcontractors at issue were reasonable as to amount. 75. On 24 August 2009, KBRS submitted an invoice under Contract 0007 for payment of$22,279,678.49. On or about I September2009, the government withheld the entire amount ofthat invoice consistent with a recommendation in the DCAAForm 1, No. 127 Revision-I, that the ACO "take immediate action to recoup the disapproved costs." (ASBCA No. 57I5I, compl. and answer 

### iii! 23-24; 57151, R4, tab 72 at 3) On 20 October 2009, KBRS submitted a certified claim under the CDA for $2I,I31,743 of the withheld amount. When the PCO did not issue a decision on the claim, KBRS appealed the deemed denial on I9 March 2010. The appeal was docketed as ASBCA No. 5715I. (Compl. and answer

### iii! 4-6) 76. In March 20IO, the government withheld an additional $2,I26,53I from payments due under Contract 0007 for further recoupment ofthe disapproved costs in the DCAA Form 1, No. I27 Revision-I. On 16 June 20IO, KBRS submitted a certified CDA claim for the remainder ofthe September2009 withholding ($1,147,935.49) and the full amount ofthe March 20IO withholding ($2,126,53I) for a total claimed amount of $3,274,466.49. (ASBCA No. 57327, compl. and answer

### iii! 26-27) When the PCO failed

35to issue a decision on this claim as required by the CDA, KBRS appealed the deemed denial on 20 August 2010. The appeal was docketed as ASBCANo. 57327. (Id. 

### 'i!'il 4-6) 77. On 30 January 2013, the Rock Island PCO issued a "Contracting Officer's Final Decision for Form 1#127 and Claims, Costs Relating to the Use ofPrivate Armed Security on LOGCAP III Contract DAAA09-02-D-0007." The final decision found unallowable $55,620,591.55 ofthe $103,397,086 suspended/disallowed costs in the DCAA Form 1, No. 127 Revision-I, and the remaining $47,776,494.45 allowable. After deducting the amounts withheld by the government ($19,652,815.00 on 22 October 2007, $21,131,743.00 on 20 October 2009, and $3,274,466.49 on 16 June 2010) the final decision claimed an amount of$11,561,567.55 8 as owed to the government. (Ex. A-210 at 15) KBRS appealed this decision on 15 February 2013. The appeal was docketed as ASBCA No. 58559 and was consolidated for hearing and decision with ASBCA Nos. 56358, 57151and57327. DECISION KBRS contends in its main briefthat it is entitled tojudgment on all ofthe appeals because the contracting officer's final decision of30 January 2013 asserting a government claim of$55,620,591.55 (finding 77) was untimely (app. br. at 106-08). The government did not address this contention in its reply brief. The CDArequires that "Each claim by the Federal Government against a contractorrelating to a contract shall be the subject ofa written decision by the contracting officer." 41 U.S.C. § 7103(a)(3). The Act also requires that "each claimby the Federal Government against a contractor relating to a contract shall be submitted within 6 years afterthe accrual ofthe claim." 41 U.S.C. § 7103(a)(4)(A). "Accrual ofa claim" is defined in FAR33.201 in pertinent part as: "the date when all events, that fix the alleged liability ofeitherthe Government or the contractor and permit assertion ofthe claim, were known or should have been known." A government claim for recovery ofpayments made for allegedly unallowable costs ofKBRS and its subcontractors using PSCs in connection with theirperformance of Contract 0007 accrued no later than 10 June 2005. RaytheonMissile Systems, ASBCA No. 58011, 13 BCA

### 'i! 35,241at173,017-018. Priorto that date, on 29 August 2004, LTC O'Dayknew that PSCs were being used instead ofmilitary escorts (finding 41). Priorto 10 June 2005, between April and August 2004, the DCMA Commander Iraq and Rock Island PCO Watkins knew that PSCs were being used for movement by KBRS personnel within Iraq (findings 47-48). Prior to 10 June 2005, on 24 March 2004, the KBRS contact at MCB, MAJ Sessoms, was told that PSCs were being used for convoys from Kuwait into Iraq (findings 58-59). Finally, on 10 June 2005, the government was

8 The correct amount afterthe stated deductions is $11,561,567.06. 36expressly advised that PSCs were being used to transport personnel to theirrespect sites in Iraq (finding 60). On these findings, the contracting officer's final decision of30 January 2013 was untimely and thus invalid and a nullity. We give it no further consideration and dismiss the appeal in ASBCANo. 58559 for lack of jurisdiction. See The Boeing Co., ASBCA No. 57490, I2-I BCA

### ii 34,916 at 171,680. The grounds for the withholdings at issue in ASBCA Nos. 56358, 5715I and 57327 were that the government had previouslypaid the withheld amounts to KBRS for the costs ofPSCs that it now believed were unallowable under the terms ofthe contract. The government cites CENTCOM GO-IA made applicable to the contract by Special Provision H-13, the promise ofgovernment force protection in Special Provision H-I6, and the "Weapons and Training" provisions in Special ProvisionH-21, as prohibitingthe use ofPSCs to supplement the government force protection withoutthe authorization of the Theater (CENTCOM) commander for support that these costs were unallowable. In our 2 April 2012 decision denying appellant's motion forjudgment on the pleadings, we specifically addressed Special Provisions H-13, H-16, H-2I and CENTCOM GO-IA. We held that none ofthese provisions categoricallyprohibitedthe use ofPSCs or mandated Theater Commander authorization for their use. KelloggBrown & RootServices, I2-1 BCA

### ii 35,00I at 172,0I6. After hearing and consideration ofthe record as a whole, we reaffirm those holdings as to the Special H clauses and CENTCOM GO-IA. Those clauses and GO-IA are clear. The extrinsic evidence offered by the government may not be used "to create an ambiguity where [the contract] language is clear." HRE, Inc. v. UnitedStates, I42 F.3d I274, I276 (Fed. Cir. I998) (citing City of Tacoma v. UnitedStates, 3 I F.3d II30, II34 (Fed. Cir.I994)). 9 Subsequent to the award ofthe contract, CENTCOMrecognized the use ofPSCs in its 4 July 2004 WARNORD that required MNF-1 to coordinate with other government agencies to protect U.S. government contractors through "A COMBINATION OF COALITION MILITARY FORCES, IRAQ SECURITY FORCES AND PRIVATE SECURITY COMPANIES." The CENTCOM WARNORD further stated that: "CONTRACTORS CONTINUE TO HAVE THEIRRIGHT OF SELF DEFENSE AND MAY, IN SOME CIRCUMSTANCES ARRANGE FORCONTRACTOR SECURITY

9 The government now contends thatthe KBRS proposal of26January 2004 to subcontract for armed convoy security was an admission that the contract prohibited the use ofPSCs without Theater Commander approval (gov'thr. at I22). We do not agree. The KBRS proposal was in response to a government request for aproposal to relieve the government from its contractual responsibility for protection ofcontractor convoys pursuantto the force protection clauses ofthe contract and task orders issued thereunder (findings 26-28). 37WITH A PRIVATE SECURITY COMPANY." (See finding 39) Neitherthe DFARS 7040 (June 2005) clause that was added to Contract 0007 by Modification No. P00012 effective 27 November 2005, nor CENTCOM GO-lB issued on 13 March 2006, superseding GO-IA addressed the use ofPSCs (see findings 6I-62, 67). The CENTCOM policy/general order dated 23 December 2005, requiring CENTCOM authorization on a case-by-case basis for use ofPSCs was clear, but under its express terms, it was not applicable to existing contracts until it was contractually incorporated into those contracts. KBRS had no notice ofthe existence ofthe order until 28 December 2006, and there is no evidence that Contract 0007 was ever modified to include the 23 December 2005 policy/general order. (See finding 65) The government has the burden ofproofin establishing that a cost is unallowable by operation ofa specific contractprovision or regulation. Space GatewaySupport, LLC, ASBCA No. 56592, 12-1BCAir34,94I at 171,792;LockheedMartin Western DevelopmentLaboratories, ASBCA No. 51452, 02-1BCAir31,803 at I57,102. On this record, we find that the government has not carried its burden ofproving that during the relevant period ofperformance (2003-2006) the terms ofContract 0007, the terms ofthe task orders issued thereunder, or the terms ofany regulation prohibited the use ofPSCs to supplement government force protection without the case-by-case authorization ofthe CENTCOM Commander. Moreover, under Special Provision H-13, onlythe guidance, instructions and general orders issued by the CENTCOMtheater commander or designated representative were contractually binding on Contract 0007. The guidance, instructions, and general orders ofmilitary headquarters subordinate to CENTCOM (such as MNF-1 and MNC-1), were not contractually binding under Special Provision H-13. A preponderance ofthe evidence shows that during the years 2003-2006 the force protection provided by the government for Contract 0007 was not commensurate with the threat or with the protectionprovided to DoD civilians. A preponderance ofthe evidence also shows that the use ofPSCs by KBRS and its subcontractors to supplement the government force protection during those years was reasonably necessary for accomplishment ofthe logistical support mission ofContract 0007 and the task orders thereunder. (See findings 13-60) A preponderance ofthe evidence further shows that the cost ofPSC services used by KBRS and its subcontractors as alleged in the DCAA Form I, No. I27 Revision-I, were reasonable as to amount (see findings 68, 74). On this record we conclude that, in the security conditions prevailing in Iraq in 2003-2006, the use ofPSCs by KBRS and its subcontractors was reasonable as that term is defined in FAR31.201-3(a) (see finding 8). The government argues in its opening briefthat: "Ifthe government ever failed to provide adequate force protection

...KBRS' remedy was delay" (gov'thr. at 13I). It repeats this argument in the conclusion ofits reply briefwhere it states "absent permission to privately arm, the Contract solely permitted delay, which could be incurred

38without costto KBRS" (gov'treply br. at 75). Fortunately for the troops that depended on KBRS and its subcontractors for their life-support and other logistical support services, KBRS and its subcontractors did not adoptthe attitude now suggested by the government as their only remedy for the government's failures to provide force protection. As Mr. Murray, the ESS DFAC subcontractor manager expressed it: "ifyou don'thave a delivery coming in every third day, you're in trouble. You can'tfeed soldiers. That was unacceptable to us, as a caterer, and to ourclient KBR. We could not fail." (See finding 52) In this regard, we note that Contract 0007 was a "rated" order under which a failure to deliver withinthe required time, could be subjectto criminal penalties (id.). See Martin v. Halliburton, 618 F.3d 476, 480 (5th Cir. 2010). Moreover, the government's argumentpresupposes that PSCs were prohibited under the terms ofthe contract. We have found otherwise. We have carefully consideredthe government's arguments as to estoppel, an alleged CAS violation, and "political question." We find them without merit. The government's estoppel argument is that (i) KBRS misrepresentedto the government that it was not using PSCs; (ii) thatthe government relied uponthat misrepresentation; and (iii) the government was materially prejudicedbythat misrepresentation. Whatever damages the government may have suffered as a result ofany misrepresentation by KBRS as to its use ofPSCs, they are not represented by the costs ofthe PSCs that we have found allowable and whichthe government is contractually boundto reimburse. We also find no ')udicial estoppel" arising from the tort litigation citedby the government (gov'tbr. at 114, 132). There is no conflictbetween the KBRS position in the tort litigation thatthe governmenthad the primaryresponsibility for force protection, and its position in thepresent litigation that the governmenthadprimaryresponsibility for force protection, but ifit failed to carry out that responsibility, there was nothing in Contract 0007 that prohibited KBRS from hiring PSCs tothe extent necessary to accomplish the logistical support mission. The government allegation ofa CAS violation is that PSC costs benefitting only Contract 0007 were charged to a KBRS Middle East Regional Office (MERO) overhead rather than as a direct cost to Contract 0007 (gov'tbr. at 128). The KBRS MERO was a "forward"home office for a number ofKBRS contracts in the Middle East. The KBRS PSC services for all ofits Middle East contracts were procuredby MERO and those services were not confined to Contract 0007 (tr. 23/17-20). The governmentbears the burden ofproving CAS violations. Raytheon v. UnitedStates, No. 2013-5004, -5006, slip. op. at 18 (Fed. Cir. April 4, 2014). On this evidence, the governmenthas failed to prove any CAS violation. As to the "political question" argument, the government states: "For KBRS to prevail, the Board must adjudge thatthe military force was inadequate and thus the PSCs were necessary. Such a task falls squarely within the political question doctrine and is thus non-justiciable." (Gov'tbr. at 146) We disagree. The "political question" doctrine

39does not apply to the adjudication underthe CDA ofwhether or not the government has met a contractual obligation to provide adequate force protection to the contractor. See Burnside-OttAviation Training Ctr. v. Dalton, 107 F.3d 854, 858 (Fed. Cir. 1997) ("In government contract disputes

...the initial determination in each dispute is made by one of the parties, i.e., the CO. Congress commanded [in the CDA] that the CO's decision on any matter cannotbe denied Boardreview."). In any event, there is no real question that the government did not provide force protection on a consistentbasis. Our findings reveal this lack offorce protection was a constantproblem and the commanding generals testified they did not have the resources to provide it. We have also consideredthe government's numerous objections to the presiding judge'srulings limiting discovery, the number ofdocuments, testimony ofwitnesses, the pages ofbrief, and excluding entirely classified documents pertaining to operations in Iraq that were still classified seven to ten years after the operations took place, and could not be disclosed to appellant's lead counsel who did not have a security clearance. 10 With the first ofthe appeals having been filed in March 2008, and after five years of discovery and motion practice, hearing on these appeals was finally held on 24 hearing days between 11 April and 25 July 2013. At hearing, 24 witnesses testified and 37,000 plus documents were received in evidence. These proceedings had to end at some point and the limitations on discovery, witnesses, documents andpages ofbriefs did not violate this Board'srules orthe discretion inherently granted to tribunals to control their proceedings. We sustain the appeals in ASBCANos. 56358, 57151and57327. In ASBCA No. 56358, KBRS is entitledto recover from the government $19,652,815 with interest underthe CDA (41 U.S.C. §7109(a)(l)) from 22 October 2007 until paid. In ASBCA No. 57151, KBRS is entitledto recover from the government $21,131,743 with interest from 20 October 2007 until paid. In ASBCANo. 57327, KBRS is entitledto

10 The administrative burden ofhandling at hearing classified documents on tactical operations in Iraq occurring seven years to ten years ago (see gov'tbr., ex. 13) outweighed any perceived evidentiary benefitparticularly since none ofthe documents were alleged by the governmentto be outcome determinative and involve the very question thatthe government alleges is a "political question," the amount ofmilitary force thatwas necessary. 40$3,274,466.49 with interest from 16 June 2010 until paid. As previously stated above, ASBCA No. 58559 is dismissed for lack of jurisdiction. Dated: 17 June 2014

I concur

Administrative Judge Acting Chairman Armed Services Board ofContract Appeals

# ~AQμu~ MONROE E. FREEMAN, JR. Administrative Judge Armed Services Board ofContractAppeals

I concur

RICHARD SHACKLEFORD Administrative Judge Vice Chairman Armed Services Board ofContractAppeals

I certify that the foregoing is a true copy ofthe Opinion and Decision ofthe Armed Services Board ofContractAppeals in ASBCA Nos. 56358, 57151, 57327, 58559, Appeals ofKellogg Brown & Root Services, Inc., rendered in conformance with the Board's Charter. Dated:

41 JEFFREYD. GARDIN Recorder, Armed Services Board ofContract Appeals