On January 20, 2025, the President issued Executive Order Number 14169 (Executive Order), which imposed a 90-day pause on new obligations and disbursements of development assistance funds to foreign countries and implementing non-governmental organizations, international organizations, and contractors pending reviews of such programs. Similarly, in furtherance of the Executive Order, on January 24, 2025, the Secretary of State issued a Memorandum ordering a pause on all new obligations of foreign assistance funding pending an 85-day review of United States foreign assistance programs. The Secretary additionally ordered contracting and grant officers to issue stop-work orders for all existing foreign assistance awards. As a result of these actions, all USAID programs have been suspended, including those with funds already obligated and disbursed.
Earlier this week, a coalition of small and large businesses, nonprofits, and other organizations that receive federal grant money to perform foreign assistance work challenged the Executive Order in D.C. federal court and sought injunctive relief. Last night, Judge Amir H. Ali, of the United States District Court for the District of Columbia issued a temporary restraining order (TRO) that requires the Trump administration to restore funds for foreign aid programs. The TRO could have a significant impact on foreign aid organizations that are operating under stop-work orders and/or have had their awards terminated as a result of the Executive Order.
Specifically, the TRO enjoins top State Department and budget aides, including Secretary of State Marco Rubio, Peter Marocco, and Russell Vought, and the U.S. Department of State, USAID, and the Office of Management and Budget (OMB) from:
- Suspending, pausing, or otherwise preventing the obligation or disbursement of appropriated foreign-assistance funds in connection with any contracts, grants, cooperative agreements, loans, or other federal foreign assistance award that was in existence as of January 19, 2025; or
- Issuing, implementing, enforcing, or otherwise giving effect to terminations, suspensions, or stop-work orders in connection with any contracts, grants, cooperative agreements, loans, or other federal foreign assistance award that was in existence as of January 19, 2025.
In issuing the TRO, the Court explained that “the implementation of the blanket suspension is likely arbitrary and capricious[,]” and highlighted the Defendants’ failure to offer any evidence that they “had a rational reason for disregarding the massive reliance interests of the countless small and large businesses that would have to shutter programs or shutter their businesses altogether and furlough or lay off swaths of Americans in the process.”
The TRO requires the Defendants to take all steps necessary to effectuate the order and to provide written notice of the order to all recipients of existing contracts, grants, and cooperative agreements for foreign assistance. The parties will proceed in the litigation with an expedited briefing schedule to determine whether the TRO should be converted to a preliminary injunction, pending the ultimate outcome of the lawsuit.
This ruling may give contractors the ability to challenge the agency actions taken in response to the Executive Order and Memorandum, including freezes on funding and the issuance of stop-work orders and contract terminations.
If you have questions about the TRO, please contact Sam Finnerty or another member of PilieroMazza’s REAs, Claims, and Appeals or Government Contracts practice groups.
If you’re seeking practical insights to gain a competitive edge by understanding the government’s compliance requirements, tune into PilieroMazza’s podcasts: GovCon Live!, Clocking in with PilieroMazza, and Ex Rel. Radio.
