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Heightened Compliance Necessary For Affiliates

Posted by on May 18, 2014 at 12:30 AM

The ruling has come down in a case that many have been watching with trepidation, and it’s not good news for companies who are affiliated with an indicted parent. In a nutshell, all affiliate companies may be suspended indefinitely for the indictment of a parent. It is not necessary to show any wrongdoing on the part of the affiliate, it is enough that the parent was indicted. This decision, in Agility Defense and Government Services, Inc. v. U.S. Dept. of Defense, 2013 WL 6850891 (11th Cir. Dec 31, 2013), overturned a lower court decision holding that without independent legal proceedings against the particular affiliate, it was improper to continue indefinite suspension of that affiliate. This means that an affiliate suspended due to a parent’s indictment has recourse only so far as the agency’s due process rules. The agency has the authority, under FAR 9.403, to suspend affiliates if it chooses to do so, provided the affiliate receives notice, and has the opportunity to contest the action.


The take away from this decision is that affiliates or affiliates counsel should inquire early and often regarding compliance of all companies it is affiliated with.