Executive Order Suspending Foreign Aid Roils State Department and USAID Grantees and Contractors
The first week of the second Trump Administration brought with it the issuance of dozens of executive orders (EO) that suggest far reaching implications for organizations large and small, for profit and non-profit alike. Although many details are still unclear and await further guidance, one EO, Reevaluating and Realigning United States Foreign Aid[1] (Foreign Assistance EO), has resulted in uncertainty and acute concern on the part of many business entities that contract with or are grantees of the US Department of State or US Agency for International Development (USAID) to administer the billions of dollars in foreign assistance appropriated annually by Congress.
The United States government has long relied upon the private sector to implement programs, deliver services, and conduct various activities to advance US foreign policy objectives. Citing the Foreign Assistance EO, over the past 96 hours the State Department and USAID have served on government contractors and grantees Notices of Suspension (Notices) directing an immediate stoppage of their work.
Contractors and grantees are scrambling to figure out how to respond to the Notices. Simultaneously, they are assessing the impact of an immediate cessation of certain business operations on the organizations themselves and, in some cases, the impact on the beneficiaries of the programs they administer. Organizations are confronting serious questions related to potential legal exposure from lower tier contractors, staff, and other vendors if they fail to meet obligations they have incurred under the awards.
Without much guidance beyond that contained in the bare bones Notices, contractors and grantees are having to make quick decisions, including whether to proceed with any work at all knowing that they may risk not being reimbursed for direct costs consistent with past practice. Organizations are also assessing the consequences, both moral and legal, of potentially furloughing, or worse, permanently laying off staff with essentially no notice.
Many organizations are halting programmatic activities and carefully combing through contracts and awards to identify allowable expenses for which they might be able to seek reimbursement. But in the absence of clear guidance on expenses and reimbursement, which may or may not be forthcoming, every decision an organization makes over these coming days and weeks will carry financial risk. For some organizations, the risks associated with these decisions could prove to be an existential dilemma.
None of these questions are easy to answer. And all of the decisions, to varying degrees, are tough. But there are some items worth thinking through right now to best position both contractors and grantees to navigate this situation as the dust continues to settle and we await clearer guidance from either the Administration or, what looks to be increasingly likely, from the courts.
Industry participants understand that the government generally has the ability to order temporary work stoppages for government contracts. The waters are murkier for grants, which are governed by a combination of federal and agency specific regulations, as well as each individual grant’s terms and conditions. Setting aside the propriety of the suspension instruction, the Notices state, “[e]ffective immediately upon receipt of this Notice of Suspension the Recipient must stop all work under the award(s) and not incur any new costs after the effective date cited above. The Recipient must cancel as many outstanding obligations as possible.” The reality of the situation is that organizations receiving this Notice must immediately begin to mitigate where possible. While it is always possible that the suspension will be rescinded and work will return to normal, contractors and grant recipients should not plan on that outcome.
As such, organizations are well advised to take stock of their operations. The questions worth asking include:
- What type of contracts/grants does the organization have? Are they fully funded with disbursed funds and can therefore operate over a longer period, or are they more at risk to funding disruptions? Are there any notice obligations on the organization to preserve rights such as through a government contract’s Changes Clause or specific grant terms and conditions?
- What agreements are in place with suppliers and subcontractors/subrecipients, and can they be temporarily suspended?
- What ability does the organization have to reassign staff or mitigate payroll costs during a suspension of work? Capable employment law counsel can assist with that assessment.
- What recordkeeping structure exists to track expense, cost, and performance impacts of the suspension? These records will be important to maximizing opportunities to recover from the government in the future.
In the future, organizations are likely to be required to explain how they attempted to mitigate damages and expenses resulting from the suspension of work. This will include proactively engaging and negotiating with business counterparties (i.e., contractors, subgrantees, lessors, etc.) to suspend operations or, in the event of a termination, to part ways on terms that reduce both financial costs and legal exposure for the organization.
Contractors and grantees that received Notices as described above are facing incredible pressures. Capable counsel can assist with navigating these difficult dynamics while maximizing the potential for recovery in the future.
The United States government has long relied upon the private sector to implement programs, deliver services, and conduct various activities to advance US foreign policy objectives. Citing the Foreign Assistance EO, over the past 96 hours the State Department and USAID have served on government contractors and grantees Notices of Suspension (Notices) directing an immediate stoppage of their work.
Contractors and grantees are scrambling to figure out how to respond to the Notices. Simultaneously, they are assessing the impact of an immediate cessation of certain business operations on the organizations themselves and, in some cases, the impact on the beneficiaries of the programs they administer. Organizations are confronting serious questions related to potential legal exposure from lower tier contractors, staff, and other vendors if they fail to meet obligations they have incurred under the awards.
Without much guidance beyond that contained in the bare bones Notices, contractors and grantees are having to make quick decisions, including whether to proceed with any work at all knowing that they may risk not being reimbursed for direct costs consistent with past practice. Organizations are also assessing the consequences, both moral and legal, of potentially furloughing, or worse, permanently laying off staff with essentially no notice.
Many organizations are halting programmatic activities and carefully combing through contracts and awards to identify allowable expenses for which they might be able to seek reimbursement. But in the absence of clear guidance on expenses and reimbursement, which may or may not be forthcoming, every decision an organization makes over these coming days and weeks will carry financial risk. For some organizations, the risks associated with these decisions could prove to be an existential dilemma.
None of these questions are easy to answer. And all of the decisions, to varying degrees, are tough. But there are some items worth thinking through right now to best position both contractors and grantees to navigate this situation as the dust continues to settle and we await clearer guidance from either the Administration or, what looks to be increasingly likely, from the courts.
Industry participants understand that the government generally has the ability to order temporary work stoppages for government contracts. The waters are murkier for grants, which are governed by a combination of federal and agency specific regulations, as well as each individual grant’s terms and conditions. Setting aside the propriety of the suspension instruction, the Notices state, “[e]ffective immediately upon receipt of this Notice of Suspension the Recipient must stop all work under the award(s) and not incur any new costs after the effective date cited above. The Recipient must cancel as many outstanding obligations as possible.” The reality of the situation is that organizations receiving this Notice must immediately begin to mitigate where possible. While it is always possible that the suspension will be rescinded and work will return to normal, contractors and grant recipients should not plan on that outcome.
As such, organizations are well advised to take stock of their operations. The questions worth asking include:
- What type of contracts/grants does the organization have? Are they fully funded with disbursed funds and can therefore operate over a longer period, or are they more at risk to funding disruptions? Are there any notice obligations on the organization to preserve rights such as through a government contract’s Changes Clause or specific grant terms and conditions?
- What agreements are in place with suppliers and subcontractors/subrecipients, and can they be temporarily suspended?
- What ability does the organization have to reassign staff or mitigate payroll costs during a suspension of work? Capable employment law counsel can assist with that assessment.
- What recordkeeping structure exists to track expense, cost, and performance impacts of the suspension? These records will be important to maximizing opportunities to recover from the government in the future.
In the future, organizations are likely to be required to explain how they attempted to mitigate damages and expenses resulting from the suspension of work. This will include proactively engaging and negotiating with business counterparties (i.e., contractors, subgrantees, lessors, etc.) to suspend operations or, in the event of a termination, to part ways on terms that reduce both financial costs and legal exposure for the organization.
Contractors and grantees that received Notices as described above are facing incredible pressures. Capable counsel can assist with navigating these difficult dynamics while maximizing the potential for recovery in the future.
Related Attorneys
Related Capabilities
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
The first week of the second Trump Administration brought with it the issuance of dozens of executive orders (EO) that suggest far reaching implications for organizations large and small, for profit and non-profit alike. Although many details are still unclear and await further guidance, one EO, Reevaluating and Realigning United States Foreign Aid[1] (Foreign Assistance EO), has resulted in uncertainty and acute concern on the part of many business entities that contract with or are grantees of the US Department of State or US Agency for International Development (USAID) to administer the billions of dollars in foreign assistance appropriated annually by Congress.
The United States government has long relied upon the private sector to implement programs, deliver services, and conduct various activities to advance US foreign policy objectives. Citing the Foreign Assistance EO, over the past 96 hours the State Department and USAID have served on government contractors and grantees Notices of Suspension (Notices) directing an immediate stoppage of their work.
Contractors and grantees are scrambling to figure out how to respond to the Notices. Simultaneously, they are assessing the impact of an immediate cessation of certain business operations on the organizations themselves and, in some cases, the impact on the beneficiaries of the programs they administer. Organizations are confronting serious questions related to potential legal exposure from lower tier contractors, staff, and other vendors if they fail to meet obligations they have incurred under the awards.
Without much guidance beyond that contained in the bare bones Notices, contractors and grantees are having to make quick decisions, including whether to proceed with any work at all knowing that they may risk not being reimbursed for direct costs consistent with past practice. Organizations are also assessing the consequences, both moral and legal, of potentially furloughing, or worse, permanently laying off staff with essentially no notice.
Many organizations are halting programmatic activities and carefully combing through contracts and awards to identify allowable expenses for which they might be able to seek reimbursement. But in the absence of clear guidance on expenses and reimbursement, which may or may not be forthcoming, every decision an organization makes over these coming days and weeks will carry financial risk. For some organizations, the risks associated with these decisions could prove to be an existential dilemma.
None of these questions are easy to answer. And all of the decisions, to varying degrees, are tough. But there are some items worth thinking through right now to best position both contractors and grantees to navigate this situation as the dust continues to settle and we await clearer guidance from either the Administration or, what looks to be increasingly likely, from the courts.
Industry participants understand that the government generally has the ability to order temporary work stoppages for government contracts. The waters are murkier for grants, which are governed by a combination of federal and agency specific regulations, as well as each individual grant’s terms and conditions. Setting aside the propriety of the suspension instruction, the Notices state, “[e]ffective immediately upon receipt of this Notice of Suspension the Recipient must stop all work under the award(s) and not incur any new costs after the effective date cited above. The Recipient must cancel as many outstanding obligations as possible.” The reality of the situation is that organizations receiving this Notice must immediately begin to mitigate where possible. While it is always possible that the suspension will be rescinded and work will return to normal, contractors and grant recipients should not plan on that outcome.
As such, organizations are well advised to take stock of their operations. The questions worth asking include:
- What type of contracts/grants does the organization have? Are they fully funded with disbursed funds and can therefore operate over a longer period, or are they more at risk to funding disruptions? Are there any notice obligations on the organization to preserve rights such as through a government contract’s Changes Clause or specific grant terms and conditions?
- What agreements are in place with suppliers and subcontractors/subrecipients, and can they be temporarily suspended?
- What ability does the organization have to reassign staff or mitigate payroll costs during a suspension of work? Capable employment law counsel can assist with that assessment.
- What recordkeeping structure exists to track expense, cost, and performance impacts of the suspension? These records will be important to maximizing opportunities to recover from the government in the future.
In the future, organizations are likely to be required to explain how they attempted to mitigate damages and expenses resulting from the suspension of work. This will include proactively engaging and negotiating with business counterparties (i.e., contractors, subgrantees, lessors, etc.) to suspend operations or, in the event of a termination, to part ways on terms that reduce both financial costs and legal exposure for the organization.
Contractors and grantees that received Notices as described above are facing incredible pressures. Capable counsel can assist with navigating these difficult dynamics while maximizing the potential for recovery in the future.
The United States government has long relied upon the private sector to implement programs, deliver services, and conduct various activities to advance US foreign policy objectives. Citing the Foreign Assistance EO, over the past 96 hours the State Department and USAID have served on government contractors and grantees Notices of Suspension (Notices) directing an immediate stoppage of their work.
Contractors and grantees are scrambling to figure out how to respond to the Notices. Simultaneously, they are assessing the impact of an immediate cessation of certain business operations on the organizations themselves and, in some cases, the impact on the beneficiaries of the programs they administer. Organizations are confronting serious questions related to potential legal exposure from lower tier contractors, staff, and other vendors if they fail to meet obligations they have incurred under the awards.
Without much guidance beyond that contained in the bare bones Notices, contractors and grantees are having to make quick decisions, including whether to proceed with any work at all knowing that they may risk not being reimbursed for direct costs consistent with past practice. Organizations are also assessing the consequences, both moral and legal, of potentially furloughing, or worse, permanently laying off staff with essentially no notice.
Many organizations are halting programmatic activities and carefully combing through contracts and awards to identify allowable expenses for which they might be able to seek reimbursement. But in the absence of clear guidance on expenses and reimbursement, which may or may not be forthcoming, every decision an organization makes over these coming days and weeks will carry financial risk. For some organizations, the risks associated with these decisions could prove to be an existential dilemma.
None of these questions are easy to answer. And all of the decisions, to varying degrees, are tough. But there are some items worth thinking through right now to best position both contractors and grantees to navigate this situation as the dust continues to settle and we await clearer guidance from either the Administration or, what looks to be increasingly likely, from the courts.
Industry participants understand that the government generally has the ability to order temporary work stoppages for government contracts. The waters are murkier for grants, which are governed by a combination of federal and agency specific regulations, as well as each individual grant’s terms and conditions. Setting aside the propriety of the suspension instruction, the Notices state, “[e]ffective immediately upon receipt of this Notice of Suspension the Recipient must stop all work under the award(s) and not incur any new costs after the effective date cited above. The Recipient must cancel as many outstanding obligations as possible.” The reality of the situation is that organizations receiving this Notice must immediately begin to mitigate where possible. While it is always possible that the suspension will be rescinded and work will return to normal, contractors and grant recipients should not plan on that outcome.
As such, organizations are well advised to take stock of their operations. The questions worth asking include:
- What type of contracts/grants does the organization have? Are they fully funded with disbursed funds and can therefore operate over a longer period, or are they more at risk to funding disruptions? Are there any notice obligations on the organization to preserve rights such as through a government contract’s Changes Clause or specific grant terms and conditions?
- What agreements are in place with suppliers and subcontractors/subrecipients, and can they be temporarily suspended?
- What ability does the organization have to reassign staff or mitigate payroll costs during a suspension of work? Capable employment law counsel can assist with that assessment.
- What recordkeeping structure exists to track expense, cost, and performance impacts of the suspension? These records will be important to maximizing opportunities to recover from the government in the future.
In the future, organizations are likely to be required to explain how they attempted to mitigate damages and expenses resulting from the suspension of work. This will include proactively engaging and negotiating with business counterparties (i.e., contractors, subgrantees, lessors, etc.) to suspend operations or, in the event of a termination, to part ways on terms that reduce both financial costs and legal exposure for the organization.
Contractors and grantees that received Notices as described above are facing incredible pressures. Capable counsel can assist with navigating these difficult dynamics while maximizing the potential for recovery in the future.
Related Attorneys
Related Capabilities
© 2026 Jenner & Block LLP. Attorney Advertising. Jenner & Block LLP is an Illinois Limited Liability Partnership including professional corporations. This publication, presentation, or event is not intended to provide legal advice but to provide information on legal matters and/or firm news of interest to our clients and colleagues. Readers or attendees should seek specific legal advice before taking any action with respect to matters mentioned in this publication or at this event. The attorney responsible for this communication is Brent E. Kidwell, Jenner & Block LLP, 353 N. Clark Street, Chicago, IL 60654-3456. Prior results do not guarantee a similar outcome. Jenner & Block London LLP, an affiliate of Jenner & Block LLP, is a limited liability partnership established under the laws of the State of Delaware, USA and is authorised and regulated by the Solicitors Regulation Authority with SRA number 615729. Information regarding the data we collect and the rights you have over your data can be found in our Privacy Notice. For further inquiries, please contact dataprotection@jenner.com.
News and Insights
Podcasts
Partner Laurel Loomis Rimon Discusses Fintech Enforcement, Debanking, and Regulatory Risk on Fintech Layer Cake Podcast
Partner Laurel Loomis Rimon was featured on the Fintech Layer Cake podcast, where she discussed how fintech enforcement and prosecution actually work in practice, and what exposes fintechs and banks to regulatory risk.
July 15, 2026
Publications
Supreme Court Clarifies Scope of Private Rights of Action Under the Investment Company Act, Private Equity Law Report
Partners Charles Riely, Todd C. Toral, and Martin Glass authored a guest article for Private Equity Law Report examining the US Supreme Court's June 11, 2026, ruling on the scope of private rights of action under the Investment Company Act of 1940.
July 14, 2026
Publications
Emily Loeb Discusses Congressional Oversight Preparedness in Bloomberg Law
Partner Emily Loeb, co-chair of Jenner & Block's Congressional Investigations Practice, spoke with Bloomberg Law article about how companies can prepare for potential oversight exposure ahead of this fall's midterm elections.
July 7, 2026
Publications
In New York Law Journal, The True Lender Doctrine and the OppFi Decision
Partners Jeremy Creelan, Michael Ross, Megan Poetzel, and Laurel Loomis Rimon, and Associate Molly Oberstein-Allen authored an article for the New York Law Journal examining the "True Lender" doctrine in light of a May 2026 California decision that provides the most detailed judicial framework to date for evaluating bank-nonbank lending partnerships.
July 1, 2026
Event
Partner Michael Vernick to Speak at NACUA's 2026 Annual Conference
On July 1, Partner Michael Vernick will speak on a panel at the National Association of College and University Attorneys (NACUA) 2026 Annual Conference in Nashville.
July 1, 2026