KBR Subcontractor’s “Delay” Costs Rejected as Unreasonable by Federal Circuit, No Remand to Cure Defects

Stephanie M. Harden

In a September 1, 2020, ruling, the Federal Circuit addressed the reasonableness of subcontractor costs stemming from a government-caused delay under KBR’s LOGCAP contract in Iraq. This decision is important for contractors across all industries given the expected flood of COVID-19-related claims involving government-caused delays and/or idle time. The decision provides new guidance on what contractors must show to demonstrate the reasonableness of subcontractor costs.

The case involved a KBR subcontract to First Kuwaiti Co. of Kuwait (“First Kuwaiti”) to transport trailers into Iraq. The dissent (Judge Newman) explains the operational significance of expeditiously delivering these trailers: soldiers were sleeping in “abandoned schools, . . . tents, vehicles, the ground, or any other place soldiers could put a sleeping bag.” The Army tasked KBR with delivering more than 18,000 trailers to multiple locations in Iraq by Christmas 2003, a deadline which was important for both morale and tactical reasons. KBR, in turn, subcontracted to First Kuwaiti. Continue reading “KBR Subcontractor’s “Delay” Costs Rejected as Unreasonable by Federal Circuit, No Remand to Cure Defects”