On March 5, 2025, the United States Supreme Court (SCOTUS) upheld a federal judge’s order directing the government to pay nearly $2 Billion to federal contractors for completed foreign aid work.[1] This client alert identifies key takeaways from the SCOTUS denial and provides important considerations for government contractors whose payments were subject to executive freezes on foreign aid spending.
Background
As previously reported by PilieroMazza, President Trump issued Executive Order 14169, “Reevaluating and Realigning United States Foreign Aid,” which ordered agencies with foreign development assistance programs to immediately pause disbursements of funds to several groups, including federal contractors, for 90 days. This pause was set in place pending the review of such foreign aid programs. The order suspended the disbursement of funds to federal contractors working in foreign assistance, including those who completed their work and were awaiting payment.
In February 2025, a coalition of non-profits, businesses, and membership associations that received federal funding for foreign aid work filed suit at the U.S. District Court for the District of Columbia (District Court) against the U.S. Department of State and the U.S. Agency for International Development, among others. The suit challenged Executive Order 14169 and sought a court order to temporarily stop the effects of the executive order following the 90-day freeze on all funding congressionally allocated for foreign assistance.
District Court Order
The District Court responded by issuing a temporary restraining order on February 13 (as reported here) that required the Trump administration to restore funds for foreign aid programs. The order also stopped the executive branch from enforcing directives that suspended, paused, or otherwise prevented the disbursement of funds in connection with any federal foreign assistance award.
On February 25, the District Court ordered the government to issue payments by 11:59 pm on February 26 to contract and grant recipients who completed work before the temporary restraining order was issued.
Application to Overturn District Court Order
The government filed an application to SCOTUS on February 25, requesting that SCOTUS: (1) issue an administrative stay, pausing the government’s payment deadline and (2) ultimately, overturn the District Court’s February 25 order.
In response, Chief Justice John Roberts entered an administrative stay ahead of the 11:59 pm February 26 deadline, temporarily freezing the District Court’s order for the government to pay eligible contract and grant recipients, and referred the government’s application to vacate to SCOTUS.
SCOTUS Decision
In a 5-4 split decision of few words, SCOTUS denied the Trump administration’s application to vacate the District Court’s order. At the same time, SCOTUS noted that the application did not “challenge the Government’s obligation to follow that order,” and directed the District Court to “clarify what obligations the Government must fulfill to ensure compliance with the temporary restraining order, with due regard for the feasibility of any compliance timelines.”
In his dissent, joined by three other Justices, Justice Alito voiced concerns that the District Court’s order was not a mere temporary restraining order, and that the relief ordered was “too extreme a response.”
Takeaways
While SCOTUS’ decision directed the District Court to explain the scope of the funds the government has to pay, the decision does not order the government to immediately compensate all unpaid contractors or otherwise disturb Executive Order 14169. Nevertheless, it signals that the withholding of funds from contractors and grant recipients who have completed work is improper. It also demonstrates that federal courts are actively exercising checks on the executive branch in light of the slew of new executive orders.
________________
[1] Department of State v. AIDS Vaccine Advocacy Coalition
