Freeze on overseas aid leaves US firms on the hook for millions

American businesses have been left with hundreds of millions of dollars in unpaid bills because of a freeze on oversease aid.

A rally outside the US Capitol on Tuesday protesting against the trump administrations cut to USAID and federal workers’ jobs. Picture:Getty Images

American businesses have been left with hundreds of millions of dollars in unpaid bills for work ­already done because of the Trump administration’s dismantling of the US Agency for International Development, according to a lawsuit filed on Tuesday.

The administration’s abrupt freeze on foreign aid also is forcing mass layoffs by US suppliers and contractors for USAID, including 750 furloughs at one company, Washington-based Chemonics International, the lawsuit says.  “One cannot overstate the ­impact of that unlawful course of conduct: on businesses large and small forced to shut down their programs and let employees go; on hungry children across the globe who will go without; on populations around the world facing deadly disease; and on our constitutional order,” the US businesses and organisations said.

An organisation representing 170 small US businesses, major suppliers, an American Jewish group aiding displaced people abroad, the American Bar Association and ­others joined the court challenge.

It was filed in US District Court in Washington against President Donald Trump, Secretary of State Marco Rubio, acting USAID deputy administrator Peter ­Marocco, a Trump appointee who has been a central figure in hollowing out the agency, and Russell Vought, the head of the ­Office of Management and Budget.

Black tape covers a reference to the UUSAID headquarters in Washington. Picture: AFP

It is at least the third lawsuit over the administration’s rapid unravelling of the US aid and ­development agency and its programs worldwide. Mr Trump and ally Elon Musk have targeted USAID in particular, saying its work is out of line with Mr Trump’s agenda. Mr Marocco, Mr Musk and Mr Rubio have overseen an across-the-board freeze on foreign assistance and agency shutdown under a January 20 executive order by Mr Trump. A lawsuit brought by federal employees associations has temporarily blocked the ­administration from pulling thousands of USAID staffers off the job. The funding freeze and other measures have persisted, including the agency losing the lease on its Washington headquarters.

The new administration terminated contracts without the ­required 30-day notice and without back payments for work that was already done, according to a US official, a businessperson with a USAID contract and an email seen by The Associated Press. They spoke on condition of anonymity for fear of reprisal by the Trump administration.

For Chemonics, one of the ­larger of the USAID partners, the funding freeze has meant $US103m ($163m) in unpaid invoices and almost $US500m in USAID-­ordered medication, food and other goods stalled in the supply chain or ports, the lawsuit says.

For the health commodities alone, not delivering them “on time could potentially lead to as many as 566,000 deaths from HIV/AIDS, malaria, and unmet reproductive health needs, including 215,000 pediatric deaths”, the lawsuit says.

The filing asserts that the ­administration has no authority to block programs and funding mandated by congress.

Mr Marocco defended the funding cuts and push to put all but a fraction of USAID staff on leave in an affidavit filed late on Monday in the lawsuit brought by the workers’ groups.

“Insubordination” and “noncompliance” by USAID staffers made it necessary to stop funding operations by the agency to allow the administration to carry out a program-by-program review to decide what US aid programs could resume overseas, he wrote.

Meanwhile, seven Republican politicians from farm states introduced legislation to safeguard a long-running $US1.8bn food-aid program run by the embattled aid agency, by moving the Food for Peace program under the Department of Agriculture.

Farmers, a politically important bloc for the Trump administration, have been affected by the administration’s funding freeze as well.

AP