Kbr Case

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KBR Inc. is a global company that provides Technology & Consulting, Engineering & Construction, and Government Services. They agreed to provide logistics support services during Operation Iraqi Freedom. They are to provide, install, operate, and maintain the dining facility services in Iraq. KBR Inc. argues that the U.S. Government was required to reimburse disputed costs despite its failure to establish that those costs were reasonable. The contract is primarily a cost-plus-award-fee arrangement. This type of contract pays the contractor for all allowable costs that were incurred plus additional fees based on the contractors performance. KBR subcontracted ABC International Group to build a Kirby style dining facility. This style consisted of prefabricated metal. The cost for constructing this facility was a fixed lump sum, and a monthly price quotation depending on headcount of the facility. ABC 's monthly cost for dining equipment, generators, lease-to purchase, labor…show more content…
The DCAA ( Defense Contracting Auditing Agency ) declined to reimburse their request. The costs were seemed to be excessive and not reasonable according to the FCC ( Federal Claims Court ). It was also determined by the FCC that the burden shall fall upon the contractor to show reimbursement cost is reasonable. The DCAA concluded that the proposed rates were three times the amount that eight similar subcontractors would have negotiated. The FCC upheld the decision to deny the reimbursement and permitted the U.S. Government to withhold nearly $30 million. The gross neglect of KBR Inc. to prove and provide that the reimbursement costs are reasonable must be explained in detail due to the nature of the contract. A practical business person would have declined or negotiated the new proposal in a different way. Since the excessive charges were not questioned by KBR, the request for the reimbursement cost should be denied due to lack of supplemental data. I find the outcome of the dispute

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