ARMED SERVICES BOARD OF CONTRACT APPEALS 

Appeals of -- ) 

) 

Kellogg Brown & Root Services, Inc. ) 

) 

) 

Under Contract No. DAAA09-02-D-0007 ) 

APPEARANCES FOR THE APPELLANT: 

APPEARANCES FOR THE GOVERNMENT: 

ASBCA Nos. 56358, 57151 

57327,58559 

Jason N. W orkmaster, 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 Chief Trial Attorney 

Stephanie B. Magnell, Esq. 

MAJ Samuel E. Gregory, JA 

Trial Attorneys 

OPINION BY ADMINISTRATIVE JUDGE FREEMAN 

In ASBCA Nos. 56358, 57151and57327, Kellogg Brown & Root Services, Inc., 

(KBRS) appeals the deemed denial of its claims under the Contract Disputes Act of 1978 

(CDA), 41 U.S.C. §§ 7101-7109, for funds totaling $44,059,024.49 withheld by 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 of private security companies 

(PSCs) which the government has subsequently alleged were unallowable under the 

terms of the contract. In ASBCA No. 58559, KBRS appeals a final decision of the 

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 of documents admitted in evidence. We sustain the appeals in 

ASBCA Nos. 56358, 57151and57327 in the total amount claimed plus CDA interest. 

We dismiss the appeal in ASBCA No. 58559 for lack of jurisdiction. 
FINDINGS OF FACT 

1. We assume familiarity with our decision in Kellogg Brown & Root Services, 

Inc., ASBCA No. 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, 1 tab 1 at 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 refer to the contractor at all times as KBRS 

and to the procuring agency as "Rock Island." 

Pertinent Terms and Conditions of Contract 0007 

and Task Orders Issued Thereunder 

3. Contract 0007 was a cost-plus-award-fee, indefinite quantity, indefinite 

delivery contract with a base period of one year and nine one-year option periods 

thereafter (R4, tab 1 at 5-26). Contract 0007 was part of the 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 support the 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 "the Allowable Cost clause") (R4, tab 1 at 3 7). 

5. The DP A clause stated: "This is a rated order certified for national defense use, 

and the Contractor shall follow all the requirements of the Defense Priorities and 

Allocations Systems regulation ( 15 CFR 700)." The cited regulation stated in pertinent 

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 

1 We cite to the Rule 4 file in ASBCA No. 56358, unless otherwise noted. 

2 
means a person must accept and fill a rated order for items 

that the person normally supplies .... 

( c) All rated orders must be scheduled to the extent 

possible to ensure delivery by the required delivery date. 

§ 700. 7 Compliance 

(a) Compliance with the provisions of this 

regulation .. .is required by the Defense Production Act .... 

Violators are subject to criminal penalties. 

6. The Allowable Cost clause of Contract 0007 stated in pertinent part: 

(a) Invoicing. The Government shall make payments 

to the Contractor when requested as work progresses .. .in 

amounts determined to be allowable by the Contracting 

Officer in accordance with Subpart 31.2 of the Federal 

Acquisition Regulation (FAR) in effect on the date of this 

contract and the terms of this contract. 

7. FAR 31.201-2, Determining allowability, in effect on 14 December 2001 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 promulgated by the CAS Board, if 

applicable; otherwise, generally accepted accounting 

principles and practices appropriate to the particular 

circumstances. 

(4) Terms of the contract. 

(5) Any limitations set forth in this subpart. 

3 
8. FAR 31.201-3 Determining reasonableness, in effect on 14 December 2001 

stated in pertinent part: 

(a) A cost is reasonable if, in its nature and amount, it 

does not exceed that which would be incurred by a prudent 

person in the conduct of competitive business .... 

(b) What is reasonable depends upon a variety of 

considerations and circumstances, including -

( 1) Whether it is the type of cost generally recognized 

as ordinary and necessary for the conduct of the contractor's 

business or the 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 of the 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 pertinent part: 

Special Provisions for Peacetime Contracts 

This general guidance addresses the deployment of contractor 

personnel into a theater of operations in support of a 

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. 

4 
In the event that the contractor deploys individuals into the 

area of operations in support of a 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 issued by 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 alter the scope of work to be 

performed .... 

• The contractor shall comply, and ensure that all deployed 

employees, subcontractors, subcontractors employees, 

invitees and agents comply with pertinent Service and 

Department of Defense 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 of the contract, the Service Theater 

Commander will provide force protection to contractor 

employees commensurate with that given to 

Service/Agency (e.g. Army, Navy, Air Force, Marine, 

DLA) civilians in the operations area unless otherwise 

stated in each task order. 

5 
H-21 Weapons and Training 

• Whether contractor personnel will be permitted to carry a 

government furnished weapon for self-defense purposes in 

the Area of Operations (AO) is at the discretion of the 

Theater Commander. However, Contractor personnel 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 ... .If accepted the contractor will maintain a 

listing of employees possessing a government firearm and 

provide notification to the Contracting Officer .... Also 

when accepted, only military issued ammunition may be 

used in the weapon. 

• Prior to issuing any weapons to contractor employees, the 

government at its discretion may provide the contractor 

employees with weapons familiarization training 

commensurate to training provided to 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 of weapons 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 of screening will be presented to the contracting 

officer. 

(R4, tab 1 at 96-98, 101-02) 

10. Section 1.3. l of the Contract 0007 Statement of Work (SOW) stated in 

pertinent part that: "All work to be performed shall be awarded by individual task 

orders" (R4, tab 1 at 56). Section 7.1 of the Contract 0007 SOW stated in pertinent part: 

6 
7.1 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 receipt by the Contractor, except 

when such document is deemed to cause an increase or 

decrease in the cost of contract performance. In such event, 

the Contractor shall inform the Contracting Officer in writing 

prior to implementation of such supplement or change. If 

applicable, a negotiated change in contract price shall be 

made to the mutual satisfaction of both the Contractor and 

Government prior to implementation of the change. 

(R4, tab 1 at 79) 

11. Following the invasion and occupation of Iraq in March 2003, Rock Island 

issued a number of task 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 other things, billeting and food service operations. (R4, tab 3 at 14-49) 

Task Order (TO) 59, effective 24 June 2003, with an initial total ceiling price of 

$802,065,733 and its successor TO 89 effective 1 May 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 September 2004 to May 2010 Mr. James Loehrl, a senior executive at 

Rock Island, was responsible for the Contract 0007 task order procurements (tr. 10/7). At 

hearing he described the scope of TO 59 as follows: 

Task Order 59 to the best of my recollection encompassed all 

of the support, logistics support, in Iraq minus some of the 

theater transportation mission .... That was under task order 44. 

Also there was some performance that was specific to 

the State Department in the Green Zone that it didn't cover. 

And there were some task orders in support of ... the Intel 

folks that were based at Camp Victory that were on a separate 

7 
(Tr. 10/57) 

task order. Basically, all of the baseline support in Iraq minus 

those things is what it covered. 

13. Paragraph 1.10 in Change 5 to the TO 59 SOW, effective 27 August 2003, 

stated: "Contractor Force Protection. The government will provide for the security of 

contractor personnel in convoys and on site, commensurate with the threat, and [in 

accordance with] the applicable Theater Anti-Terrorism/Force Protection guidelines." 

(R4, tab 3 at 99) Paragraph 1.7 of the TO 89 SOW issued on 1 May 2005 stated: 

"Contractor Force Protection. The Government will provide for the force protection and 

security of contractor personnel in convoys and on site, commensurate with the threat, 

and [in accordance with] the applicable Theater Anti-Terrorism/Force Protection 

guidelines." (R4, tab 5 at 1, 16) 

The Need for PSCs to Supplement Government Force 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 of the same date, the KBRS contracts 

manager (Ms. Mary Wade) told the lead Rock Island procurement contracting officer 

(PCO) for Contract 0007 (Ms. Mary Beth Watkins)2 that: 

This incident underscores the threat to U.S. personnel 

identified in the ... classified message that informed cleared 

KBR personnel that movement along the MSR [Main Supply 

Route] in IRAQ, particularly during the next 72 hrs, poses a 

significant risk to both personnel and materiel for all US 

personnel. 

As a result of this incident as well as the threat conditions 

identified in the message, safety and security considerations 

mandate that movement of KBR and subcontractor vehicle 

convoys be delayed until such time as the U.S. Government 

provides force protection assets adequate to the threat level. 

KBR is acutely aware that time is of the essence in providing 

food service support to V Corps, however, failure of the U.S. 

Government to provide adequate Force Protection in 

2 Ms. Watkins was the Rock Island lead PCO for Contract 0007 from the date of award 

(R4, tab 1 at 1) to October 2004 (tr. 5/142). During that period, 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 

1 July 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 inability to get permits to 

arm their security personnel. 

(Ex. A-24 at 1, 2) 

16. The Coalition Forces Land Component Command (CFLCC) was the military 

command responsible for the movement of logistical 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: 

I had arrived in late June. It was obvious to me very quickly 

that we were taking new levels of threat to our supply and 

relief formations across Iraq, some situations more serious 

than others, and that we had to be very thoughtful about how 

we organized and supported convoys. 

And so early on what I asked our theater to do is to give a 

thoughtful examination to options. And the options that I 

outlined ranged the spectrum of capability. Most desirable, 

frankly, would be more combat support capability units be 

dedicated to the mission .... 

The other thing I wanted to do is look at expanding our 

capability by missioning [sic] more units to provide the 

capability. And the other thing that I early on had said is let's 

9 
look at the potential for some form of the 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 concluded that if not delivered, "the other missions that are 

dependent on the Truck Driver providing the transportation will come to a screeching halt 

and the Client as well as KBR, will be in jeopardy of mission failure." (Ex. A-27) 

18. The Rock Island PCO referred this message to the Rock Island operations 

personnel with the comment that: "The lack of required 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 of the warfighter are in 

jeopardy of not 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 of its subcontractors 

from mid-May to date were 7 killed, 7 wounded, 4 missing and 10 trucks missing. 

MG Speakes noted, among other things that: "Tomorrow the government will provide 

convoy protection for 46% of the convoys waiting to travel north. This level of support 

must increase, but presently 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 of work requesting 

contracted security." (Ex. A-29 at 1, 3) 

20. On 19 September 2003, MG Speakes sent the following message and formal 

request to the Rock Island Commander with copies to, among others, the Deputy 

Commanding General and senior logistics staff officer of CJTF-7 :3 

Subject: CFLCC Request for Help with LOGCAP Contractor 

Convoy Security. 

3 Combined Joint Task Force-7 (CJTF-7) was the initial designation of the coalition military 

forces in Iraq (tr. 5/188-89). On 15 May 2004, the designation was changed to 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 contract provisoins [sic] be 

amended to support operations in Iraq. We appreciate your 

support and hope that this is a request 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 Kuwait and 

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 of convoys in Iraq during the movement of 

government materiel on theater supply routes. The current 

force protection posture, pending reductions in force 

structure, present and future demands for military police 

forces, all support the need to explore options other than 

military escorts in order to conduct secure and unhindered 

convoy operations. 

2. The LOGCAP Basic contract and Statements of Work 

(SOW) needs to be modified to allow for KBR to provide 

contract security for their convoys moving government 

materiel on theater supply routes in Kuwait and Iraq. This 

change to authorization and utilization of contracted 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 of operations or task execution plan will 

be developed by KBR and accepted through the appropriate 

contracting and command channels. 

11 
4. We understand that there will be legal and perception 

concerns in the use of contracted security, but with 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 of action. 

(Ex. A-41 at 3-5) 

21. MG Speakes expected that Rock Island would prepare 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: "Despite my 

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 staff to ask for their help." 

(Tr. 8/55-56) 

22. On 26 September 2003, CJTF-7 Fragmentary Operations Order (FRAGO) 889 

described the current convoy security situation in pertinent part as follows: 

BA'ATH PARTY SECURITY FORCE ELEMENTS, 

RELIGIOUS EXTREMISTS/FOREIGN TERRORISTS, 

AND CRIMINAL ELEMENTS CONTINUE TO A TT ACK 

INDIVIDUAL OR SQUAD-SIZED UNITS WITH SMALL 

ARMS, RPGS, OR SNIPER FIRE AGAINST CONVOYS 

AND CRITICAL NODES IN THE CJTF-7 AOR. THERE 

CONTINUES TO BE NUMEROUS ATTACKS ALONG 

MSR TAMP A BETWEEN CSC NAVISTAR AND LSA 

ANACONDA .... IT IS ASSESSED THAT THESE SMALL 

GROUPS ... OF ARMED INDIVIDUALS WILL 

CONTINUE TO EMERGE. ATTACKS WILL CONTINUE 

DUE TO THE ACCESSIBILITY OF WEAPONS AND 

ABSENCE OF MILITARY PRESENCE IN THE SMALLER 

OUTLYING TOWNS. 

(Ex. A-44 at 1) 

23. On 24 November 2003, the commander of the Defense Contract Management 

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 convoy protection, and 

further stated in pertinent part: 

12 
As convoy security is contractually required to be provided 

by the government and be consistent with 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, especially when 

you consider that contractors cannot carry weapons. Their 

need for external security is greater [than] that of armed 

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 equipment to 

perform the missions assumed by KBR under the LOGCAP 

III contract, the Army has entered into a contract with KBR 

and is apparently unable to provide the requisite security and 

protection requirements established by either CFLCC or 

CJTF-7. If uncorrected this will significantly impact the fuel, 

line haul, mail, and Class 1 transportation mission areas 

supported under this contract. 

(Ex. A-56 at 2) 

24. On 19 December 2003, CJTF-7 FRAGO 1242, (KBR Convoy Security 

Procedures) stated in relevant part: 

ATTACKS AGAINST KELLOGG, BROWN AND ROOT 

(KBR) CONVOYS HAVE DRAMATICALLY 

INCREASED DURING THE MONTHS OF OCTOBER 

AND NOVEMBER. BASED UPON INTELLIGENCE 

ESTIMATES, THE THREAT OF FUTURE ATTACKS 

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 KBR CONVOYS HA VE BEEN THE RESULT 

OF IEDS AND SMALL ARMS FIRE. NINETY PERCENT 

OF ALL ATTACKS DIRECTED SPECIFICALLY 

AGAINST KBR CONVOYS HA VE OCCURRED ON MSR 

TAMPA. HOWEVER, SEGMENTS OF ASR JACKSON, 

MSR MICHIGAN, MSR MIL TON AND MSR MOBILE 

REMAIN EXTREMELY DANGEROUS TO KBR 

13 
CONVOYS. KBR CONVOYS REMAIN EXTREMELY 

VULNERABLE TO ATTACKS AT REST STOPS, REFUEL 

POINTS, TRAFFIC CHOKE POINTS, LOCATIONS OF 

VEHICLE BREAKDOWNS, HAND-OFF POINTS FOR 

CONVOY SECURITY ESCORTS, 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 of Iraq from 8 May 2003 to 30 June 2004,4 recognized the need for and 

authorized the presence of private security companies in Iraq in its Order Number 3 

(Revised) entitled "WEAPONS CONTROL." Section 3 of the order distinguished 

possession of firearms by "Private security firms" from possession of firearms by other 

"Groups" and "individuals" where it stated in pertinent part: 

Authorized Possession and Use of Firearms 

and Military Weapons 

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 of their 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 Interior to possess and use licensed Firearms and 

Military Weapons .. .in the course of their duties, 

including in public places. 

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 of Interior, as described in Section 5 of this 

Order, 

26. Lieutenant Colonel (L TC) 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 of convoys and commercial traffic throughout Iraq" and 

requested KBRS to provide an outline of the 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 December 2003 request. The substance of the 

reply was that: 

KBR has made the decision that the arming of truck drivers as 

a means of self defense to mitigate the dangers facing these 

personnel as they travel the roads of Iraq, 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 of providing route security. 

With the issuance of indemnification for KBR, and 

acceptance of the concept of operations (att. a) KBR stands 

ready to subcontract out the armed convoy escort for those 

trucks under KBR LOGCAP responsibility and control across 

the Major Supply Routes of Iraq. 

(Ex. A-74 at 8241) 

28. At hearing Ms. Watkins could not recall sending a written reply to the KBRS 

26 January 2004 proposal, but testified that "We discussed and verbally it was 

communicated back to KBR that we were not inclined to indemnify" (tr. 4/213-14). 

29. At hearing, L TC Walsh testified that he interpreted the 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 that time." However, he also 

testified that: "There was nothing [in the contract or task orders] that specifically said 

thou shalt not use private security companies." (Tr. 13/114) Moreover, when asked 

whether he thought the use of PSCs should have been allowed, he testified: 

15 
A. 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 

contractor to be able to either acquire protection through one 

of the, you know, we had an army of private contractors 

running around Iraq .... 

[Q.] Private security contractors? 

[A.] Yes .... 

A. You couldn't swing a dead cat without knocking 

down half a dozen guys walking around with M4s .... [T]o 

answer your question, yes, absolutely I thought that KBR 

should have been able to do that. 

(Tr. 13/175-76) 

30. On 22 February 2004, the KBRS Deputy Area Manager for V Corps North 

sent the following message to the troop unit that was responsible for force protection in 

that area: 

For your 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 after phone 

calls to get this 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 of the 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. 

It was 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 (I 0) trucks which are loaded and ready to go, when 

request for convoy was acquired today, KBR was told [the 

16 
government] 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 KBR by CJTF7, plus is causing the 

subcontractor to 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 OUR LINES OF 

COMMUNICATION (LOC). WITH THE 

SIMULTANEOUS ATTACKS ON SIX OVERPASSES ON 

10-12 APRIL 04, IT IS APP ARENT THE ENEMY HAS 

TAKEN HIS CAMPAIGN BEYOND HARASSMENT 

THROUGH DIRECT ACTION TO A DELIBERATE 

EFFORT FOCUSED ON THEATER LOC INTERDICTION. 

CURRENT SITUATION. ALONG MSRS LEADING INTO 

AND OUT OF BAGHDAD THERE HA VE BEEN 66 ATTACKS 

IN THE LAST WEEK, 49 ATTACKS ONE WEEK AGO, AND 

50 TWO WEEKS AGO. THERE HA VE BEEN 3 COMPLEX 

ATTACKS/ AMBUSHES IN LAST THREE DAYS RES UL TING 

IN THE DESTRUCTION OF A REFUELING 

CONVOY ... DESTRUCTION OF 4 OVERP ASSES ... AND THE 

AMBUSH OF A CONVOY .... THE MSRS BETWEEN 1) 

BAGHDAD AND BALLAD, 2) BAGHDAD AND KARBALA, 

AND 3) BAGHDAD AND FALLUJAH ARE EXTREMELY 

DANGEROUS AND CONTINUE TO BE HIGHLY 

SUSCEPTIBLE TO THREAT ACTIVITY RANGING FROM 

IEDS TO SMALL ARMS AND RPG ATTACKS/AMBUSHES. 

CURRENT ASSESSMENT: ATTACKS ARE MUCH 

HIGHER THIS WEEK AND UPWARD TREND IS LIKELY 

TO CONTINUE AS A RESULT OF THE CONTINUED 

17 
SADR/MAHDI MILITIA UNREST, AND OPERA TIO NS 

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 government has 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 (if any) convoy routes. They did run 

three convoys to Anaconda today. Only one made it. The 

other two got lost. They are now at an FOB. KBR may not 

run any convoys tomorrow if the 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 

never ran the route they are about to set out on. Based on my 

discussions with TTM' s PM .. .I went 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] stated that 

COSCOM was doing their part by providing a soldier for 

every third truck. He said it was the 15th MP's that were 

providing the escort not COSCOM and that the issue of 

getting lost was ... not a FP issue " ... they are all safe aren't 

they." I just want 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 with the 

threat. If they choose not to run tomorrow I would be hard 

pressed to disagree with them. Oh by the way, one of the 

trucks in one of the lost convoys got destroyed by an IED. 

(Ex. A-98 at 2-3) 

34. On 26 June 2004, CPA Memorandum Number 17 entitled "REGISTRATION 

REQUIREMENTS FOR PRIVATE SECURITY COMPANIES (PSC)" was issued to 

"establish a mechanism whereby all PSC will be registered, regulated and vetted and to 

update Iraqi law as it relates to PSC." The memorandum set forth detailed requirements 

and procedures for licensing, use of force, code of conduct, etc. (Ex. G-189) As of 

18 
25 November 2006, more than 100 PSCs were registered or in the process of being 

registered with the Iraq Ministry of Interior (MOI) (ex. A-154). 

3 5. Lieutenant General (L TG) Ricardo Sanchez was 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 if he had any comment on reports in the press that the Army Chief 

of Staff (General Shinseki) had advised Congress and the President that it would take 

200,000 men to occupy Iraq, L TG Sanchez testified: 

He was about right. And as you' 11 see from the end of my 

description here, it was, as a nation, America did not have 

sufficient capacity to accomplish the tasks that were assigned 

to the force that was on the ground during that time frame. 

(Tr. 5/175-76) When asked whether he 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 whether there were any areas in Iraq where it would have been 

acceptable to travel without armed escorts, L TG Sanchez testified: 

[F]rom the very beginning we established a requirement that 

there was an absolute minimum ... standard of force 

protection. We never wavered from that. There was never 

any segment of the country where we said this is benign 

enough, or it's peace time, completely peace time and there is 

not [sic] threat of attack. No, we never did that. 

(Tr. 6/102-03) 

37. With respect to the origin of the need for PSCs in the occupation of Iraq, 

L TG Sanchez testified: 

[T]he key factor is that DOD [Department of Defense] does 

not have the military capacity to secure all of the missions 

Ambassador Bremer hasY1 It's a massive requirement, 

and ... the numbers of forces that we have on the ground and 

the tremendous challenge that the country has to sustain that 

requirement over time. It's just not there. 

5 Ambassador Bremer was the Administrator of the CPA. 

19 
(Tr. 6/22, 67) 

... [B]ecause of the analysis that we have done in 

the ... fall and early winter of 2003, we very clearly 

established, unequivocally established within the command 

that the capacity of the force, the quantity of the force, and 

the demands of the mission both from a war fighting 

perspective and the growing requirement that we foresaw 

coming from the reconstruction mission, that we were not 

going to be able to continue to support that without private 

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 and possibly 20 PSCs 

operating in Iraq in March 2004 (tr. 6/25). Moreover, their presence in the battle space 

was not merely tolerated, it was welcomed by the combat troop commanders. 

L TG Sanchez testified: 

We allow them to come in, and we encourage them to come 

in at the different levels of command to get situational 

awareness briefings, to briefthem on what is available for 

them in the event that they get into a situation that they can't 

handle. We have quick reaction forces that are in every 

sector that can respond to an incident on the major routes that 

they're operating in . 

... [I]f a 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 your mission of feeding my 

fellow battalion across the street, go ahead and do it. 

We were not concerned with ... and commanders at that 

level were definitely not concerned with going up to the next 

higher headquarters to brigade or division and say hey, can I 

move this? What they were trying to do was actually get the 

mission done, and the reality of the complexity and the 

20 
density, and the demand that was on the ground at that time 

was basically for them to get the mission done. 

And this was not just in moving a box of tomatoes, 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 want to 

be doing was diverting their combat power to those kinds of 

missions, so if they saw the opportunity they- clearly, in my 

mind, they would have taken it. And I would not have 

objected to that if that 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 of Iraq (ex. A-113). On 4 July 2004 

CENTCOM issued a Warning Order (WARNORD) entitled "CONTRACTOR RISK 

MITIGATION" which stated in pertinent part: 

THIS IS AW ARNING ORDER (WARN ORD). 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 CONTRACTOR RISK MITIGATION IN IRAQ. 

PROVIDE ESTIMATE WITH COAS TO CENTCOM NLT 

13 JULY 2004 .... SITUATION. 1.A. A MAJOR USG 

CONTRACTOR IN IRAQ IS CONSIDERING 

SUSPENDING OPERA TIO NS DUE TO CONCERNS 

OVER THE SECURITY ENVIRONMENT 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 FOR CONTRACTORS, AS 

CONTRACTOR SECURITY IS NOT A SPECIFIED 

MILITARY MISSION. CONTRACTORS ARE 

PRIMARILY RESPONSIBLE FOR THEIR OWN 

SECURITY, AND CONTRACTOR SELF-PROTECTION 

WAS ASSUMED TO CONTINUE BEYOND THE 30 JUNE 

TRANSFER OF POWER. UNSCR 1546 AND THE 

21 
(Id.) 

ANNEXED LETTER BY IRAQ PRIME MINISTER 

ALLA WI GIVE THE MULTI-NATIONAL FORCES THE 

MANDATE TO CONTRIBUTE TO THE MAINTENANCE 

OF A SECURE AND STABLE ENVIRONMENT IN IRAQ. 

THIS INCLUDES THE AUTHORITY TO DEFEND USG 

CONTRACTORS. l .B. GIVEN THE CURRENT 

SECURITY ENVIRONMENT IN IRAQ, ALL USG 

AGENCIES MUST COORDINATE PROTECTION OF 

USG CONTRACTORS THROUGH A COMBINATION OF 

COALITION MILITARY FORCES, IRAQ SECURITY 

FORCES AND PRIVATE SECURITY COMPANIES. 

CONTRACTORS CONTINUE TO HA VE THEIR RIGHT 

OF SELF DEFENSE AND MAY, IN SOME 

CIRCUMSTANCES, ARRANGE FOR CONTRACTOR 

SECURITY THROUGH A SUBCONTRACT WITH A 

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 

of the "B" worksites. In these attacks, 5 employees were killed, 1 beaten, and 25 were 

missing or held captive. (Ex. G-232 at 5-9) 

41. From June through November 2004, L TC Sean O'Day was Commander, 

DCMA Northern Iraq, responsible for overseeing KBRS' performance of TO 59 in 

northern and western Iraq (tr. 12/8). On 29 August 2004, KBRS notified LTC 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 come back why were these guys using a 

private security detail instead of military escorts." (Ex. A-126 at 2, 4) At hearing, 

LTC O'Day testified: 

Security was always a big issue .... 

.. .It was that security thing that always held them 

[KBRS] up on bringing stuff in .... 

[T]here weren't enough military forces in Iraq to do 

everything that had to be done and convoy security for 

contractors as well as security for somebody like me to get 

22 
around because I didn't have 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. of this order recognized the 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 

MILITARY AND DOD PERSONNEL IN IRAQ 

PERFORMING SECURITY DUTIES IN SUPPORT OF 

MNFI, DEPARTMENT OF STATE (DOS), 

INTERNATIONAL DIPLOMA TIC MISSIONS, AND 

OTHER OPERATIONS VITAL TO THE FUTURE OF 

IRAQ. THEIR MISSIONS 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 

of the award fee for KBRS' performance of TO 59 from 13 June 2003 to 31 January 

2005. The overall performance rating was excellent. The determining official noted the 

arduous circumstances under which the task order was performed, including among 

others, "the attacks on and hijacking of your convoys" and "a lack of force protection to 

escort convoys with needed materials." (Ex. A-144 at 1-3) 

44. L TC Scott Sheridan succeeded L TC O'Day as Commander DCMA North 

from November 2004 to May 2005 (tr. 12/121-22, 124). At a KBRS briefing in 

December 2004, L TC 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 of TO 59 for the period 1 February to 

30 April 2005. The briefing slides included one for "Special Considerations" with two 

major bullet points-"Operating in a non-permissive environment" and "Availability of 

escorts." Two of the sub-bullets under non-permissive environment were "Loss of 

material-Hijacked, destroyed," and "Loss of employees, due to death/fear of losing 

life." (Ex. G-276 at 5) At hearing, when asked whether at any time during his tour of 

23 
duty in Iraq convoys were not attacked for some prolonged period of time, L TC Sheridan 

answered "I don't believe that ever happened while I was there" (tr. 12/167). 

KBRS Prime Contractor Use of PSCs 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 

himself in Iraq. (Tr. 6/123, 125, 129) At hearing, Mr. Peterson testified that his policy in 

Iraq was not to use private security on Contract 0007 "because the Army was supposed to 

provide our protection. And if we went willy-nilly off and 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 thought the 

contract prohibited the use of PSCs. (Tr. 6/185-87) 

4 7. After Mr. Peterson left Iraq, the senior personnel 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 October 2004, testified 

that: 

Yes, I knew that there was a private security guard contract to 

use for the senior managers 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. It was that that was not an allowable cost 

under the LOGCAP contract and that that would have to be 

something that LOGCAP would pay for. I'm sorry. That 

would be something that KBR would 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 of the LOGCAP contract. And I did relay that to 

Mary Wade, Reno Butler and to Paul Cerjan [ofKBRS]. 

(Tr. 11/88, 131) 

48. In its post-hearing brief, the government states that "Had Ms. Watkins been 

advised of KBRS' noncompliance, there is no question that she would have stopped it" 

(gov't br. at 128). COL Mills' testimony is that she was so advised (see finding 47). 

24 
The parties have not pointed to 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. 

Subcontractor Use of PSCs on Contract 0007-ESS 

49. Although the KBRS manager Mr. Peterson testified that he did not use private 

security for himself while he was in Iraq, he knew that KBRS subcontractors on Contract 

0007 were using PSCs and he did not object to their use. His testimony on this point was 

as follows: 

Q .... [D]id you know that KBR's subcontractors were 

using private security contractors under LOGCAP at the time 

you were there? 

A. Well, I'd say yes. I meant, they had to. I mean, 

they were dying off like flies. We had a hard time keeping 

subcontractors. 

Q. I mean, any specific knowledge ofKBR's 

subcontractors using PSCs, or is it just an inference? 

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

untenable timing ... .If they were not using PSCs, I have no 

idea how they did their job. None whatsoever. Because they 

couldn't have gone anywhere. 

So I can't point to me talking to a sub and say "Tell me 

about your subcontract with a PSC." That didn't 

happen .... But I knew in my own mind that they had to be 

using them, or they couldn't have performed. 

(Tr. 6/193-94) 

50. As to the availability of military convoys for subcontractor travel between 

sites within Iraq, Mr. Peterson testified: 

I myself, as the head [of LOGCAP] and a retired general 

officer, would be on an installation and ask the young 

lieutenant or captain who has got a convoy going to Arifjan or 

somewhere if I could pile in. They said, "I don't do 

25 
contractors." I said, "I'm Craig 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 -- if I got kicked out of 

convoys, then there 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 of troop dining facilities (DF A Cs) 

at specified sites in Iraq (app. supp. R4, tab 2). ESS had the largest PSC costs 

($19,234,932) of the 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 testified that ESS used PSCs for the 

entire period of its engagement in Iraq because the government force protection did not 

cover all of its security requirements. This testimony in pertinent part was as follows: 

[W]e pretty 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 of the country, because again, even in '05 and '06, 

the [government] convoy system would not let our NTVs 

[non-tactical vehicles] in the convoy. If you disclosed you're 

carrying cash, you're not getting in the convoy with cash, and 

it was a total cash economy the whole time we were there . 

.. .It became extremely difficult to move things 

between sites. We'd approach- we tried to use some military 

force protection on the site, and I personally talked to two or 

three commanders about this. We were told pretty 

consistently that the military is not there to babysit 

contractors. 

26 
I 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 our vehicle ... [S]aid they got a call to go on a mission 

and they took off in another direction .... [W]e dispatched, 

enormous cost, ... a PSD team to go and pick them up . 

. . . Another occasion happened whereby we were 

moving equipment ... we had two or three 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 our truck to pull over and 

wait. They had to leave, and they left. Never saw my truck 

again. It was just gone. The driver, .. .! don't know 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're not doing that. 

We can't do that. We're warfighters. Take care of 

yourselves." It's extremely difficult to move between sites, 

and it was a pretty regular need of ours to do that. ... 

Money, people, sometimes food .... [We] only carried 

two or three days' worth of food [at each dining facility site]. 

So if you don't have 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 bigger things to do than 

to move contractors. 

Q: Did there ever come a time when you simply gave 

up on seeking force protection? 

A. Honestly, no. It was in our interest. I mean this is 

a business, and if I didn't have to pay a PSD team, which 

were not cheap, and I could get it in a convoy, I'd rather use a 

convoy. It didn't always fit with our business unfortunately. 

27 
Either you didn't have the time to do it, or they 

wouldn't do it. But always, even up until middle of June of 

2006, when we were leaving, we tried to use convoys as 

much as we could. It's a cost saver for us. So but the 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 of its 

Iraq contracts in June 2006. The extent of the government force protection and ESS' use 

of PSCs during this period was described by Mr. Murray as follows: 

We started demobilizing contracts in January of 2006. We 

dropped a few of the Charlie sites in January, and all of the 

rest of our sites, seven or eight of them that were left, came to 

full term in June 2006. 

A couple of things happened in '06 when we ended 

our contracts. In some instances, the FOB [Forward 

Operating Base] was closing, going away, and we'd have to 

relocate. KBR would tell us move all of this stuff from this 

FOB to th[i]s FOB. There was no force protection for that. 

The military was leaving. They were either gone or on their 

way, and that brings up a point about static security as well. 

In those situations, two or three instances where the 

static security went away. The gates were gone. There's now 

an open installation, and we had people and assets on the 

ground. So we would put PSD teams on the ground, to keep 

us safe, and to move whatever it is that we had to move from 

A to B, either excess food or reefers. 

Q. Did you get any force protection for any of that 

demob operation? 

A. Unfortunately, we asked several times. On the 

demobing again, these military units were now departing. 

They were leaving, either going to another FOB or 

retrograding back to Kuwait or back to the U.S. We had no 

28 
force protection. There were times when the perimeter came 

down, the gates were open. 

All the military were leaving, and we had to put, at our 

cost again, these PSD teams on site, one to protect our little 

compound. Of course, we shrunk the perimeter down to 

protecting our tent, and then as we took things 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 of war structure. We used 

our own, our own guns to move those things across country. 

(Tr. 81158-60) 

54. For reasons of expediency in meeting the logistical requirements of the troops, 

most if not all of the KBRS subcontracts at issue in these appeals, including the ESS 

subcontract, were awarded on a negotiated fixed-price basis (tr. 15/83-84). Asked at 

hearing if ESS "made or lost money on your use of PSCs," Mr. Murray testified: 

Our use of private security, unequivocably [sic] was a losing 

proposition for us. We incurred more costs than we charged 

... KBR for .... [W]e had to estimate our usage when we're 

putting in a firm fixed price contract. We estimate what 

we're going to use. 

You know, the world changed on us, and we didn't 

have the ability to go back and change our price. Aside from 

the escalation of use, the escalation of the cost increased as 

well. The PSD team, instead of 750 now was $4,000 [per 

mission]. 

(Tr. 81168-69) 

55. The government states in its post-hearing reply brief that "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 of the NAVISTAR convoy matrices 

prove that the military moved food every day, proving Mr. Murray to be a liar."(Gov't 

reply br. at 18-19) We have carefully examined government counsel's accusation of 

perjury regarding the movement of food, and find it entirely without merit. There is no 

testimony by the witness on the cited transcript page that "the military did not move 

food." To the contrary, the witness's testimony on the two preceding pages regarding the 

military's daily priorities for NAVISTAR convoys from Kuwait into Iraq was that "Some 

29 
days 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 of movements of food by ESS 

between the dining facilities within Iraq when a dining facility had a shortage of food 

(tr. 8/157). The "NAVISTAR convoy matrices" cited by the government show only the 

movement of food on convoys from NAVISTAR on the Iraq/Kuwait border into Iraq. 

They do not show and do not purport to show the movement of food originating at one 

base in Iraq and delivered to another base in Iraq. (Exs. A-85, -115) 

56. The overall performance of the task order food service requirement by KBRS 

and its food service subcontractors was succinctly summarized by the testimony of two 

government witnesses. MG Speakes, the Deputy Commanding General of CFLCC from 

June 2003 to July 2004 testified that he made unannounced visits and ate at the KBRS 

subcontractor DFACs "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 of materials 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 border had to be submitted 

to and approved by the U.S. Army Movement Control Battalion (MCB). The primary 

method of movement was in a military escorted convoy. However, if a place in a military 

escorted convoy was not available, or if the 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 on border crossings into 

Iraq to MAJ Grady Sessoms, her designated point of contact 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) At hearing Ms. Smith 

testified that she received no response from MAJ Sessoms then or at any other time 

telling her that use of private security for convoys into Iraq was not allowed (tr. 7 /46-49). 

59. LTG Jack Stultz was deployed in Kuwait and Iraq as Commander of the 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 of the use of PSCs at the border crossing described by Ms. Smith 

(tr. 14/48-49). However, we find the testimony of Ms. Smith and the contemporaneous 

30 
documentation in exhibits A-85, A-86 and A-115 persuasive as to the actual practice at 

the NAVISTAR border crossing. Moreover, we find that her 24 March 2004 

memorandum sent to MAJ Sessoms (ex. A-86) was sufficient to put the 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 government was also on notice of the use of PSCs by KBRS 

subcontractors under Contract 0007 when on 10 June 2005, an ACO consented to the 

award of a food services subcontract with an express pricing justification in the consent 

documents stating that maintenance personnel would be moved by "Air transportation 

instead of land transportation ... [and] then using the services of a 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 other things, this modification 

added the DF ARS 252.225-7040, CONTRACTOR PERSONNEL SUPPORTING A FORCE 

DEPLOYED OUTSIDE THE UNITED STATES (JUN 2005) clause (hereinafter "the DFARS 

7040 (JUN 2005) clause") to the contract (id. at 134 ). Section G)( 1) of the clause stated: 

G) Weapons. 

( 1) If the Contractor requests that its personnel 

performing in the theater of operations be authorized to carry 

weapons, the request shall be made through the Contracting 

Officer to the Combatant Commander. The Combatant 

Commander will determine whether to authorize in-theater 

contractor personnel to carry weapons and what weapons will 

be allowed. 

(R4, tab 1 at 137-39) 

62. The government contends that section G)(l) of the DFARS 7040 clause 

required KBRS to obtain Theater Commander authorization for use of PSCs in 

performing Contract 0007 (gov't br. at 110-11). We find no reference to PSCs or 

contracts for security services in the DF ARS 7040 (JUN 2005) clause that was added to 

Contract 0007 by Modification No. P00012. The DFARS 252.225-7040, CONTRACTOR 

PERSONNEL AUTHORIZED TO ACCOMPANY U.S. ARMED FORCES DEPLOYED OUTSIDE THE 

UNITED ST A TES (JUN 2006) clause at section G)( 1) does distinguish between arming 

contractor personnel and arming personnel under a contract or subcontract for security 

from a professional PSC and expressly applies the authorization requirement to both. 

31 
There is no evidence, however, that the 2006 version of the DF ARS 7040 clause was 

incorporated by modification into Contract 0007 or the task orders thereunder at any time 

relevant to these appeals. 

CENTCOM General Orders 

63. Special Provision H-13 of Contract 0007 required among other things that "all 

personnel hired by or for the contractor will comply with all guidance, instructions and 

general orders ... issued by the Theater Commander or his/her representative" (see finding 

8). CENTCOM General Order No. IA (GO-IA) dated I 9 December 2000 was entitled: 

"Prohibited Activities for U.S. Department of Defense Personnel Present Within the 

United States Central Command (USCENTCOM) AOR." The stated purpose of the 

order was: "To identify conduct that is prejudicial to the maintenance of good order and 

discipline of all forces in the USCENTCOM AOR." Among the prohibitions in the order 

was paragraph 2.a. which stated: "Purchase, possession, use or sale of privately owned 

firearms, ammunition, explosives, or the introduction of these items into the 

USCENTCOM AOR." The order concluded with a waiver provision stating: "Authority 

to waive or modify the prohibitions of Paragraph 2 of this General Order is delegated to 

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 staff officer at CENTCOM responsible for reviewing applications for 

waiver of paragraph 2.a. in GO-IA. At hearing, CDR O'Donnell testified that there was 

nothing in GO-IA about contracted security (tr. 9/I I5). He further testified that, in 

August 2003, there were no theater written policies or procedures 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 of PS Cs in Iraq and 

Afghanistan. This policy/general order was addressed to about 60 Department of 

Defense and other government agencies, including the DCMA, but not to KBRS. The 

policy/general order stated in pertinent part: 

2.c CONTRACT SECURITY ARMING AND USE OF 

PRIVATE SECURITY COMPANIES (PSC) IN IRAQ AND 

AFGHANISTAN. 

2.c. I. THE DECISION TO ARM DOD CIVILIAN 

PERSONNEL, DOD CONTRACTOR EMPLOYEES OR 

AUTHORIZE THE USE OF CONTRACT SECURITY/PSC 

WITHIN IRAQ OR AFGHANISTAN TO PERFORM 

32 
SECURITY SERVICES SHALL BE DECIDED ON A 

CASE-BY-CASE BASIS PER THE POLICY PROVIDED 

HEREIN. ALL REQUESTS SHALL BE SUBMITTED TO 

THE COGNIZANT US COMMANDER PER PARA 2.D., 

AND SHALL COMPLY WITH PARAGRAPH 3.F. 

BELOW. A REQUIREMENT TO COMPLY WITH THIS 

PROCEDURE SHALL BE INCLUDED IN ALL EXISTING 

CONTRACTS (WITHIN 90 DAYS OF THE EFFECTIVE 

DATE OF THIS POLICY OR AS SOON AS 

PRACTICABLE) .... 

11. THIS POLICY IS EFFECTIVE IMMEDIATELY AND 

SHALL BE CONSIDERED A LAWFUL GENERAL ORDER. 

VIOLATION OF THIS GENERAL ORDER MAY SUBJECT 

AN OFFENDER TO ADMINISTRATIVE OR DISCIPLINARY 

ACTION UNDER THE UCMJ, CIVILIAN PERSONNEL 

REGULATIONS, CONTRACT TERMS OR CRIMINAL 

PROSECUTION UNDER US OR HOST-NATION LAW. 

(Ex. G-328 at 1, 2, 6, 7; tr. 22/22) 

66. KBRS had no notice of the 23 December 2005 CENTCOM Policy 

Statement/General Order until it received a Rock Island PCO letter dated 28 December 

2006 attaching a modification of that 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 contract was 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 of Defense Personnel Present within 

the United States Central Command (USCENTCOM) Area of Responsibility (AOR)." 

GO-I B expressly superseded GO-I A 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 of PSCs to 

supplement government force protection. (Ex. G-5 at 13-I 8) 

68. From September through December 2006, the Special Inspector General for 

Iraq Reconstruction conducted a survey of the security costs being incurred at that time 

by the contractors performing the reconstruction work. The total Iraq Relief and 

Reconstruction Funds (IRRF) spent on security costs as a percentage of total contract 

costs for each of the nine contractors responding to the survey ranged from a low of 7.6% 

33 
to 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 

of PSCs 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)% of the 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 of the same date, 

the PCO and DCAA notified KBRS that they were respectively "adjusting payments" 

(PCO) and "suspending" costs (DCAA) in the amount of$19,652,815 associated with 

ESS' use of PSCs 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 of Costs of Armed Private Force Protection Services Associated with 

[Contract 0007]." The report stated that subcontractor billings 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 government under Contract 0007 in those years also 

included $20,3 71, 798 of indirect allocations of private security costs incurred by the 

KBRS Middle East Regional Office (MERO). The total amount of the allegedly 

unallowable private security costs in the 29 August 2007 DCAA report was $99,678,695. 

(R4, tab 58 at 1, 5, 7-11) 

6 The "Estimated amount of security 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 subcontract prices of$231,444,266.18 (R4, 

tab 60 at 16). 

7 The DCAA calculation of the subcontractor PSC costs was based on the estimated PSC 

costs provided by 21 subcontractors which amounted to 1. 7 8 percent of their total 

subcontract billings to KBRS. However, this estimated percentage of the PSC 

costs of 21 subcontractors was also applied by DCAA to the total billings of 

another 44 subcontractors who had not provided any estimates of their PSC costs. 

The result of this added calculation raised the government claim for the 

subcontractor PSC costs by $35,317,266. (R4, tab 58 at 7-10) 

34 
72. On 22 October 2007, KBRS submitted a certified claim to the Rock Island 

PCO under the Contract Disputes Act of 1978 (CDA), 4I U.S.C. §§ 7I01-7109, for 

payment of the $I9,652,8I5 withheld by the government in the PCO's letter of 

6 February 2007 and the DCAA's Form I, No. I27, of the same date (R4, tab 59). The 

PCO did not respond as required by the CDA with either a decision within 60 days of 

receipt of the claim or with 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 of PSCs charged to Contract 0007. The amount in the Form I, No. I27 

Revision-I, was the total estimated direct and indirect private 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 that period. (ASBCA Nos. 57I5I, 

57327, R4, tab 72 at 3-9) 

74. The total PSC security cost alleged in the DCAA Form I, No. I27 Revision-I, 

($I03,397,086) was 2.32% of the related subcontractor total billings ($4,449,I52,680). 

As a percentage of total billings, the PSC security costs of KBRS and its subcontractors 

as alleged in the DCAA Form I, No. 127 Revision-I, (2.32%) were substantially lower 

than the PSC security costs of the Iraq Reconstruction contractors (I2.5%) that were 

performing in substantially the same security situation at the same period of time (see 

finding 68). On this evidence, we find that the alleged PSC security costs of KBRS 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 September 2009, the government withheld 

the entire amount of that invoice consistent with a recommendation in the DCAA Form 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 I 9 March 2010. The appeal was docketed as ASBCA 

No. 5715 I. (Compl. and answer iii! 4-6) 

76. In March 20IO, the government withheld an additional $2,I26,53 I from 

payments due under Contract 0007 for further recoupment of the disapproved costs in the 

DCAA Form 1, No. I27 Revision-I. On 16 June 20IO, KBRS submitted a certified CDA 

claim for the remainder of the September 2009 withholding ($1,147,935.49) and the full 

amount of the March 20IO withholding ($2,126,53 I) for a total claimed amount of 

$3,274,466.49. (ASBCA No. 57327, compl. and answer iii! 26-27) When the PCO failed 

35 
to 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 ASBCA No. 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 of Private Armed 

Security on LOGCAP III Contract DAAA09-02-D-0007." The final decision found 

unallowable $55,620,591.55 of the $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 $11,561,567.558 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 brief that it is entitled to judgment on all of the appeals 

because the contracting officer's final decision of 30 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 CDA requires that 

"Each claim by the Federal Government against a contractor relating to a contract shall 

be the subject of a written decision by the contracting officer." 41 U.S.C. § 7103(a)(3). 

The Act also requires that "each claim by the Federal Government against a contractor 

relating to a contract shall be submitted within 6 years after the accrual of the claim." 

41 U.S.C. § 7103(a)(4)(A). "Accrual of a claim" is defined in FAR 33.201 in pertinent 

part as: "the date when all events, that fix the alleged liability of either the Government 

or the contractor and permit assertion of the claim, were known or should have been 

known." 

A government claim for recovery of payments made for allegedly unallowable 

costs of KBRS and its subcontractors using PSCs in connection with their performance of 

Contract 0007 accrued no later than 10 June 2005. Raytheon Missile Systems, ASBCA 

No. 58011, 13 BCA 'i! 35,241at173,017-018. Prior to that date, on 29 August 2004, 

LTC O'Day knew that PSCs were being used instead of military escorts (finding 41). 

Prior to 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 after the stated deductions is $11,561,567.06. 

36 
expressly advised that PSCs were being used to transport personnel to their respect sites 

in Iraq (finding 60). 

On these findings, the contracting officer's final decision of 30 January 2013 was 

untimely and thus invalid and a nullity. We give it no further consideration and dismiss 

the appeal in ASBCA No. 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 previously paid the withheld amounts to KBRS for 

the costs of PSCs that it now believed were unallowable under the terms of the contract. 

The government cites CENTCOM GO-IA made applicable to the contract by Special 

Provision H-13, the promise of government force protection in Special Provision H-I 6, 

and the "Weapons and Training" provisions in Special Provision H-21, as prohibiting the 

use of PSCs to supplement the government force protection without the authorization of 

the Theater (CENTCOM) commander for support that these costs were unallowable. 

In our 2 April 2012 decision denying appellant's motion for judgment on the 

pleadings, we specifically addressed Special Provisions H-13, H-16, H-2I and 

CENTCOM GO-IA. We held that none of these provisions categorically prohibited the 

use of PSCs or mandated Theater Commander authorization for their use. Kellogg Brown 

& Root Services, I 2-1 BCA ii 35,00 I at 172,0 I 6. After hearing and consideration of the 

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. United States, I42 F.3d I274, I276 (Fed. Cir. I998) (citing City of 

Tacoma v. United States, 3 I F.3d I I30, I I34 (Fed. Cir. I 994)). 9 

Subsequent to the award of the contract, CENTCOM recognized the use of PSCs 

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 W ARNO RD further stated that: 

"CONTRACTORS CONTINUE TO HA VE THEIR RIGHT OF SELF DEFENSE AND 

MAY, IN SOME CIRCUMSTANCES ARRANGE FOR CONTRACTOR SECURITY 

9 The government now contends that the KBRS proposal of26 January 2004 to 

subcontract for armed convoy security was an admission that the contract 

prohibited the use of PSCs without Theater Commander approval (gov't hr. 

at I22). We do not agree. The KBRS proposal was in response to a government 

request for a proposal to relieve the government from its contractual responsibility 

for protection of contractor convoys pursuant to the force protection clauses of the 

contract and task orders issued thereunder (findings 26-28). 

37 
WITH A PRIVATE SECURITY COMPANY." (See finding 39) Neither the 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 of PSCs (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 of PSCs 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 of the existence of the 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 of proof in establishing that a cost is unallowable 

by operation of a specific contract provision or regulation. Space Gateway Support, LLC, 

ASBCA No. 56592, 12-1BCAir34,94I at 171,792; Lockheed Martin Western 

Development Laboratories, ASBCA No. 51452, 02-1BCAir31,803 at I57,102. On this 

record, we find that the government has not carried its burden of proving that during the 

relevant period of performance (2003-2006) the terms of Contract 0007, the terms of the 

task orders issued thereunder, or the terms of any regulation prohibited the use of PSCs to 

supplement government force protection without the case-by-case authorization of the 

CENTCOM Commander. Moreover, under Special Provision H-13, only the guidance, 

instructions and general orders issued by the CENTCOM theater commander or 

designated representative were contractually binding on Contract 0007. The guidance, 

instructions, and general orders of military headquarters subordinate to CENTCOM (such 

as MNF-1 and MNC-1), were not contractually binding under Special Provision H-13. 

A preponderance of the 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 protection provided to DoD civilians. A preponderance of the evidence 

also shows that the use of PSCs by KBRS and its subcontractors to supplement the 

government force protection during those years was reasonably necessary for 

accomplishment of the logistical support mission of Contract 0007 and the task orders 

thereunder. (See findings 13-60) A preponderance of the evidence further shows that the 

cost of PSC 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 of PSCs by KBRS and its subcontractors was reasonable as that term is defined in 

FAR 31.201-3(a) (see finding 8). 

The government argues in its opening brief that: "If the government ever failed to 

provide adequate force protection ... KBRS' remedy was delay" (gov't hr. at 13I). It 

repeats this argument in the conclusion of its reply brief where it states "absent 

permission to privately arm, the Contract solely permitted delay, which could be incurred 

38 
without cost to KBRS" (gov't reply 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 adopt the 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: "if you 

don't have 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." (See finding 52) In this regard, we note that Contract 0007 was a "rated" order 

under which a failure to deliver within the required time, could be subject to criminal 

penalties (id.). See Martin v. Halliburton, 618 F.3d 476, 480 (5th Cir. 2010). Moreover, 

the government's argument presupposes that PSCs were prohibited under the terms of the 

contract. We have found otherwise. 

We have carefully considered the 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 misrepresented to the government 

that it was not using PSCs; (ii) that the government relied upon that misrepresentation; 

and (iii) the government was materially prejudiced by that misrepresentation. Whatever 

damages the government may have suffered as a result of any misrepresentation by 

KBRS as to its use of PSCs, they are not represented by the costs of the PSCs that we 

have found allowable and which the government is contractually bound to reimburse. 

We also find no ')udicial estoppel" arising from the tort litigation cited by the 

government (gov't br. at 114, 132). There is no conflict between the KBRS position in 

the tort litigation that the government had the primary responsibility for force protection, 

and its position in the present litigation that the government had primary responsibility 

for force protection, but if it failed to carry out that responsibility, there was nothing in 

Contract 0007 that prohibited KBRS from hiring PSCs to the extent necessary to 

accomplish the logistical support mission. 

The government allegation of a 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't br. at 128). The KBRS MERO was a 

"forward" home office for a number of KBRS contracts in the Middle East. The KBRS 

PSC services for all of its Middle East contracts were procured by MERO and those 

services were not confined to Contract 0007 (tr. 23/17-20). The government bears the 

burden of proving CAS violations. Raytheon v. United States, No. 2013-5004, -5006, 

slip. op. at 18 (Fed. Cir. April 4, 2014). On this evidence, the government has failed to 

prove any CAS violation. 

As to the "political question" argument, the government states: "For KBRS to 

prevail, the Board must adjudge that the 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't br. at 146) We disagree. The "political question" doctrine 

39 
does not apply to the adjudication under the CDA of whether or not the government has 

met a contractual obligation to provide adequate force protection to the contractor. See 

Burnside-Ott Aviation 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 cannot be denied Board review."). In any event, there is no real question that 

the government did not provide force protection on a consistent basis. Our findings 

reveal this lack of force protection was a constant problem and the commanding generals 

testified they did not have the resources to provide it. 

We have also considered the government's numerous objections to the presiding 

judge's rulings limiting discovery, the number of documents, testimony of witnesses, the 

pages of brief, 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 of the 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 3 7 ,000 

plus documents were received in evidence. These proceedings had to end at some point 

and the limitations on discovery, witnesses, documents and pages of briefs did not violate 

this Board's rules or the discretion inherently granted to tribunals to control their 

proceedings. 

We sustain the appeals in ASBCA Nos. 56358, 57151and57327. In ASBCA 

No. 56358, KBRS is entitled to recover from the government $19,652,815 with interest 

under the CDA (41 U.S.C. § 7109(a)(l)) from 22 October 2007 until paid. In ASBCA 

No. 57151, KBRS is entitled to recover from the government $21,131,743 with interest 

from 20 October 2007 until paid. In ASBCA No. 57327, KBRS is entitled to 

10 The administrative burden of handling at hearing classified documents on tactical 

operations in Iraq occurring seven years to ten years ago (see gov't br., ex. 13) 

outweighed any perceived evidentiary benefit particularly since none of the 

documents were alleged by the government to be outcome determinative and 

involve the very question that the government alleges is a "political question," the 

amount of military force that was 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 

of Contract Appeals 

~AQμu~ MONROE E. FREEMAN, JR. 

Administrative Judge 

Armed Services Board 

of Contract Appeals 

I concur 

RICHARD SHACKLEFORD 

Administrative Judge 

Vice Chairman 

Armed Services Board 

of Contract Appeals 

I certify that the foregoing is a true copy of the Opinion and Decision of the 

Armed Services Board of Contract Appeals in ASBCA Nos. 56358, 57151, 57327, 

58559, Appeals of Kellogg Brown & Root Services, Inc., rendered in conformance with 

the Board's Charter. 

Dated: 

41 

JEFFREYD. GARDIN 

Recorder, Armed Services 

Board of Contract Appeals