Trump administration says it has canceled most foreign aid contracts

By Brendan Pierson

(Reuters) -President Donald Trump's administration said in a court filing on Wednesday it has made final decisions terminating most U.S. foreign aid contracts and grants, while maintaining that it cannot meet a court-ordered 11:59 p.m. EST (0559 GMT) deadline to pay for past work.

The administration is cutting more than 90% of the U.S. Agency for International Development's foreign aid contracts and $60 billion in overall U.S. assistance around the world, the Associated Press reported, citing a separate internal memo.

The Wednesday filing in federal court in Washington, D.C., came in a pair of lawsuits brought by organizations that contract with or receive grants from USAID and the State Department, alleging that the agencies have illegally frozen all foreign aid payments.

The Trump administration has kept those payments largely frozen despite a February 13 temporary restraining order from U.S. District Judge Amir Ali that they be released, and multiple subsequent orders that the administration comply, culminating in the Wednesday night deadline.

Lawyers for the U.S. Justice Department have maintained that the administration has a right to suspend its agreements while it reviews them to determine whether they comply with administration policy.

That review is now complete, the administration said in its new filing. It said USAID has made final decisions to cancel nearly 5,800 awards, while keeping more than 500, and that the State Department has canceled about 4,100 awards, while keeping about 2,700.

An administration official said in an earlier court filing that grounds for terminating contracts include that they were related to diversity, equity, inclusion and accessibility efforts, or were deemed wasteful.

Trump has taken a hardline on programs related to diversity, equity and inclusion, signing an executive order in his second day in office last month directing federal agency chiefs to dismantle DEI policies.

The administration said on Wednesday that Secretary of State Marco Rubio had ordered that past-due invoices from the plaintiffs for work before January 24, when the payment freeze began, to be "expedited for payment without the ordinary vetting procedures, in a good-faith effort to comply" with Ali's order. It said that while some money would be paid on Wednesday, full payments could take weeks.

The filing comes as the administration has asked the D.C. Circuit Court of Appeals to put Ali's order on hold while the court hears the administration's appeal.

HALT UNDERMINES RELIEF EFFORTS

Trump, a Republican, ordered a 90-day pause on all foreign aid on his first day in office last month. That order, and ensuing stop-work orders halting USAID operations around the world, have jeopardized the delivery of life-saving food and medical aid, throwing global humanitarian relief efforts into chaos.

USAID administers some 60% of U.S. foreign assistance and disbursed $43.79 billion in fiscal 2023. According to a Congressional Research Service report this month, its workforce of 10,000, of which about two-thirds serves overseas, assisted about 130 countries.

Trump's administration on Sunday said it was placing all but leaders and critical staff at USAID on paid administrative leave and eliminating 1,600 positions. Employee unions have sued to challenge the cuts, though a judge last week allowed them to go ahead.

Ali, who was appointed by Trump's Democratic predecessor, former President Joe Biden, issued his temporary restraining order to prevent irreparable harm to the plaintiffs while he considers their claims. The plaintiffs allege Trump has exceeded his authority under federal law and the U.S. Constitution by effectively dismantling an independent agency and canceling spending authorized by Congress.

The plaintiffs have said the administration has not done anything to comply with the restraining order, and some have said they will shut down within days if they are not paid.

"The lengths that the government is willing to go to flout a court order, all for the goal of ending life-saving humanitarian assistance, is staggering," said Allison Zieve, a lawyer representing two plaintiffs, AIDS Vaccine Advocacy Coalition and Journalism Development Network, on Wednesday.

Other plaintiffs include international development company DAI Global and refugee assistance organization HIAS.

Both Ali and a Rhode Island federal judge in a separate case over a broader federal payment freeze have castigated the Trump administration for failing to follow their orders. The administration in both cases has maintained it is trying in good faith to interpret and comply with the orders.

(Reporting by Brendan Pierson in New York; additional reporting by Kanishka Singh; editing by Amy Stevens, Deepa Babington, Nick Zieminski, Alexia Garamfalvi, Rod Nickel and Leslie Adler)