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United States ex rel. McBride v. Halliburton Co.

United States Court of Appeals, District of Columbia Circuit

February 17, 2017

United States, ex rel. Julie McBride, and Julie McBride, Appellant
Halliburton Company, et al., Appellees Linda Warren and Denis Mayer, Appellees

          Argued October 21, 2016

         Appeal from the United States District Court for the District of Columbia (No. 1:05-cv-00828)

          Victor Aronoff Kubli argued the cause and filed the briefs for appellant.

          Joshua S. Johnson argued the cause for appellees Halliburton Company, et al. With him on the brief were John P. Elwood, Tirzah S. Lollar, and John M. Faust. Craig D. Margolis entered an appearance.

          Before: Kavanaugh and Wilkins, Circuit Judges, and Williams, Senior Circuit Judge.

          Wilkins Circuit Judge.

         Relator-Appellant Julie McBride ("McBride") appeals the District Court's grant of summary judgment in favor of Defendants-Appellees Halliburton Company; Kellogg Brown & Root, Inc.; Service Employees International Inc.; Kellogg Brown & Root Services, Inc.; and KBR Technical Services, Inc. (collectively, "KBR"). McBride asserted violations of the False Claims Act ("FCA"), 31 U.S.C. § 3729(a), based on KBR's alleged inflation of "headcount" data - which purported to track how many U.S. troops frequented KBR's recreation centers at certain camps in Iraq - from July 2004 to March 2005. The District Court granted summary judgment for KBR, concluding that McBride failed to offer evidence that any misrepresentation regarding headcount data (if one existed) was material to the Government's decision to pay KBR. We agree; and, taking into account the Supreme Court's intervening decision in Universal Health Services, Inc. v. United States ex rel. Escobar, 136 S.Ct. 1989 (2016), we affirm.



         Under the Logistics Civil Augmentation Program ("LOGCAP"), the U.S. Army contracts with private companies to provide a wide range of logistical services. In 2001, the Army awarded KBR the third contract issued under the LOGCAP program, known as "LOGCAP III."[1] LOGCAP III did not specify the particular work to be performed by KBR. Instead, KBR's contractual responsibilities were set forth in individual "Task Orders."

         The Task Orders used a cost-plus-award-fee structure, see 48 C.F.R. § 16.405-2, meaning KBR received reimbursement for the actual costs of the services provided, [2] as well as a "base fee" of 1% of the pre-determined estimated cost of performing the services under the Task Order. At the Government's discretion, KBR could also earn an "award fee" of up to 2% of the estimated cost based upon better than average performance.

         Shortly after the U.S. military's March 2003 invasion of Iraq, KBR began providing services under Task Order 59, which was effective from June 2003 to May 2005. Task Order 59 required KBR to provide a wide range of support services for U.S. troops, such as camp construction, power generation, dining facilities, potable and non-potable water services, fire protection, laundry, and - relevant here - morale, welfare, and recreation ("MWR") services. KBR performed MWR services by maintaining recreation centers where U.S. troops could exercise, play games, watch television, and use the internet, among other things. MWR services were a relatively small part of KBR's overall effort, representing about 1.5% of total costs incurred under Task Order 59.

         From November 2004 to March 2005, McBride worked for KBR as one of ten employees at the MWR facilities at Camp Fallujah (also known as Camp B-3) in Iraq. McBride's duties included ensuring that soldiers who entered the MWR facilities signed in to use them. According to McBride, during the night shift she had the additional responsibility of compiling "headcount" data which purported to reflect how many troops had used the facilities each day. McBride assembled this data in "Situation Reports" or "Sit Reps, " and distributed them to KBR personnel.

         This case centers on McBride's allegation that KBR inflated the headcount data, reflecting inaccurate headcount numbers for MWR facilities at Camp Fallujah and Camp Ar Ramadi (also known as Camp B-4) from July 2004 to March 2005. McBride alleges various ways in which the headcount data was inflated, such as counting soldiers each time they entered different parts of the facilities. McBride also alleges that KBR destroyed sign-in sheets to conceal the falsity of the headcount data, and that KBR stopped inflating headcounts after she reported the practice to her supervisors.

         Although McBride has not consistently articulated a precise theory, her basic contention is that KBR failed to disclose violations of its obligations to maintain accurate data to support ...

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