In a landmark decision, Judge Ali has issued a preliminary injunction (PI) preventing the U.S. government from enforcing suspensions, stop-work orders, and terminations for foreign aid contracts issued between January 20 and February 13, 2025—the date on which Judge Ali issued a temporary restraining order in this case. The ruling is a major rebuke of the executive branch’s attempt to halt congressionally appropriated funds, reaffirming Congress’s constitutional spending authority. This ruling requires the government to resume payments and allow drawdowns for completed work prior to February 13th.
Key Rulings from Judge Ali
- The injunction prevents the government from unlawfully impounding congressionally allocated foreign aid funds.
- The government must process contractor and grantee payments at a rate of approximately 300 per day.
- The parties must file a status report by March 14th that apprises the Court of the Government’s compliance with this order and proposes a schedule for next steps in this lawsuit (the PI provides relief while the parties litigate the case on the merits)
- Judge Ali did not find it likely that terminations issued after February 13th are invalid.
While this ruling restores some funding, it does not block the government’s broader contract review process or the more recent mass terminations. It also leaves several critical questions unanswered, including:
- How does this ruling impact awards that were already terminated?
- What damages are available to contractors affected by the enjoined actions?
- How will the Government react to this ruling?
Next Steps for Contractors
- Act quickly: Contractors affected by this ruling should consider submitting outstanding invoices and drawdown requests promptly.
- Assess potential damages: Contractors impacted by the enjoined suspensions and terminations may grounds for additional damages.
- Seek expert guidance: Legal and accounting professionals can help maximize cost recovery, and their fees are allowable expenses in termination settlements.
This ruling is a significant victory for foreign assistance contractors, reinforcing that appropriated funds must be spent as Congress intended. However, the broader landscape of foreign aid contracting remains uncertain.
If you have questions about this ruling, please contact Sam Finnerty or another member of PilieroMazza’s REAs, Claims, and Appeals or Government Contracts practice groups.
