Better to Ask Permission than Forgiveness: ASBCA Denies Subcontract Payments
Client Alert | 1 min read | 01.18.19
On November 19, 2018, the ASBCA denied KBR’s claim for reimbursement of REA payments made to KBR’s subcontractor supplying trailers to the Army in Iraq. The cost-reimbursement task order permitted payment of “reasonable” allowable costs. KBR alleged that the government failed to perform the prime contract or, alternatively, was obligated to change the period of performance, and, thus, was responsible for the subcontractor’s delays and additional costs sought by the subcontractor’s REA and paid by KBR. The Board held that KBR was not entitled to reimbursement because the terms of the fixed-price subcontract did not obligate it to reimburse the additional costs, the decision to pay the subcontractor was a business decision KBR made, and the government did not object to any performance period extensions KBR granted to the subcontractor. The Board also found that the subcontractor’s REA costs were not substantiated, because they were not based on actual costs (although the subcontractor had this information), but on market estimates and delay models (which the Board found to be unreasonable). The Board rejected KBR’s argument that actual costs were not required because the subcontract was for commercial items, finding that the subcontract did not state it was for commercial items or contain commercial item clauses.
Contacts
Insights
Client Alert | 9 min read | 08.02.26
The 2026 ICC Arbitration Rules: A New Era
The International Chamber of Commerce (ICC) has released its revised 2026 Arbitration Rules (the 2026 Rules), which entered into force on 1 June 2026. The 2026 Rules apply to any arbitration commenced on or after 1 June 2026, unless the parties have agreed otherwise. The revisions were driven by increased competition among arbitral institutions—illustrated by recent amendments to the Singapore International Arbitration Centre (SIAC) Rules in August 2025 and the anticipated update to the London Court of International Arbitration (LCIA) Rules.
Client Alert | 4 min read | 07.31.26
Client Alert | 3 min read | 07.31.26
Client Alert | 5 min read | 07.28.26
Data Centers in the Crosshairs: The Plaintiffs' Bar Has Begun Filing New Claims Using Old Tricks



