In Agility Def. & Gov’t Servs. v. Dep’t of Def., the Eleventh Circuit reversed an Alabama district court ruling and held that under the Federal Acquisition Regulation (FAR), when the government suspends a contractor, it may suspend affiliates of that contractor for more than 18 months based solely on its affiliation with the contractor as long as legal proceedings have been initiated against the contractor, even if no legal proceedings are initiated against the affiliate.
In November 2009, the Defense Logistics Agency (“DLA”) suspended Public Warehousing Company, K.S.C. (“Public Warehousing”), the parent company of Agility Defense and Agility International, after it was indicted for allegedly defrauding the government in connection with a food supply contract. DLA also suspended Agility Defense and Agility International solely because they were affiliates of Public Warehousing Company, K.S.C (“Public Warehousing”). Both affiliates submitted written responses to DLA opposing their suspensions and arguing that neither affiliate was implicated in indictment of Public Warehousing and that both companies had sufficient compliance procedures in place. DLA rejected their requests to end the suspensions, and later rejected a second request to end the suspensions after Agility Defense presented evidence of improved compliance procedures and Agility International proposed a management buyout.
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