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FEATURE COMMENT: How to Protect Internal Investigation Materials from Disclosure,” The Government Contractor, Vol. 56, No. 14

A bizarre and unexpected event occurred, as frequently happens, in our nation’s capital: A Federal court ordered defense contractor Kellogg Brown and Root Inc. (KBR) to produce internal investigative reports from its law department. Although the reports were prepared at the direction and supervision of counsel, initiated in response to employee complaints of contracting fraud, and kept under lock and key in a legal department file cabinet, the court concluded that they were not privileged and had to be produced to the relator in a qui tam False Claims Act case. Although the court in Barko may have misinterpreted the law, and the ruling may ultimately be vacated, the decision should be carefully considered, as changes may be necessary to the way in which companies—and not just Government contractors—conduct internal investigations to avoid the same fate. With some strategic, practical changes recommended below, companies can lay the foundation for protecting their internal investigation materials, e.g., witness interview summaries, from compelled disclosure. Barko’s Case—This saga began in 2005 when Barko filed an FCA action alleging that KBR overcharged the U.S. Army for services performed in Iraq under the Logistics Civil Augmentation Program (LOGCAP III) contract. In short, Barko alleged that KBR incurred excessive and fraudulent subcontractor costs on work performed by its subcontractor, Daoud and Partners (D&P), and then knowingly passed those costs on to the Army. Barko alleged, inter alia, that D&P—which was based in Jordan and was retained to build and staff laundry facilities, build wells, and construct a dormitory—received favoritism in the procurement process, overcharged KBR, and performed poorly. After conducting its investigation, the Government declined to intervene, and the qui tam case was unsealed in 2009.

Co-Authors: Andy Liu, Gail D. Zirkelbach, Jonathan Cone.

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