1. MARCH 13, 2014
This alert provides only general
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your Patton Boggs LLP attorney
or the authors listed below.
MARY BETH BOSCO
mbbosco@pattonboggs.com
ABU DHABI
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PattonBoggs.com Client Alert: New District Court Decision May Change How Government Contractors Conduct Internal Investigations 1
GOVERNMENT CONTRACTORS CLIENT ALERT
NEW DISTRICT COURT DECISION MAY
CHANGE HOW GOVERNMENT
CONTRACTORS CONDUCT INTERNAL
INVESTIGATIONS
Federal government contractors operate in an environment of mandatory self-
disclosure. For example, the Anti-Kickback Act requires contractors and
subcontractors to submit written reports when there is “reasonable grounds to
believe” a violation of the statute has occurred. Federal Acquisition Regulation
(FAR) 3.502-2(g). When they have “credible evidence” that there has been a
violation of federal criminal law involving fraud, conflicts of interest, bribery,
gratuities, or of the civil False Claims Act, contractors and subcontractors must
also submit a written disclosure. FAR 52.203-13(b)(3). Failure to do so subjects
contractors to potential debarment or suspension. FAR 3.1003(a)(2).
The FAR regulations implementing the latter disclosure requirement recognize
the interplay between conducting an internal company investigation, reporting to
the government, and maintaining the attorney/client and/or work-product
privilege. The associated contract clause expressly states that the disclosure
obligation does not require a contractor to waive either privilege, and even
promises that the government “will safeguard and treat information obtained
pursuant to the Contractor’s disclosure” as confidential. FAR 52.203-13(a)(2)(i)
and (b)(3)(ii).
Despite these words of comfort, the United States District Court for the District
of Columbia recently dealt a blow to companies’ ability to protect internal
corporate investigations undertaken in order to comply with the FAR’s
disclosure obligations. The case involves a qui tam relator’s allegations that
Kellogg Brown & Root (KBR) defrauded the Army through an improper
relationship with a subcontractor in Iraq. United States of America ex rel. Harry
Barko v. Halliburton Company, et al., Case No. 1:05-CV-1276 (D.C.D.C., Order
dated March 6, 2014). KBR had received “tips” about the subcontractor through

2. PattonBoggs.com Client Alert: New District Court Decision May Change How Government Contractors Conduct Internal Investigations 2
its Code of Business Conduct (COBC) program, and had investigated the tips utilizing its standard COBC processes.
According to KBR, the Director of the COBC program is an attorney, but the investigations are conducted by
company security investigators who are not lawyers.
The relator argued that the COBC investigations were not undertaken for the purpose of seeking legal advice, but
instead fulfilled the business and regulatory purposes of complying with KBR’s investigation and disclosure
obligations as a government contractor. The District Court agreed, stating that KBR had the burden of demonstrating
that the communication for which protection is sought must primarily be for the purpose of obtaining legal advice
and would not have occurred “but for” the purpose of receiving legal advice. The court determined that KBR
conducted the investigations into the treatment of the subcontractor “merely” to comply with its regulatory
requirements, and therefore distinguished the ensuing communications from the protected communications in the
Upjohn case:
KBR’s COBC policies merely implement these regulatory requirements.
The COBC investigation differs from the investigation conducted in
Upjohn. The COBC investigation was a routine corporate, and apparently
ongoing, compliance investigation required by regulatory law and corporate
policy. …As such, the COBC investigative materials do not meet the “but
for” test because the investigations would have been conducted regardless
of whether legal advice were sought.
Barko, at page 6.
In reaching this conclusion, the court noted that the COBC investigators did not advise the individuals being
interviewed that the interview’s purpose was to obtain legal advice and that the witness confidentiality agreements
provided to the interviewees did not mention legal advice. The court additionally cited the fact that the investigations
occurred long before the unsealing of the qui tam complaint as support for rejecting KBR’s work product claims.
KBR plans to file a writ of mandamus asking the D.C. Circuit to block release of the reports. The Barko decision,
however, represents a cautionary tale not just for government contractors, but for other regulated industries facing
disclosure obligations. Companies are well advised to review their internal investigation procedures, including their
litigation hold memoranda, their interview process statements, employee communication plans, interview procedures,
and hotline or tip resolution procedures, to address the vulnerabilities flagged by the Barko case.