Pillsbury Winthrop Shaw Pittman

Affiliates of indicted contractor may face longer suspension

By John E Jensen and Alexander B Ginsberg

The US Court of Appeals for the Eleventh Circuit recently confirmed that the government has the ability to suspend ‘affiliates’ of a suspended contractor, even though there is no allegation that the affiliates themselves had done anything wrong.

The Eleventh Circuit then went on to hold that affiliates of a government contractor facing indictment could be suspended longer than the 18-month limit contained in the Federal Acquisition Regulation (FAR), again even though the affiliates themselves were not accused of wrongdoing. The 31 December 2013 decision reversed the holding of an Alabama federal district court, which had held the affiliates’ suspension past 18 months impermissible.

Agility Defense & Government Services Inc v US Department of Defense, No. 13–10757, 2013 WL 6850891 (11th Cir. Dec. 31, 2013), involved two US subsidiaries (collectively ‘Agility’) of Public Warehousing Company PWC, a Kuwaiti corporation that was suspended in 2009 after it was indicted on fraud charges related to US military food supply contracts. The government also suspended Agility on the basis of affiliation, relying on the following FAR provision…

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