U.S. v. Kellogg Brown & Root Services, Inc., 10-cv-530 (RCL) (D.D.C. 2012), presents the interesting case whether a defendant in an international litigation can or should counterclaim litigation, in this case against the U.S. government.  The U.S. sued KBR for over $100 million in allegedly false claims arising from the war in Iraq.  The government is seeking civil penalties and treble damages.  Once the government sued, the defendant had the choice to counterclaim, which it did here.  The government then moved to dismiss on a variety of grounds that arise with some frequency in international litigation. 

Of particular interest is the government’s invocation of the political question doctine, which the government said “bars judicial second-guessing of the military’s decision making as regards the provision of force protection in Iraq”.  As a result, argued the government, “KBR’s challenge to the military’s performance of its contractual obligation to provide force protection is nonjusticiable”.

The Court rejected these defenses. “Absent some discovery”, said the Court, “and more detailed briefing by the parties specifically concerning the political question problem, the Court cannot perform the ‘discriminating analysis’ required to resolve this problem”. See El Shifa Pharm. Indus. Co. v. U.S., 607 F.3d 836, 841 (D.C. Cir. 2010).

At the same time, the Court agreed that DKR’s failure to exhaust its administrative remedies.  Under the Contract Disputes Act, a contractor is required make a written claim against the government before going to court.  The Court did not address whether that rule applied in the case where there are time limits set on litigants to assert their counterclaims, including mandatory or compulsory counterclaims.

Also, the Court then went on to find that the contractor has failed to state any claim for relief because of the fatal failure to plead a claim for “recoupment” in the manner required by law.  The Court did not explain why it went through the earlier and extensive analysis in its decision if in fact the Court had determined that there was no cause of action alleged.