Trump administration owes U.S. business millions in unpaid bills amid USAID shutdown, lawsuit says

The U.S. Agency for International Development sign is seen outside of USAID headquarters in Washington, Friday, Feb. 7, 2025. (AP Photo/Jose Luis Magana)

WASHINGTON — The Trump administration’s dismantling of the U.S. Agency for International Development is stiffing American businesses on hundreds of millions of dollars in unpaid bills for work that has already been done, according to a lawsuit filed Tuesday.

The administration’s abrupt freeze on foreign aid also is forcing mass layoffs by U.S. 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 U.S. businesses and organizations said.

An organization representing 170 small U.S. 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 U.S. 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, Trump’s head of the Office of Management and Budget.

It is at least the third lawsuit over the administration’s rapid unraveling of the U.S. aid and development agency and its programs worldwide. Trump and ally Elon Musk have targeted USAID in particular, saying its work is out of line with Trump’s agenda.

Marocco, Musk and Rubio have overseen an across-the-board freeze on foreign assistance and agency shutdown under a Jan. 20 executive order by 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 U.S. 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 $103 million in unpaid invoices and almost $500 million 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 without approval.

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

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

Meanwhile, seven Republican lawmakers from farm states introduced legislation to safeguard a long-running $1.8 billion 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. Kansas Republican Sen. Jerry Moran, who announced the legislation, over the weekend thanked Rubio for interceding to allow delivery of $560 million in U.S.-grown commodities intended for hunger programs worldwide but stuck in ports because of the administration’s abrupt cutoff of foreign assistance spending.

Associated Press writer Heather Hollingsworth contributed reporting from Kansas City, Missouri.