Army V Kbr Essay

888 Words Jun 29th, 2015 4 Pages
Company Overview
KBR is a global engineering, construction and services company supporting the energy, hydrocarbon, government services, and minerals, in industrial and commercial markets. Headquartered in Houston, TX and employees approximately 27,000 people around the world. According to KNR 2014 Press release for the fourth quarter and Annual 2014 financial results, the company had a $1.24B net loss and the company advised that is due to the restructuring of the company. The government service section of the company had a revenue of $111 million down from $126 million, while gross profit suffered a loss of 60 million. The loss according to the company was driven primarily by $46 million in charges relating to the legacy LogCAP III.
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Contract Reimbursement Allegations and Dispute Overview
The Dispute stems from the Army wanting KBR to now provide a fixed price on remaining work of the largest government services contract in US history: LogCAP III. AT the center of the dispute is Army Contracting officer Robert Egan who gave the ultimatum that KBR deliver a fixed price or no further communication will continue. The $38 Billion LOGCAP III is in its final stages and the 12 year old logistic contract has supported virtually all US military logistics operations in IRAQ. The army now want to revise the pricing terms to be fixed instead of cost-reimbursable, prompting KBR to file a lawsuit seeking to keep the existing pricing terms. At stake in the dispute is KBR states it estimates the contract will cost more than $500 million and take up to 13 years. The final decision could cost or save the government hundreds of millions of dollars in additional costs. This dispute has cause a big drift in the relationship between the Army and KBR one of the government biggest contractors.

Summary of Outcome of Dispute
In August of 2014 The Court of Federal Claims threw out KBR’s lawsuit, saying “KBR couldn’t bring the suit as bid protest because it doesn’t allege any competitive harm.” (Law360, n.d.). Judge Victor Wolski the assigned judge to the case agreed with the US, stating that since KBR is the only source for the closeout work

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