11th Circuit Holds That Companies May Be Indefinitely Suspended on the Basis of an Indictment of an Affiliate; No Independent Showing of Wrongdoing Is Required
08 January 2014Government Contracts Alert
In a long awaited decision, the 11th Circuit Court of Appeals held that affiliates of Public Warehousing Company, K.S.C. (PW), which was indicted for fraud, may be suspended for periods in excess of 18 months even though they were not charged or otherwise implicated in the misconduct. Agility Defense & Government Services v. U.S. Dept. of Defense, 2013 WL 6850891 (11th Cir. Dec. 31, 2013). The decision overturned the district court’s decision finding it was improper to continue the suspensions of affiliated entities Agility Defense & Government Services (ADGS) and Agility International, Inc. (AI) beyond 18 months without instituting independent legal proceedings against the affiliates. Agility Defense and Government Services, Inc. v. U.S. Dept. of Defense, 2012 WL 2480484 (N.D. Ala., June 26, 2012). The 11th Circuit ruling means that affiliates of suspended entities may have little recourse beyond the limited due process afforded by the agency suspension and debarment process (i.e., the right to separate notice and an opportunity to respond).