UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

)

UNITED STATES OF AMERICA, )

)

Plaintiff, )

)

v. ) 10-cv-530 (RCL)

)

KELLOGG BROWN & ROOT SERVICES, INC. )

)

Defendant. )

)

MEMORANDUM OPINION

Before the Court is plaintiff’s Motion [61] to Dismiss KBR’s Counterclaim and to Strike 

KBR’s First Affirmative Defense. Upon consideration of the Motion, Opposition, Reply, the 

entire record, and the applicable law, the Court will grant plaintiff’s Motion, dismiss defendant’s 

first counterclaim without prejudice, and strike its first affirmative defense.

I. BACKGROUND

As is explained more fully in an earlier opinion of this Court, the United States sued 

Kellogg Brown & Root Services, Inc. (“KBR”) to recover civil penalties and treble damages on 

over $100 million in allegedly false claims arising from the war in Iraq. See U.S. v. Kellogg 

Brown & Root Servs., Inc., 800 F. Supp. 2d 143, 146–47 (D.D.C. 2011). The government 

alleges that, in violation of a logistical services contract awarded to KBR in 2001 (the “LOGCAP 

III” contract), the company knowingly billed the government for the cost of private security 

contractors in Iraq. Id. at 147. Early in the case, KBR filed a Motion to Dismiss, which the 

Court granted in part by dismissing the government’s claims for unjust enrichment and payment 

by mistake. Id. at 161. However, the Court denied KBR’s Motion as to the government’s False 

Claims Act and breach of contract claims. Id.
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In August 2011, shortly after the Court ruled on KBR’s Motion to Dismiss, KBR

answered the Complaint, asserting as an affirmative defense that the government materially 

breached the LOGCAP III contract by “failing to provide the contractually-required force 

protection.” Answer [58] ¶39, Aug. 17, 2011. KBR also brought a counterclaim for 

recoupment, “arising out of the Government’s failure to provide the requisite force protection, in 

breach of the Government’s obligations under LOGCAP III.” Id. ¶86. The United States then 

filed the instant Motion, asking the Court to dismiss KBR’s counterclaim and to strike its first 

affirmative defense. Pl.’s Mot. Dismiss [61] 1, Sept. 12, 2011. The government asserts a 

number of independent barriers to KBR’s counterclaim and affirmative defense, including 

judicial estoppel, the political question doctrine, failure to exhaust administrative remedies, and 

failure to state a claim. Pl.’s Mem. [61] 1–3.

II. ANALYSIS

The Court finds that KBR’s recoupment counterclaim must be dismissed for failure to 

exhaust administrative remedies and for failure to state a claim. The Court also finds that KBR’s

first affirmative defense of material breach must be struck as precluded by the LOGCAP III 

contract. However, anticipating that KBR may correct the jurisdictional and other defects in its 

counterclaim and seek leave to amend its answer to include a revised version of that claim, the 

Court will briefly address other arguments in the parties’ briefs, not necessary to the Court’s

decision, that may emerge again at a later stage of this case, should KBR amend its pleading.

A. KBR’s Counterclaim and First Affirmative Defense Are Not Barred by 

Judicial Estoppel.

The government’s principal argument in its Motion to Dismiss concerns the doctrine of 

judicial estoppel. Both KBR’s recoupment counterclaim and first affirmative defense of material 

breach depend upon the allegation that the government breached LOGCAP III by failing to
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provide adequate force protection. See Answer [58] ¶¶39, 45, 47, 50, 86, 88. The government

argues that KBR is “judicially estopped from disputing the adequacy of the military’s measures 

for the provision of force protection for KBR and its subcontractors in Iraq” based upon 

positions it has taken, allegedly inconsistent with its present position, in previous cases. Pl.’s 

Mem. [1] 1. The Court disagrees.

As is well known, judicial estoppel “is an equitable doctrine invoked by a court at its 

discretion.” New Hampshire v. Maine, 532 U.S. 742, 750 (2001) (quoting Russell v. Rolfs, 893 

F.2d 1033, 1037 (9th Cir. 1990)); see also Moses v. Howard Univ. Hosp., 606 F.3d 789, 792 

(D.C. Cir. 2010). Its purpose is to “protect the integrity of the judicial process” by “prohibiting 

parties from deliberately changing positions according to the exigencies of the moment.” New 

Hampshire, 532 U.S. at 750 (citations omitted). 

“[S]everal factors typically inform the decision whether to apply the doctrine in a 

particular case.” Id. 

(1) “First, a party’s later position must be ‘clearly inconsistent’ with its earlier 

position.” Id. 

(2) “Second, courts regularly inquire whether the party has succeeded in 

persuading a court to accept that party’s earlier position, so that judicial 

acceptance of an inconsistent position in a later proceedings would create ‘the 

perception that either the first or the second court was misled.’” Id. (citations 

omitted). 

(3) “A third consideration is whether the party seeking to assert an inconsistent 

position would derive an unfair advantage or impose an unfair detriment on 

the opposing party if not estopped.” 

Id. at 751. These factors are not “inflexible prerequisites,” and “[a]dditional considerations may 

inform the doctrine’s application in specific factual contexts.” Id.

In light of these factors, the Court finds that exercising its discretion to estop KBR from 

challenging the government’s performance of its force protection obligation in the LOGCAP III 
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contract would be inappropriate. KBR’s position in this litigation is not “clearly inconsistent”

with its position in the tort cases cited by the government, where KBR successfully argued that

the political question doctrine barred judicial scrutiny of the military’s judgments regarding the 

provision of force protection in wartime. See, e.g., Carmichael v. Kellogg, Brown & Root Servs., 

Inc., 572 F.3d 1271, 1282–83 (11th Cir. 2009); see also Pl.’s Ex. 1 [61-1] at 4–5). Carmichael, 

for example, involved negligence claims brought against KBR by the wife of a U.S. soldier who 

was seriously injured in Iraq while providing convoy protection. See Carmichael, 572 F.3d at 

1275–76. KBR persuaded both the district court and the court of appeals that since, at trial, the 

district could not adjudicate the plaintiff’s claims “without reexamining numerous core military 

decisions”—such as the convoy commander’s decisions concerning how fast the convoy would 

move and the route it would take—the case would unavoidably involve nonjusticiable political 

questions. Compare Pl.’s Ex. 2 [61-2] 31–32 with Carmichael, 572 F.3d at 1282–83. 

Furthermore, KBR successfully argued that the courts were incompetent to develop liability 

standards for the military. Compare Pl.’s Ex. 2 [61-2] 41–42 with Carmichael, 572 F.3d at 

1288–92. 

Although the government argues, correctly, that judicial estoppel is not precluded simply 

because the claims brought in previous litigation are different from the claims in this case, Pl.’s 

Reply [71] 4–5, the tort settings of KBR’s prior litigating positions nevertheless inform the 

question of whether, in this contract dispute, KBR is “playing fast and loose with the courts” by

arguing that this Court can review the military’s compliance with the force protection obligation 

in the contract. See New Hampshire, 532 U.S. at 750 (quoting Scarano v. Central R. Co., 203 

F.2d 510, 513 (3d Cir. 1953)). Both formally and functionally there are significant differences 

between using tort standards to challenge a military’s decision making and using contract
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standards to challenge the military’s performance of its obligations. Whereas the policies 

underlying tort law include the deterrence of tortious conduct, see Piamba Cortes v. Am.

Airlines, Inc., 177 F.3d 1272, 1302 (11th Cir. 1999), contract law focuses upon enforcement of 

“the bargain that the parties themselves freely made, as . . . expressed in their agreement.” 

Hershon v. Gibraltar Bldg. & Loan Ass’n, Inc., 864 F.2d 848, 853–54 (D.C. Cir. 1989). These 

differing policies result in important differences in the way tort and contract cases are litigated 

and decided. While, in a tort setting, the government’s conduct would be judged by reference to 

duties set out in the common law or arising from a statute, in a contract setting the relevant 

standards are defined by the parties in their contract, and the court’s role is to enforce their intent 

as evidenced by the language of the contract, as illuminated (if necessary) by extrinsic evidence. 

Therefore, KBR’s position now is not “clearly inconsistent” with its position before, since a 

persuasive argument can be made that the political question doctrine is more likely to pose a 

problem in tort cases involving the military, where second-guessing its decisions would be the 

name of the game, than in contract cases, where all the Court would be doing is holding the 

parties to their bargain. Given these differences, allowing KBR to litigate its counterclaim and 

assert its first affirmative defense will not create the perception that either this Court or the courts 

in the tort cases cited by the government have been misled by KBR, nor will it have any negative 

impact on the integrity of the judicial process. See New Hampshire, 532 U.S. at 750. Nor will 

KBR obtain an unfair advantage here as a result of its taking its current position on the 

justiciability of its counterclaim. Id. at 751. 

Accordingly, the Court rejects this aspect of the government’s Motion.
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B. The Government Has Failed to Demonstrate (at this Stage) that the 

Political Question Doctrine Bars KBR’s Counterclaim or First 

Affirmative Defense.

The government also contends that KBR’s position in the previously cited tort cases—

namely, that the political question doctrine bars judicial second-guessing of the military’s 

decision making as regards the provision of force protection in Iraq—is the correct position in 

this case, and that KBR’s challenge to the military’s performance of its contractual obligation to 

provide force protection is nonjusticiable. Pl.’s Mem. [61] 11. However, the Court finds that 

although this case may potentially generate nonjusticiable political questions, absent some 

discovery, and more detailed briefing by the parties specifically concerning the political question 

problem, the Court cannot perform the “discriminating analysis” required to resolve this 

problem. See El Shifa Pharm. Indus. Co. v. U.S., 607 F.3d 836, 841 (D.C. Cir. 2010).

The political question doctrine “excludes from judicial review those controversies which 

revolve around policy choices and value determinations constitutionally committed for resolution 

to the halls of Congress or the confines of the Executive Branch.” Japan Whaling Ass’n v. Am. 

Cetacean Soc’y, 478 U.S. 221, 230 (1986). The doctrine originates in Article III of the 

Constitution, which limits the judicial power to “cases” or “controversies.” U.S. Const. art. III; 

see also El Shifa, 607 F.3d at 840–41. No justiciable “controversy” exists when the issue to be 

adjudicated is “political” in nature. Massachusetts v. EPA, 549 U.S. 497, 516 (2007).

As outlined by the Supreme Court in Baker v. Carr, there are six circumstances in which 

an issue may present a political question: 

(1) “a textually demonstrable constitutional commitment of the issue to a 

coordinate political department”; 

(2) “a lack of judicially discoverable and manageable standards for resolving it”;

(3) “the impossibility of deciding without an initial policy determination of a kind 

clearly for nonjudicial discretion”; 
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(4) “the impossibility of a court’s undertaking independent resolution without 

expressing lack of the respect due coordinate branches of government”; 

(5) “an unusual need for unquestioning adherence to a political decision already 

made”; or 

(6) “the potentiality of embarrassment from multifarious pronouncements by 

various departments on one question.” 

Baker v. Carr, 369 U.S. 186, 217 (1962). To find that a political question exists, only one of 

these factors need be present, not all. El Shifa, 607 F.3d at 841. However, courts must conduct 

“a discriminating analysis of the particular question posed” in the “specific case” to determine 

whether the political question doctrine bars a claim. Id.

The government contends that the military’s decision making, as it relates to providing 

force protection for KBR in Iraq, involves “quintessential military judgments” in areas such as 

intelligence gathering and analysis, as well as the development of risk assessments and risk 

management strategies that consider the military’s limited resources and threat levels. Pl.’s 

Mem. [61] 12. The military’s judgments include, the government says, decisions to use less, or 

less visible, force to protect convoys and installations so as to minimize their perceived 

importance to the enemy. Id. The political question doctrine bars the courts from “secondguessing these military decisions and other judgments confided in the Executive and Legislative 

Branches by the Constitution.” Id. The government’s position is that KBR’s counterclaim and 

affirmative defense “necessarily require” the Court to second-guess such judgments. Id. at 13.

Contrary to the government’s position, the Court is unpersuaded at this time that KBR’s 

litigating position will “necessarily require” the Court to define force protection standards or 

adjudge the adequacy of the Army’s provision of force protection in Iraq according to some 

court-made standard. As stated above in the context of the Court’s discussion of judicial 

estoppel, the parties’ own contract provides a standard by which to judge the Army’s 
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performance of its force protection obligation, and to the extent that this provision is ambiguous 

parol evidence may be permitted to clarify the parties’ intent. In either case, the Court would be 

determining and enforcing the parties’ intent, not subjecting the military to standards drawn from 

the common law or elsewhere. However, discovery may reveal such conflicting accounts of the 

Army’s force protection obligation in LOGCAP III that the judicial process could amount to 

judicial identification and application of force protections standards, implicating the political 

question doctrine more directly.

Consequently, the Court declines at this time to rule on the applicability of the political 

question doctrine to KBR’s counterclaim and first affirmative defense. However, anticipating 

that KBR may remedy the defects presented below and seek leave to amend its Answer to 

include a similar claim in the future, the Court will, at a later point, following some discovery, 

invite briefing specifically on the question of the applicability of the political question doctrine to 

KBR’s counterclaim. 

C. The Court Lacks Jurisdiction Over KBR’s Counterclaim Because It 

Failed to Exhaust Its Administrative Remedies Before Filing Its 

Counterclaim.

While the Court declines to dismiss KBR’s counterclaim on judicial estoppel or political 

question grounds, it agrees with the government that it lacks jurisdiction over KBR’s

counterclaim because the company failed to exhaust its administrative remedies prior to filing it 

in this Court.

Congress, in passing the Contract Disputes Act (“CDA”), sought “to promote the 

efficient resolution of contract claims by relying in the first instance upon the contracting 

officer’s general experience in the administration of [g]overnment contracts and specific 

knowledge of the contract and parties in question.” Blinderman Const. Co. v. U.S., 39 Fed. Cl. 

529, 560 (1997) (citations omitted). Accordingly, “[u]nder the CDA, a contractor [must] take 
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recourse against the government’s alleged breach by submitting a written claim to the 

contracting officer for a final decision prior to commencing suit.” U.S. v. Intrados/Int’l Mgmt. 

Group, 277 F. Supp. 2d 55, 63 (D.D.C. 2003) (citing 41 U.S.C. § 605(a)). A federal court “does 

not have jurisdiction over a new claim or a claim of different scope that was not previously 

presented and certified to the contracting officer for decision.” Armour of Am. v. U.S., 69 Fed. 

Cl. 587, 590 (2006). A claim is “new” when it does not “arise from the same set of operative 

facts as the claim submitted to the contracting officer.” Id. (citations omitted). While the 

exhaustion requirement “does not require rigid adherence to the exact language of the original 

administrative CDA claim,” the claim must provide the contracting officer with adequate notice 

of the basis and amount of the claim. Scott Timber Co. v. U.S., 333 F.3d 1358, 1365 (Fed. Cir. 

2003). A failure to exhaust administrative remedies under the CDA requires dismissal of the 

claim. A&S Council Oil Co., Inc. v. Lader, 56 F.3d 234, 236 (D.C. Cir. 1995).

KBR responds to the government’s exhaustion argument by claiming that it “fil[ed] three 

claims that provided the contracting officer with . . . notice of the basis of [its] counterclaim . . . 

.” Def.’s Opp’n [69] 21. These claims, KBR argues, “informed the Army that it had breached 

the LOGCAP III Contract and provide notice of the amount of damages [KBR] was owed.” Id. 

However, “[o]ut of an abundance of caution,” KBR also filed (after filing its counterclaim) a 

“protective claim” with the Army. Id. In the event that the Court determines that KBR’s 

counterclaim was not exhausted, KBR suggests, the Court can stay the proceedings until the 

Army (as KBR expects) denies the claim. Id. at 22. 

As support for its contention that its counterclaim is properly exhausted, KBR has 

attached (under seal) claims submitted to the contracting officer in October 2007, October 2009, 

and June 2010. See Bhatia Decl. [69-2] 1. However, each of these claims, filed with the 
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contracting officer prior to KBR’s filing of its counterclaim in this Court in August 2011, 

concerns only a portion of the $103 million disapproved by the government in an August 2009 

notice to KBR. Since KBR’s recoupment counterclaim seeks an offset for everything the 

government is asking for in this lawsuit, Answer [58] ¶93, these certified claims for portions of 

that amount could not have put the contracting officer on notice of the “amount” of KBR’s 

claim, as is required. See Scott Timber, 333 F.3d at 1365. Accordingly, the Court lacks 

jurisdiction over KBR’s counterclaim, and the Court will dismiss it. However, this dismissal is 

without prejudice, and KBR can seek leave to amend its Answer and reassert its counterclaim

once the exhaustion requirement is satisfied. Also, in view of the fact that discovery on the 

government’s claims and KBR’s counterclaim should proceed simultaneously for the sake of 

efficiency and judicial economy, the Court will entertain motions from the parties, with fourteen 

days of this date, debating the advisability of a stay of the proceedings while KBR’s September 

29, 2011 claim is exhausted.

D. KBR Has Failed to State a Counterclaim Upon Which Relief Can Be 

Granted.

In addition to the jurisdictional defect identified above, the Court also concludes that 

KBR’s counterclaim is legally deficient because it fails to allege facts that would show KBR’s 

entitlement to relief.

A motion to dismiss is appropriate when a complaint fails “to state a claim upon which 

relief can be granted.” Fed. R. Civ. P. 12(b)(6). To overcome this hurdle, a complaint must 

contain “a short and plain statement of the claim showing that the pleader is entitled to relief, in 

order to give the defendant fair notice of what the . . . claim is and the grounds upon which it 

rests.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). The 

Court must “accept as true all of the factual allegations contained in the complaint,” Atherton v. 
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District of Columbia, 567 F.3d 672, 681 (D.C. Cir. 2009), and grant a plaintiff “the benefit of all 

inferences that can be derived from the facts alleged.” Kowal v. MCI Commc’ns Corp., 16 F.3d 

1271, 1276 (D.C. Cir. 1994). However, the Court may not “accept inferences drawn by plaintiffs 

if such inferences are unsupported by the facts set out in the complaint.” Id. In other words, 

“only a complaint that states a plausible claim for relief survives a motion to dismiss.” Ashcroft 

v. Iqbal, 129 S. Ct. 1937, 1950 (2009); see also Atherton, 567 F.3d at 681. 

Turning to KBR’s counterclaim for recoupment, recoupment is the right of a defendant to 

have the plaintiff’s claim reduced or eliminated because of the plaintiff’s breach of contract or 

duty in the same transaction. Intrados, 277 F. Supp. 2d at 57 n.1 (citing Reiter v. Cooper, 507 

U.S. 258, 264 (1993)). To establish such a claim, the defendant must meet three requirements: 

(1) “the claim must arise from the same transaction or occurrence as the government’s suit”; (2) 

“the relief sought must be of the same kind or nature as the [government’s] requested relief”; and 

(3) “any damages sought cannot exceed the amount sought by the government’s claim.” Id. at 60 

(citations omitted). 

The government argues that KBR’s recoupment counterclaim is inadequately pled 

because, while it alleges that the Army breached the LOGCAP III contract by “fail[ing] to 

provide the requisite force protection,” Answer [58] ¶86, nowhere does KBR allege “specifics” 

concerning “how the military’s force protection supposedly failed to meet the contractual 

guidelines.” Pl.’s Mem. [61] 15. Accordingly, the government says, KBR has failed to allege 

facts sufficient to give rise to a plausible claim that the Army breached the contract. Id. at 16. 

KBR counters that its counterclaim alleges specific facts indicating that Army officials conceded 

that the Army had breached its force protection obligation. Def.’s Opp’n [69] 23. 

The Court finds that KBR’s counterclaim fails to allege facts that would show a breach of 
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the specific standard set out in the contract, which obligates the Army to provide, not “adequate” 

force protection generally speaking, but “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.” Compl. [1] ¶21 (quoting Clause H16 of the LOGCAP III contract). KBR’s allegations regarding the “adequacy” of the military’s 

force protection, including alleged statements by military officials opining that the government 

wasn’t living up to its contractual obligation, do not by themselves suggest a violation of Clause 

H-16, absent specific allegations that KBR and its subcontractors did not receive the level of 

force protection set out in LOGCAP III—namely, force protection “commensurate” with that 

given by the military to other Department of Defense civilians in Iraq. KBR’s allegations would 

be sufficient if they contained facts suggesting that Department of Defense civilians were 

provided with a level of military force protection that was not commensurate with that provided 

to KBR, but its Answer contains no such allegations. Accordingly, KBR has not presented a 

plausible claim for recoupment based on breach of contract, and the Court will dismiss KBR’s 

counterclaim on this independent basis.

E. KBR’s First Affirmative Defense Is Legally Deficient.

The Court also finds that KBR’s first affirmative defense of material breach—based upon 

the government’s alleged failure to fulfill the force protection obligation in the contract—must

be struck, since the defense is precluded by the parties’ contract. 

Under the doctrine of prior material breach, a party may defend against a breach of 

contract claim on the ground that its performance was excused by the other party’s prior breach 

of the contract. See Long Island Bank, FSB v. U.S., 503 F.3d 1234, 1251 (Fed. Cir. 2007). 

However, in the government’s Motion, it argues that this defense fails as a matter of law because 
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the LOGCAP III contract obligates KBR to continue performance “irrespective of any 

governmental breach.” Pl.’s Mem. [61] 18. The government points to a regulation, which 

LOGCAP III incorporates, that requires KBR to “proceed diligently with performance . . . , 

pending final resolution of any request for relief, claim, appeal, or action arising under the 

contract . . . .” Id. at 20 (citing Pl.’s Ex. 6 [61-6] 39 and 48 C.F.R. § 52.233-1). Therefore, the 

government asserts, KBR’s defense is legally deficient because, under the LOGCAP III, any 

alleged breach by the government could not excuse KBR’s performance of its obligation to not 

use private armed security or permit its subcontractors to do so. Id. at 20. 

As noted by the government, Pl.’s Reply [71] 21, KBR fails to address this independent 

basis for striking its first affirmative defense, and so that argument is deemed conceded. See 

Buggs v. Powell, 293 F. Supp. 2d 135, 141 (D.D.C. 2003) (holding that a court may treat as 

conceded any arguments raised in a dispositive motion that the plaintiff fails to address in its

opposition). Therefore, pursuant to Federal Rule of Civil Procedure 12(f), the Court will strike 

KBR’s first affirmative defense of material breach.

III. CONCLUSION

For the reasons stated above, the Court will grant the government’s Motion [61] to 

Dismiss KBR’s Counterclaim and to Strike KBR’s First Affirmative Defense. Furthermore, the 

Court will order the parties to file, within fourteen (14) days of this date, motions addressing the 

appropriateness of a limited stay of the proceedings pending administrative exhaustion of KBR’s 

September 29, 2011 certified claim and the filing of an amended answer that passes muster under 

Rule 12(b)(6).

A separate Order consistent with this Memorandum Opinion shall issue this date.

Signed by Royce C. Lamberth, Chief Judge, on April 23, 2012.