The US District Court for the District of Columbia has just published an order ending IRD’s suspension, and that the suspension was void ab initio (as if it never happened). This is a tremendous development, as void ab initio is an unique remedy reserved for truly egregious conduct and the ruling erases the suspension from the records.

Specifically, the Judge ordered:

“1. Defendants are enjoined to declare plaintiffs’ suspension void ab initio within 1 (one) day of this order

Defendants are enjoined [to] restore plaintiffs’ presuspension access to advance funding within 3 (three) days for all contracts, grants, and agreements under which plaintiffs would be qualified for advance funding but for the now-voided suspension.”
And, (combining other line items in the ruling) USAID shall instruct contracting or agreement officers that they must consider the proposals as if IRD had never been suspended or declared ineligible, that the officers do not have discretion to disregard the proposal based on the “legally invalid and since-lifted suspension,” that the proposals must be considered just as any others, and the “reevaluat[ion]” of IRD present responsibility shall not factor into the analysis. Remarkably, USAID shall also contact certain other parties outside the agency and correct any misstatements about IRD’s status.

As a reminder, in late June, USAID determined that the agency had a conflict of interest pursuant to the 2013 NDAA because its Suspending and Debarring Official was also in USAID’s acquisition chain, contrary to law. After that finding, USAID decided to end IRD’s suspension temporarily and to conduct a separate review with a new SDO [ ]. However, according to public court filings, the review seems not to have progressed, with confusion in USAID concerning IRD’s status. That confusion apparently caused USAID contracting personnel to refuse to extend awards to IRD, and was compounded by a USAID Inspector General employee who referred to IRD in a fraud briefing in negative light, suggesting the exclusion from contracting/grants was ongoing.
This was a fascinating case with early lessons for both the agency and contractors/awardees.

For Contractors/Awardees who are suspended or proposed for debarment:

1) Keep track of statements made by the government concerning the company, and any predictions of outcomes of a present responsibility review – they may suggest improper prejudgment by the agency rather than an objective review.

2) Explain the robust remedial measures taken after wrongdoing and how it will protect the government. This may be the basis for a claim of improper inaction by the government.

3) Consider filing suit. These suits are high risk-high reward strategies, but this case may suggest new opportunities for companies/grant recipients to force the government to act when the exclusion extends unnecessarily long or the process is less-than-fair. This void ab initio ruling may change that calculus for some contractors, while the relatively limited reach of the NDAA conflict of interest analysis may make future application challenging.

For Agencies:

1) Watch award decisions made immediately before exclusions as they suggest present responsibility.

2) Political pressure cannot lead to debarment under the Kiewit line of cases. In this case, at a minimum there was an impression given that the exclusion decision followed a letter from Congress. That is not a proper reason for a suspension or proposed debarment.

3) Move expeditiously once a course of action is announced or facts change. Companies should not be kept in indefinite limbo.