A U.S. district court judge ruled Tuesday that the U.S. Agency for International Development violated the law when in January it suspended nonprofit International Relief and Development for financial misconduct.
Judge Royce C. Lamberth ordered USAID not only to undo the suspension within 24 hours, but to also allow IRD “presuspension access” to any contracts it may have missed due to the suspension. Lamberth also ordered USAID to remove any potentially damaging mention of IRD’s suspension from the administrative record and issue corrections within three days.
Formerly one of USAID’s largest nonprofit contractors in Iraq and Afghanistan, IRD responded in June to the suspension by filing a lawsuit against USAID. The claim alleged the agency shirked suspension and debarment protocol by “completely ignoring” new oversight measures and years’ worth of disclosed financial documents, IRD President and CEO Roger Ervin told Devex in June.
At Monday’s hearing, Lamberth, speaking to USAID’s legal team, referred to the aid agency’s conduct toward IRD in court proceedings as “shooting yourselves in the foot,” according to court transcripts.
See more stories on IRD:
► USAID lifts IRD's suspension, says change is on the way
► Does IRD have a case against USAID?
► Suspended IRD responds to allegations that it mismanaged US funding
The judge ruled in favor of IRD’s claim that the suspension was in violation of the Administrative Procedure Act. He also deemed the suspension a violation of the National Defense Authorization Act, section 861 A, which states: “A suspension and debarment official under paragraph (1) may not report to or be subject to the supervision of the acquisition office or the Inspector General.”
“Let me put it this way,” Lamberth said, “To each contracting or agreement officer for the business opportunities identified, [USAID] shall issue an unqualified written statement that [it] shall consider IRD's proposal [as if IRD] had never been suspended or declared ineligible for award.”
In what one former suspension and debarment official called an unprecedented ruling and “the harshest indictment a judge could make of a government agency,” all mention of IRD’s suspension will be struck from the System for Award Management — a database established by the U.S. Congress and policymakers and maintained as a way for permit officials to evaluate an organization’s eligibility for grants or awards.
The judge also ordered USAID to identify all the nongovernmental organizations, contractors or other third parties that USAID or the Office of the Inspector General “made statements about IRD's suspension status” and to issue statements to those parties “with IRD’s advice and consent,” correcting any mention of past or potential suspension of IRD.
“This ruling is so significant that the historical data cannot exist anymore,” David Robbins, a former debarment official and government contracts department chair at Shulman Rogers LLC, told Devex.
While returning the nonprofit to presuspension status is “just not a realistic possibility for awards already made,” Robbins said the order would force current award managers to immediately retract claims that IRD isn’t eligible for awards due to the suspension.
Ervin told Devex IRD is most concerned about the more than a million beneficiaries impacted by the suspension.
“Three hundred-plus IRD employees lost their jobs and we incurred more than $10 million in costs, [as well as] hundreds of millions more lost award opportunities,” Ervin said. “But what is most damaging is the impact on our reputation as a competent implementor — we lost the public trust — because of a flawed, sloppy and misdirected process by the Bureau of Management.”
Ervin stressed however that IRD is “committed to moving ahead and innovating great solutions for the U.S. government and other donors. We intend to be around for a very long time.”
USAID did not respond to requests for comment in time for publication, and it remains unclear how the agency will meet the judge’s deadlines. A spokesman for IRD confirmed that as of Aug. 5, USAID had not yet contacted the nonprofit to consult on the wording of corrections, a stipulation of Lamberth’s order.
If USAID misses the deadlines, Robbins said the court could hold the agency in contempt or even impose fines or sanctions.
Stay tuned to Devex for more news and analysis of U.S. aid, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision makers — emailed to you FREE every business day.
About the author
Molly Andersmollyanders_dev
Molly Anders is a U.K. Correspondent for Devex. Based in London, she reports on development finance trends with a focus on British and European institutions. She is especially interested in evidence-based development and women’s economic empowerment, as well as innovative financing for the protection of migrants and refugees. Molly is a former Fulbright Scholar and studied Arabic in Syria, Jordan, Egypt and Morocco.
